Are the Markets Too High to Invest?

coastline

kidmugsy wrote: »

If you're going to add the dividends, should you not also subtract the inflation?

I'd rather like to see the chart with both adjustments made. Can anyone help?

First a decent chart of the FTSE 100 showing the real effects of major corrections especially 1987..

http://www.macrotrends.net/2598/ftse-100-index-historical-chart-data

Inflation adjusted but only up to 2014 ..

https://pureresearchgroup.com/blog/2014/02/uk-stock-market/

http://www.aboutinflation.com/inflation-adjusted-charts/world-indices-inflation-adjusted-charts/ftse-100-index-inflation-adjusted

A few other yardsticks but again up to 2014..
Dividends are estimated at an average of 3.67% for the FTSE.

https://www.investorschronicle.co.uk/r/FT%20Publications/IC/Assets/PDF/Valuation.pdf

Or maybe a calculator to play around with..

http://swanlowpark.co.uk/assetpricecalculator.jsp

Regarding valuations I see earnings forecasts are on the up again and I believe this has been the driver of the recent rally.You can see from the link earnings were flat just like the markets during 2015-2016.

https://www.yardeni.com/Pub/peacockfeval.pdf

Fund managers are more confident and have been adding money in recent months.

http://fat-pitch.blogspot.co.uk/2017/03/fund-managers-current-asset-allocation.html

StellaN

Sally57 wrote: »

Most of the geographical regions (Japan, Asia Pacific, EM & Europe) are very high at the moment so are these markets far too high to invest?

'Time in the Market is a regular comment but if you had cash to invest now don't you think it's worth holding back at current prices?'

I know prices seem high at the moment and there doesn't seem any real value, however I personally still feel there is more scope in Asia Pacific excluding Japan mainly because of the India, China, South Korea, Taiwan, Hong Kong and Australian markets.

These are quite high risk so I suppose it depends on your attitude to risk and volatility. I personally hold two funds in this sector a) concentrated more in India (35%) and b) more South Korea and China with some Taiwan, Hong Kong, Australia, and about 5% India.

I am wary in adding further investment in the US, UK and Europe at the moment but that's just my opinion - time will tell.

Sally57

StellaN wrote: »

I know prices seem high at the moment and there doesn't seem any real value, however I personally still feel there is more scope in Asia Pacific excluding Japan mainly because of the India, China, South Korea, Taiwan, Hong Kong and Australian markets.

These are quite high risk so I suppose it depends on your attitude to risk and volatility. I personally hold two funds in this sector a) concentrated more in India (35%) and b) more South Korea and China with some Taiwan, Hong Kong, Australia, and about 5% India.

I am wary in adding further investment in the US, UK and Europe at the moment but that's just my opinion - time will tell.

Thank you for your input and I will take another look at Asia Pacific Excluding Japan funds. I also take your point about high risk and volatility.

Can anybody else suggest any other sectors or funds to consider for my S&S ISA allowance?

AnotherJoe

Sally57 wrote: »

Yes, I do realise I have 'lost out' by not using my ISA allowance at the beginning of the tax year but there was a lot of uncertainty at the time with Brexit.

However, that's why I don't feel like holding back any longer but the IFA suggestion through me off course a bit hence the thread!

Why not invest in markets that aren't affected by Brexit, or invest globally, where Brexit will be a small speed bump at most due to the small proportion of UK equities ?

Many posters here use Brexit as an [STRIKE]excuse[/STRIKE] reason not to invest but as Chester pointed out there's always something (what about Trump, French and German elections, USA -Russia tensions etc etc) and Brexit itself is irrelevant to most markets.

Anyone who truly is scared of the Brexit effect on UK shares should be asking why they are looking at investing all their equity in the U.K. which is inherently a risky thing to be doing with or without Brexit. Or, if they aren't thinking of investing all their equity in the U.K, why then is Brexit a concern ?

Sally57 wrote: »

Can anybody else suggest any other sectors or funds to consider for my S&S ISA allowance?

My funds are mostly global but I also have a small proportion in Biotech and Far East because long term I think they will do better than the average global. However they are also riskier and more volatile so oniy have about 5% of each compared to my global. And most of my global is either ex UK or has the 7% or so UK global allocation.

Ps I forgot I also have 4% in property. (Blackrock Global). I'm somewhat ambivalent about that though. That may go if it rises substantially whereas the other two won't.

MonroeM

StellaN wrote: »

I know prices seem high at the moment and there doesn't seem any real value, however I personally still feel there is more scope in Asia Pacific excluding Japan mainly because of the India, China, South Korea, Taiwan, Hong Kong and Australian markets.

These are quite high risk so I suppose it depends on your attitude to risk and volatility. I personally hold two funds in this sector a) concentrated more in India (35%) and b) more South Korea and China with some Taiwan, Hong Kong, Australia, and about 5% India.

I am wary in adding further investment in the US, UK and Europe at the moment but that's just my opinion - time will tell.

Asia Pacific ex Japan funds have been doing well and I agree, it would seem could continue with high producing countries such as India, South Korea, Taiwan & China.

We need to wait and see what the Trump effect/policies will have on the US market.

It is a difficult time to know which regions to invest in so you have to be very selective but its all a risk!

Sally57

I've decided to listen to the IFA's suggestion and park my £15,240 ISA allocation for this year in cash on my platform. I will then see how things go over the next month or so before making a final decision.

Thank you everybody for your views.

StellaN

Sally57 wrote: »

I've decided to listen to the IFA's suggestion and park my £15,240 ISA allocation for this year in cash on my platform. I will then see how things go over the next month or so before making a final decision.

Thank you everybody for your views.

Well good luck - it would be interesting to know when you do finally invest this sum and at what time you entered the market?

I personally would have invested now but we're all different. Good luck again.

ChesterDog

MonroeM wrote: »

Asia Pacific ex Japan funds have been doing well and I agree, it would seem could continue with high producing countries such as India, South Korea, Taiwan & China.

We need to wait and see what the Trump effect/policies will have on the US market.

It is a difficult time to know which regions to invest in so you have to be very selective but its all a risk!

I would take issue with those latter points.

You don't have to wait and see. Doing so will see most boats sail without you.

And if it's a difficult time to know which regions to invest in, then a broad, global approach seems ideal, rather than being selective.

jimjames

kidmugsy wrote: »

I wonder whether that's true. We sold equities in '99 and invested some of the loot in cash.

I was referring to now not other points in history. I guess you can get higher cash deposit rates now using current accounts but not for a cash ISA or for £100k or more.

kidmugsy

Linton wrote: »

Inflation and dividends are hardly equivalent.

For the purpose under discussion they are: the question was how long it took to break even after the market peak in '99. To give an answer that ignored inflation would be preposterous.


I go further: the key argument for investing in equities is the hope that they will protect the investor from inflation. Any plot of returns which suppresses the effect of inflation is therefore NBG.