Investment advice

economic

key reasons to invest now:
- signs of global economy growing
- earnings growth good in US
- alternative is cash (definate loss making) and bonds (rates can only go up, long term)
- historically returns have been better then anything other asset class on average.
- whats the alternative?????

Superscrooge

elephantrosie wrote: »

so you think the market will go higher, now that it is already in the high range?

I read a US article a couple of months ago that tested whether it would be a good investment strategy to sell each time the S&P 500 reached an all time high.

They found that historically 80% of the time after the market hit an all time high it was even higher 12 months later and concluded that buy and hold was a much more successful strategy.

I'll post a link if I can find the article

elephantrosie

bowlhead99 wrote: »

If markets went up in a straight line then whenever you invested would always be an all time high, but despite that it would never be the wrong time to invest.

Of course, markets don't go up in a straight line because if everyone knew the market was always going to go up and never go down for the next ten years they would all invest today and the price would go through the roof and already instantly get to where they had thought it would be in ten years. And then if a couple of other people came along with a bit more money to invest, but the shares are already owned by everyone else, a bidding war would ensue for all the shares that were in existence at that time.

There would be a maximum that people would be willing to pay for a parcel of shares and a minimum that someone would accept to sell theirs. And those numbers would go up and down with supply and demand minute by minute, hour by hour, day by day, year by year. And then it would be a "proper" market; just like it is today

The fact that supply and demand exists is why the price doesn't always go up, but that doesn't mean that if it has recently gone up it will go down next. But you are rewarded for taking the risk. If there was no risk it would be unlikely that you could make money for just putting your money in and taking it out again. Companies make more and more profits over time as economies grow; over time people have more money to spend on goods and services from the companies which makes them more profitable, and people have more money to invest in the companies to help them grow more, and the demand to invest in the companies means they will be willing to pay more for an ownership share of the companies etc etc.

So over time you would expect share prices to grow and make money for you even if a lot of your money wasn't lucky enough to be first invested at the statistically very best possible time to have invested it. Invest broadly and within your means, and you'll probably be fine.

good writing.

elephantrosie

Superscrooge wrote: »

I read a US article a couple of months ago that tested whether it would be a good investment strategy to sell each time the S&P 500 reached an all time high.

They found that historically 80% of the time after the market hit an all time high it was even higher 12 months later and concluded that buy and hold was a much more successful strategy.

I'll post a link if I can find the article

what does all time high mean?

bowlhead99

elephantrosie wrote: »

what does all time high mean?

The highest level that it has ever been, measured across all time. The S&P500 started being an index measure of the capital values of 500 stocks in 1957, sixty years ago. Prior to that it was called the Composite Index with 90 stocks since about the 1920s.

So if it closed yesterday at 2399.63 and it has never closed higher than 2399.63 in all recorded history, you would say it is at an all-time high point.

This doesn't necessarily mean it is too expensive to buy in; for example if you look at the amount of $ of profits that the companies in the S&P500 are making every quarter or every year at the moment, you might find that on average their share prices represent better 'value for money' now than when the S&P500 index was only 1500-ish, seventeen years ago.