Why is 'Timing' the market bad ?

grey_gym_sock

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.

but is this money staying off the table permanently, i.e. you're scaling down your equity exposure because you're either approaching retirement or have enough accumulated that you don't need so high a real return to meet your aims? or money which is supposed to go back into equities when prices are more favourable?

the former is perfectly sensible. the latter is the kind of 'timing the market' which is usually a bad idea.

EdGasket

Good question. It's a mixture of both as I am pretty near retirement and in uncertain employment which might end any time. I also think the market is too high and after the Trump honeymoon is over we could see a pullback; if not I don't think I'm losing too much by having some cash around for a while. Just a pity that in a SIPP there is nowhere safe to invest it so will have to stay as cash.

jamesd

You might consider Newton Real Return, which didn't drop particularly badly in 2008. It seems to be one of the decent absolute return funds. I'd suggest money market funds but at the moment you might pay more in fund charges than the money market returns and suffer a loss.

EdGasket

Yes I could consider Newton RR. The only thing is at the moment I have no traditional funds |(only ETFs and ITs) and so don't pay any 'platform fees'.

bowlhead99

EdGasket wrote: »

The only thing is at the moment I have no traditional funds |(only ETFs and ITs) and so don't pay any 'platform fees'.

The 'platform fees' of which you speak are something like £12.50 a year flat fee with Halifax sharedealing once you've bought the assets assuming you want an ISA. If you don't want an ISA because you aren't expecting unmanageable levels of dividend / interest income or unmanageable capital gains, from this 'conservative' allocation - maybe less.

I don't use Halifax, just sayin'.

Glen_Clark

Thrugelmir wrote: »

Why is it only a problem now? Been going on for decades.

Did you read the post before replying? Whats changed now is they are no longer guaranteed access to the single market. It isn't just selling, its the ability to settle trade disputes, border delays etc through the EU.

Glen_Clark

grey_gym_sock wrote: »

there is no problem with UK government debt. that is complete fiction.
.

Can you explain why there is no problem with this http://www.nationaldebtclock.co.uk/ or it is complete fiction?

EdGasket

bowlhead99 wrote: »

I don't use Halifax, just sayin'.

Neither do I.
I would get charged 0.25% platform fee which together with Newton's fees would mean making over 1% just to tread water; not really an attractive proposition.

EdGasket

Glen_Clark wrote: »

Can you explain why there is no problem with this http://www.nationaldebtclock.co.uk/ or it is complete fiction?

Yes, read this:
https://www.theguardian.com/business/2016/aug/25/how-worried-should-we-be-about-national-debt-uk-us-fiscal-austerity

grey_gym_sock

Glen_Clark wrote: »

Can you explain why there is no problem with this http://www.nationaldebtclock.co.uk/ or it is complete fiction?

it's partly fictional, but mostly misleading by omitting all the context.

it's fictional, in the sense that the outstanding public debt is currently about £400bn less than they say, because they're not deducting the gilts which the BoE is holding. you can't owe debt to yourself, and the BoE is wholly owned by the UK. this fiction is also perpetuated by the government, of course - it's not just that website. but the government does also publish "whole of government" accounts, which show the net debt correctly.

it's also misleading to show debt "per taxpayer", by which they appear (from the numbers) to mean "per income tax payer". only about 28% of tax raised is income tax; a much larger number of people pay taxes altogether.

if you want to answer the question "how big is public debt?", including how it varies over time, you should show the debt-to-GDP ratio, not the debt in £. the debt in £ rises due to inflation and real economic growth. but in any sensible analysis, if the debt-to-GDP ratio remained the same, there'd be no real rise.

the broader context is: there is no reason why public debt should ever be repaid. in fact, trying to repay it would cause huge problems. because we use IOUs from the UK government (read what it says on any bank note) as money, and it would be very inconvenient not to have money.

the broader context is: there is no question of the UK government not being able to pay its debt, because the debt is in £, which are IOUs from UK government, which it can produce as many as it needs to, at will.

the broader context is: interest on UK government debt has no real cost. currently, the interest is actually less than inflation. but in fact, that's not quite necessary for it to have no real cost: it just needs to be less than nominal economic growth (i.e. real growth + inflation). because that ensures that the interest won't make the debt-to-GDP ratio rise.

the alarmism over public debt is simply a smoke-screen peddled by ideologues who want to cut public services and social security. those cuts make no sense: they're cruel, they're unnecessary, they make the economy weaker in the current context (that households are can't spend much without going further into debt; and that businesses aren't investing much), and they aren't even effective at the declared aim of reducing the deficit (as we've seen under osborne/hammond - in reality there has been no change of policy under the latter).

this is all in contrast with household debt. households do need to pay their debt down, because their years of earning from selling their labour will come to an end at some age. households can't just pay their debt at will by writing IOUs. households pay real, sometimes cripplingly high, rates of interest on their debt. high household debt is a real problem (which the government isn't even attempting to solve).