Funds in agriculture? Q for Dunstoh?

rockrat

pjala wrote: »

......... and we all know how much milk has increased in price at the moment. ....

a lot of the milk price increase has been identified as being artificially hiked up by the supermarkets, for which some of the biggest fines in retail history have recently been handed out.

that said, its underlying price is increasing, and the dairy farmers are now seriously looking at reducing herds and using grazing land for growing the more profitable grains.

Murphy_The_Cat

rockrat wrote: »

a lot of the milk price increase has been identified as being artificially hiked up by the supermarkets, for which some of the biggest fines in retail history have recently been handed out.
that was several years ago

that said, its underlying price is increasing, and the dairy farmers are now seriously looking at reducing herds and using grazing land for growing the more profitable grains.

The current price rises aren't related to supermarket price fixing.

nrsql

dunstonh wrote: »

Its not low risk. Its lower than than the high risk areas. It is still medium/high.

Interesting opinion.
As I said a number of people seem to consider it low risk.
It's just a timing issue though.

>> Remember risk is about potential losses and not potential gains.
Interesting approach - think it would miss a lot though.

purch

Remember risk is about potential losses and not potential gains.

:T

Quite right !!!

Far too often 'High Risk' investments are presented, or sold as though the potential for profit is equal to the potential for loss

The level of Risk only ever pertains to the potential for loss

dunstonh

Interesting opinion.
As I said a number of people seem to consider it low risk.
It's just a timing issue though.

On a 1-10 scale you would find most UK equity funds at 7 (excluding smaller cos and specialist areas). Some uk equity income funds would be at 6. However, you will find many european funds, some US and some pacific funds at 7 as well. Although you will find more at 8 and 9.

I would like to think there is a realisation that the top 100 companies in the UK are no safer or riskier than the top 100 companies in the US, Europe or Asia. The only extra risk really is currency fluctuation.

A lot of novice investors do seem to have this opinion that trackers are low risk and thats perhaps where this misconception that UK is low risk comes from. Ironcially, trackers are typically slightly higher risk.

Interesting approach - think it would miss a lot though.

It isnt about the gain though. It is about the potential for loss.

It doesnt matter that China has doubled in a year and the outlook for long term growth is very good and far better than the UK. Chinese investments have the potential to lose more money in the short term than the UK.

Experienced investors understand that and accept it. However, inexperienced investors (which are the majority) usually do not and whilst they are very happy when things go up, they soon start getting cold feet and panic when things go down.

What tends to happen after sustained periods of growth is that people underestimate the risk and switch off to it. Then you end up with people putting money in tech stocks when they should never have been near them (and then pull out saying they will never invest in the stockmarket again when their problem was not the stockmarket but choosing extreme high risk stockmarket and putting all their money in one place). You can also use endowments as an example of that. Decades of massive surpluses led to the assumption they would always do that. Next you have mortgaged buy to lets where people have assumed they can only make money on property.

The more frequently you take a risk and nothing goes wrong, the more likely you are to increase your risk and/or underestimate it in future.

nrsql

Problem with looking at those numbers for risk is how often they are assessed. The UK market wouldn't have the same risk now as it had a few years ago but how much have these values changed? How much did they change leading up to the last large fall?

A lot of people get confused between uncertainly, volatility and risk (and other things). They are only terms so don't affect one's view of investing but cause a lot of problems in discussion.

Another issue is that people talk about risk without considering coverage.
When talking about risk in the UK market what does that mean?
If a tracker is higher risk what's it higher risk than?
You could argue that they aer lower risk (by your definition and ignoring hindsight) but it would depend on what you are comparing them with.

>> I would like to think there is a realisation that the top 100 companies in the UK are no safer or riskier than the top 100 companies in the US, Europe or Asia. The only extra risk really is currency fluctuation.

Does that mean that if you want to invest in the top 100 companies in the area you would only consider the potential for gain as the potential for loss (risk?) is the same?

cheerfulcat

dunstonh wrote: »

I would like to think there is a realisation that the top 100 companies in the UK are no safer or riskier than the top 100 companies in the US, Europe or Asia. The only extra risk really is currency fluctuation.

I would take issue with that - less developed/newly opened markets may also carry extra regulatory risk.

dunstonh

I would take issue with that - less developed/newly opened markets may also carry extra regulatory risk.

Fair point. Certain countries would carry more risk. However, do you think the Germans feel that investing in the top 100 UK companies carries less risk than investing in the top 100 German companies?

cheerfulcat

Hi, dh,

No! For a start, as you say, there is the currency risk. In any case the notion that investing in UK equities is " low risk " is a mistaken one - not sure where nrsql got that from.

wombat42_2

I think DunstonH is a little fixated by this "China could drop 70%" thing. The Hong Kong market dropped 70% in 1997 during the year it got taken over by China. These were extraordinary circumstances. The Hong Kong market (the western world's conduit to the Chinese market) has matured since then - some authorities still consider Hong Kong to be an emerging market and some do not.

The huge rises in China are largely underpinned by huge economic growth in Chna and other factors.

Sure Hong Kong/ China is more volatile than the Western markets. Opinion is divided and the Chinese markets could decine by maybe 20% but some think that the bull run is set to contine up to the olympics. They dont have credit crunch issues. The Western markets havent exactly been doing well of late.