Why is 'Timing' the market bad ?

EdGasket

adindas wrote: »

At most people know that we are not in the credit crunch anymore now.

hmmm there's still a lot of reckless lending going on. Everyone wants to lend me money and no-one is interested in my savings. Average household borrowing is very high. Just wait until interest rates have to go up then watch: Credit Crunch, the sequel.

AnotherJoe

Jon_W wrote: »

1. Value could fall

Not of say US or Japan orJapanese or Chinese shares. they wont be affected by a Brexit panic about, say, a potential tariff on UK exports..

2. This is really quite embarrassing but I had to get pencil and paper to work out this out. And i'm still not sure I'm right...

A weak/low £ exchange rate is good for buyers of shares in the currency it's fallen against. Bad for sellers.
True of UK shares, (in general) but what about non UK shares?

A high/strong £ exchange rate is good for sellers of the shares in the currency the £ has risen against. Bad for buyers.

I hope this is the right way around...:o

So if the £ dropped it wouldn't directly affect the prices of non-UK shares not listed in £. But a falling £ would mean that anyone holding such stock has an investment that is now not worth as much in £.

If the Pound dropped, it would mean the value of non-UK shares or funds you held would rise in £ terms. (all of them of course would but just care about the ones you invested in in the expectation that the Pound would fall because of Brexit).

For example if Apple shares were $150 each, and the Dollar was £1.50 to the £ and you had 1 Apple share that would be worth $150=£100. If the Pound fell to parity, £1=$1 you'd now still have $150 of Apple shares but they would be worth £150.

3. I *think* these share prices may rise exports will be cheaper for the purchasing countries when the £ is 'low'.

More to the point, the non-UK shares you bought will rise in £ value. So saying "I'm not investing in "shares" because the UK market might fall" is ignoring the entire ROTW. Surely you weren't contemplating buying only UK shares?

The investment world is a lot bigger than the UK or even Europe. But you are apparently saying "i wont invest because of Brexit" despite the fact that (a) there's 93% left of the globe you can invest in thats not affected directly, eg Apple shares wont rise or fall in $ terms whatever happens with Brexit, and (b) odds are that the other 93% will rise relative to your currency (Pounds) because if Brexit is a bust and the Pound falls as a result, your investments will rise in £ terms.

AnotherJoe

adindas wrote: »

If you are aiming to invest a large some of money (not drip feeding), and vast majority of people are telling you that we are in the wrong cycle of the financial market to invest then it is not sensible to invest at this time of the market.

You have it the wrong way round. The time to buy is when everyone is saying "now is the time to sell" and vice versa.

When Crashy finally posts "I admit you folks were right and I"ve bought", thats the time to sell :-)

Glen_Clark

EdGasket wrote: »

hmmm there's still a lot of reckless lending going on. Everyone wants to lend me money and no-one is interested in my savings. Average household borrowing is very high. Just wait until interest rates have to go up then watch: Credit Crunch, the sequel.

Biggest borrower is the Government doubling the 300 year old National Debt in 6 years - nothing they won't do to keep house prices up even when its crippling the rest of the economy. My guess is they will default through inflation because thats what Government's always do when they can't pay their debts. So I don't want to be holding much cash

adindas

EdGasket wrote: »

hmmm there's still a lot of reckless lending going on. Everyone wants to lend me money and no-one is interested in my savings. Average household borrowing is very high. Just wait until interest rates have to go up then watch: Credit Crunch, the sequel.

If people could wait until no lenders, banks want to lend money anymore, no trust among each other, interest rate is going up similar symptom when we were having credit crunch. You have a large deposit to put to lender, in the bust market you are a clear winner.

Jon_W

AnotherJoe wrote: »

More to the point, the non-UK shares you bought will rise in £ value. So saying "I'm not investing in "shares" because the UK market might fall" is ignoring the entire ROTW. Surely you weren't contemplating buying only UK shares?

