Are you concerned by the current investing climate?

Biggles

Cintrapark wrote: »

I keep on reading articles in the press that we're due for a big crash and that this isn't a good time to be investing.

I've been investing for 30 years and I've been reading those articles in the press for 30 years too.

You need to be invested in the market to make money; what you say about being in it for the long term is the right approach.

dunstonh

Biggles wrote: »

I've been investing for 30 years and I've been reading those articles in the press for 30 years too.

You need to be invested in the market to make money; what you say about being in it for the long term is the right approach.

Exactly. There is always something coming.

In the 20th century, people lived through uncertain times and major changes all the time. Uncertainty was the norm. Then in from early in the 2000s, uncertainty seemed to go away and a whole generation of young adults hasnt experienced uncertainty. The media is generally run by young adults and they have a sensationalist approach as they need to grab attention. So, they see uncertainty as unusual or worrying. It is not. It is totally normal.

There is always a crash coming. You know that when you invest, whenever that may be. You just don't know when. We had one last Autumn. It recovered quickly. It could be a week or a year or 3 years to the next one. You could have a sharp drop in a short period crash or you could have the slow, drawn out decline over a few years. You never know what or how. You only know it is coming. It is always coming.

ChesterDog

When markets are going well, the voices tell you they are heading for a fall.

When markets are falling, the voices tell you to keep your powder try and wait for them to bottom out.

When everything is running smoothly, the voices tell you volatility being low is a really bad sign and something terrible is about to happen.

When things are all over the place, the voices tell you it would be madness to invest in the current climate.

Markets go up and down in the short term. Sometimes a lot. Bad news is normal.

The voices are just noise.

Glen_Clark

Ray_Singh-Blue wrote: »

I think sometimes it's OK just to sit on the sidelines and wait a while, see what happens next.

Personally I don't like making new investments in an asset class which is within x% of its all time highest value (although I'm happy to hold existing investments). Right now that applies to most equity and bond markets as far as I can see.

So "I'm Out", at least for now.

Small private investors have an advantage over institutional investors, we can get a real return of near 0% on cash just by parking it in the best cash ISAs. And waiting...

Very true, but holding Sterling is taking a risk so whilst I am happy to hold some in Sterling I wouldn't want to hold it all in that one basket.
By spreading your eggs arounsd lots of baskets you won't do very well. But, more importantly, you won't do very badly either. This is more important to me because have earned enough to retire and live modestly. Doubling my investments wouldn't make a huge difference to me. But losing them would.

Freecall

Glen_Clark wrote: »

Doubling my investments wouldn't make a huge difference to me. But losing them would.

An absolutely key point for most people but seldom voiced.

Malthusian

Ray_Singh-Blue wrote: »

Personally I don't like making new investments in an asset class which is within x% of its all time highest value (although I'm happy to hold existing investments). Right now that applies to most equity and bond markets as far as I can see.

The problem with this approach is that equities still pay dividends whether or not they are within X% of their highest all time value. And dividends often make up the larger part of long-term investment returns.

If for the sake of argument X is 10 and you don't want to be invested when the market is within 90% of its highest value. The FTSE 100 has spent roughly half of its history since 1983 within 90% of its highest value. So by being out of the market when it's within 90% of its peak (and selling when it reaches that point is no different in principle from declining to invest) you miss out on 50% of the greater part of the return from equities. Essentially it is just another market timing strategy.

Saying "I'm not going to invest because markets are at an all-time high" suggests that A) you think markets might fall in the next few years and you can't cope with a market fall within that time, therefore you can't invest. But if B is true then you shouldn't invest regardless of A. Markets suffer crashes even when they aren't at an all time high. Equally, they often continue to rise when they are.

Ray_Singh-Blue

Yet someone investing a lump sum in 1999 or 2007 would have done significantly worse than someone investing a lump sum in 2002 or 2009.

Indicators such as CAPE could be dismissed as noise- but then, so could a foghorn. And if you were driving a ship in the fog, perhaps not a bad analogy for what we are doing, then you'd probably take at least passing notice and it might even influence your steering decisions

[Deleted User]

Biggles wrote: »

I've been investing for 30 years and I've been reading those articles in the press for 30 years too.

You need to be invested in the market to make money; what you say about being in it for the long term is the right approach.

Don't think that strategy would have worked well for my RBS shares...


Thankfully the wife made me sell them at £20 odd each, purchased for £1.48, in 2006. Of course these prices do not relate to the current price only to say they'd be worthless now.

steampowered

jeepjunkie wrote: »

Don't think that strategy would have worked well for my RBS shares...

Thankfully the wife made me sell them at £20 odd each, purchased for £1.48, in 2006. Of course these prices do not relate to the current price only to say they'd be worthless now.

That is why you have a balanced portfolio rather than putting all your eggs in one basket.

My understanding from a quick google search (http://www.telegraph.co.uk/finance/comment/tom-stevenson/8469660/What-history-tells-us-about-returns-over-the-next-30-years.html) is that a balanced 30 year investment in the stock market would have achieved 8% annual returns, after adjusting for inflation.

[Deleted User]

Ray_Singh-Blue wrote: »

Yet someone investing a lump sum in 1999 or 2007 would have done significantly worse than someone investing a lump sum in 2002 or 2009.

Indicators such as CAPE could be dismissed as noise- but then, so could a foghorn. And if you were driving a ship in the fog, perhaps not a bad analogy for what we are doing, then you'd probably take at least passing notice and it might even influence your steering decisions

Looking at an old DC pension I had with Aviva invested in Global Equity... Now in HL.


It was doing quite well until the 2007 crash and only thanks to Brexit has it really gone well past highs of almost 10 years ago... Repeat the cycle and it's not achieving much.


So considering just banking the profit as it's not that long till I want to drawdown...