Panorama 21/10/19

bd10

itwasntme001 wrote: »

You assume all those invested in his fund were smart enough to have realised. You are wrong. A lot are not smart enough to put it bluntly. Whilst it is easy to find the companies that woodford invested in, it is not so easy to determine that they were a load of rubbish. The Link reports do not help as well as it just validates the valuations that are clearly too high.


So probably the best option investors have is to get out when they see some underperformance but most dont think like that, many would prefer to hope for the best rather then lock in a loss. Others may be convinced by their IFAs to hold tight. And the rest would not even monitor that closely.


What woodford did was not just picking bad stocks. He made a complete U turn in strategy and made highly dangerous bets that went completely against his main objective. Not to mention the fact that Woodford was a bit too cosy with the same companies he invested in as well as the influence he had with valuers. I have seen this in person myself. When someone wants to sell something hard to value, they cosy up with valuers to convince them to value it at a higher price then it is actually worth. It happens a lot in the finance industry (particularly if it is related to real estate). I have seen it so many times that i think genuinely there should be investigations done. Similar to the subprime crisis when rating agencies got it so wrong.


But regulators are always asleep, not interested or turn a blind eye.

I agree with you on many points. Cutting losers is the toughest part for any retail investor. Hope dies last. I did not at one of his funds actually, this was not the fund that got closed but another one and the combination of home builders and finance companies and others heavily exposed to the current brexit turmoil had me run the other way. Too toxic.
It's absolutely impossible to value illiquid not publicly traded stocks for almost everyone. I am not expecting that.

As for the FCA, also agree. They were totally asleep and failed the public. If I look across the pond how strict the CFTC/SEC is, oh boy, they are pulling up trading firms left right and centre now. Although they were also deep asleep and did not act on Madoff.

There were failings on all sides. (I simply found Panorama's conclusion a bit too one-sided).

bostonerimus

bd10 wrote: »

I agree with you on many points. Cutting losers is the toughest part for any retail investor.

My portfolio is broadly the same as it was a quarter of a century ago. In 2008 I sold a lot of bonds and bought a lot of equities as I rebalanced through the financial crisis. I well remember selling bonds to buy a US equity index with the Dow Jones having fallen from 13k to around 7k.
It wasn't a tough choice at all, I just followed my rebalancing rules.

itwasntme001

bostonerimus wrote: »

My portfolio is broadly the same as it was a quarter of a century ago. In 2008 I sold a lot of bonds and bought a lot of equities as I rebalanced through the financial crisis. I well remember selling bonds to buy a US equity index with the Dow Jones having fallen from 13k to around 7k.
It wasn't a tough choice at all, I just followed my rebalancing rules.

You are lucky to have had the opportunity to ride the market with bond yields falling and then hopping onto the equities train at low levels during the crisis.


With bond yields at record lows and stocks at record highs, what can one expect in terms of growth in bonds and equities and how can one rebalance going forward? Seems like the easy money has been made already.

bostonerimus

itwasntme001 wrote: »

With bond yields at record lows and stocks at record highs, what can one expect in terms of growth in bonds and equities and how can one rebalance going forward? Seems like the easy money has been made already.

Hmm, maybe just own VLS60 and see what happens in 30 years.
My portfolio is becoming more equity heavy as I've stopped rebalancing, but I'll leave it alone and see what happens in the next 30 years.

Brian65

Thrugelmir wrote: »

Just had a look. To be included on the published list. Fund managers are required to provide discounted fees on the funds to HL clients. No direct remuneration , but a clear incentive to buy the fund via HL for retail investors. Cosy relationship.

Indeed. So the most profitable punters are sucked into HL instead of platforms which charge lower platform and trading fees.

Brian65

ZingPowZing wrote: »

Toothless as the owner of dentures sitting in a glass by the bedside.

If you mean the FCA I would agree.
But I thought that, this time, the BBC went about as far as it could without risking legal action.

Brian65

itwasntme001 wrote: »

valuations that are clearly too high.

That may be clear now but it wasn't then, and I think that is the root of the problem

msallen

bd10 wrote: »

Or the lady who bought the fund for a few grand based on recommendation by a friend. That's just naive with an element of greed. Did she check what the holdings were or what the strategy is? I bet not.

Indeed. Although it was not explicitly stated it was implied that all her investments were in the one fund. The Beeb would have fulfilled its public service criteria better by just spending half an hour telling people not to put all their eggs in one basket, regardless of who the basket maker was or how well made they think the basket is.

Brian65

bd10 wrote: »

They were totally asleep and failed the public. If I look across the pond how strict the CFTC/SEC is, oh boy, they are pulling up trading firms left right and centre now. Although they were also deep asleep and did not act on Madoff.

They seemed to have missed the other fund manager on the Panorama programme too, so I don't know if they are more efficient over there. Certainly prison sentences are longer in the USA for all types of crime. More inequality inevitably leads to more crime, and more prisoners. Hence Britain having the most in Europe, but not as many as the USA where inequality is greater.

Brian65

itwasntme001 wrote: »

I would say anything with direct property (not liquid REITs), hy corporate bonds, some small/mid cap funds, some ig bond funds, anything else too exotic, should probably get sold asap.

Every other investment looks expensive to me too, as prices have been inflated by years of QE. But how else might you preserve the value of cash