How can I invest in FTSE250

bowlhead99

EdGasket wrote: »

the traditional methods of calculating if a market is over-bought have to be tempered by the fact that interest rates are abnormally low. The net result, imho, is that equities might not in fact be overpriced in the current environment.

With my 'accountant' hat on, the fair value of an equity is basically the price at which it would change hands between a willing seller and an unconnected willing seller. The market gives us evidence of the fair value because if the sellers were asking too much, the price would fall until they weren't. So, there is as much money wanting to be in the shares as want to get out of the shares at the current price ; as such, I can agree they aren't overpriced.

Until, of course, the market gets more information about the fortunes of the companies involved or about some alternative investment. That information might come along tomorrow, next week, month, year or decade, and make today's buyers wish they had not been.

For instance the housebuilder and property shares that fell heavily pre and post Brexit still look good value with PE's of under 10 and dividends of 5% or so such as BVS, PSN, SMP, and UAI which is just above half it's net asset value.

Comparing some historic level of earnings or dividend payouts to the current price and concluding that the price is low considering the company "is making" x profit, or "is paying" y dividends, is a rookie mistake (although I'm not suggesting you personally have made one).

Clearly Mr Market thinks the prospects for those companies worsened, or at least increased in risk, with the Brexit thing, so they do not necessarily represent as good or better value at current P/('historic E') of 10 than they did at old P/('historic E') of 15+, because the conservative estimate of future 'E' got lower ; expectations for the 'E' going forwards has changed and is no longer to be expected to be so good.

Of course, the actual 'E' and asset values experienced by the companies over the next decade or so will depend on things like levels of business and consumer confidence, employment, free movement of Europeans, and ongoing supply of cheap credit. The BoE seems to be doing what it can to assure the latter because they along with economists and investors have concerns about the former.

fairleads wrote: »

wonder if Joe has checked today's ftse250 closing price? :T

At 17808 it's 1% higher than the 17640 it was at when he originally posed the question last Thursday morning; if he bought any time Thursday and sold any time the day after or yesterday or today, he would be in profit (less trading fees). Was that what you meant?

fairleads

bowlhead99 wrote: »

At 17808 it's 1% higher than the 17640 it was at when he originally posed the question last Thursday morning; if he bought any time Thursday and sold any time the day after or yesterday or today, he would be in profit (less trading fees). Was that what you meant?

Joe didn't pose the original question, Andy did and my reply was aimed primarily at Joe's comment yesterday but applies equally to Andy as well.
However, frequent trading on such small movements is hardly worth it unless you invest 10s of thousands and again in this particular case, with the market being overbought, not worth the risk
HTHs

EdGasket

FTSE250 up strongly today on strong retail sales figures.

(BVS and PSN also up a few percent)

MattGb

Invest in a FTSE 250 Index fund. Your bank should allow you to do that.