The investment world is a lot bigger than the UK or even Europe. But you are apparently saying "i wont invest because of Brexit" despite the fact that (a) there's 93% left of the globe you can invest in thats not affected directly, eg Apple shares wont rise or fall in $ terms whatever happens with Brexit, and (b) odds are that the other 93% will rise relative to your currency (Pounds) because if Brexit is a bust and the Pound falls as a result, your investments will rise in £ terms.

Thanks for your detailed responses - you have made me see the folly of hanging on.

BrockStoker

fun4everyone wrote: »

Nice post for us night owls BrockStoker thanks.


Can I ask if you believe in passive investing for any sectors? I notice you don't have any index funds listed for your main portfolio.


I have constructed my own portfolio recently and most of it is actively managed funds. However for the S&P (large cap USA sector in my mind) I just went with a passive index fund. Is your lack of index funds simply because you prefer an active approach or is it more because you prefer each fund to be far more targeted/specialist than just "large cap USA". Hope that makes sense.

Thanks.

Actually last night the wall clock stopped. I thought it was around 10PM but by the time I noticed it was about 3.30AM :rotfl:...and I wanted to get an early night. I've always been a bit of a night owl too, but now I need to start getting up a bit earlier to get things done outside - we have a bit of land here, and I grow fruit n veg, and this is the busy time of year when things need to get done. Trying to be as self sufficient as possible as we don't like throwing money away if it can be avoided.

I do hold one index fund (Close FTSE techMARK), but can't blame you for missing it as the FTSE techMARK index isn't very well known. I do think actively managed funds will pay for themselves if you can find the right ones, but an index fund in the right sector probably isn't a bad choice, and the S&P 500 would be top of my list.

I only went for the FTSE techMARK since I wanted a bit more exposure to UK tech, and could find a better option on my platform. It had just gone through a short period of under-performance, and I thought it would be a reasonable entry point when I bought it (12th Nov last year). I had actually requested it on the 5th, but for some reason the fund was not bought till the 12th. It's the first time my platform has let me down like that (I'm assuming it was their screw up). Usually I get the valuation point on the same day if I make my request in the morning.

Going back to active vs. passive, I always like to stay active where possible since out-performance is what I'm after, but indexes like the S&P 500 which tend to perform strongly anyway can make sense. For me though, since I'm so overweight in biotech which is heavily represented in the NASDAQ/S&P 500, I don't think it would be a good idea to buy a separate S&P 500 fund, and sticking to specialist funds (for the most part) seems to work better with my strategy.

I should also say, I'm still tweaking my main portfolio, and intend to add at least a couple more funds (when opportunities arise), one of them a specialized tech index fund, one active general tech fund, and possibly another actively managed UK small cap/value fund (I might just buy some more Marlborough Special Situations to hold in my main portfolio, since I try leave my other portfolio alone mostly - it's easier to make changes to my main portfolio).

jimjames

adindas wrote: »

Renting for 17 years, woow ?????. The money from the rent itself probably probably already cover a fractional of the value of the house or multiple value of the deposit.

But it's exactly the same about you trying to time it. Keep waiting for the best time and prices to drop and you miss the boat completely. Obviously share investments are discretionary so not needed for roof over your head and you can still buy later - but not at such an advantageous price perhaps.

EdGasket

Sold a number of my shares recently; 'taking money off the table'. It looks like risks being in the market right now outweigh returns with Brexit, Trump running into trouble, and inflated values for housing and commercial property. Will see what market is like in a couple of months.

Glen_Clark

EdGasket wrote: »

Sold a number of my shares recently; 'taking money off the table'. It looks like risks being in the market right now outweigh returns with Brexit, Trump running into trouble, and inflated values for housing and commercial property. Will see what market is like in a couple of months.

What about the risks to Sterling cash from Brexit?
http://www.nationaldebtclock.co.uk/
We are already seeing companies moving their offices cw jobs and tax revenue, across the channel to retain access to the single market