I finally opened a stocks and shares isa.

CreditCardChris

After delaying it for months and months waiting for a pull back, I finally decided now is the time. I don't care if it drops more from here, it's just nice knowing I'm not buying at the complete top and a 13% discount is better than nothing. I decided to go with a US 500 index tracker as the UK market has been a complete shambles for with old (oil, banking and insurance) dinosaur companies at the helm for far too long. From this point on I'm going to invest £500 a month for the next 30 years and hopefully I'll generate a nice retirement fund for myself.

I might split that £500 between the US index tracker and a FTSE index tracker at some point but I need to see this country get back on the world stage again before I do that.
I understand that the recent drop is caused by corona virus and while it'll probably get worse before it gets better, I seriously doubt it's going to be a long term thing which causes uncontrollable damage to the world economy.

dunstonh

 I decided to go with a US 500 index tracker as the UK market has been a complete shambles for with old (oil, banking and insurance) dinosaur companies at the helm for far too long. 
Its funny as many models have been reducing their US exposure and increasing their UK exposure.   Not the large cap (as that is poor as you mention but the stronger mid and small cap).     
Single sector investing is bad investing at any time.   So, you are not off to a good start.   And picking the stand out sector in this cycle is a recipe for lower returns.    The sector that performs best in one cycle is often near the bottom in the following cycle.  The threats to the US economy are strong. Especially if Trump doesn't get in and Sanders does  (a case of the least worst option - who would have thought that a worse option than Trump exists).

I might split that £500 between the US index tracker and a FTSE index tracker at some point but I need to see this country get back on the world stage again before I do that.
You really need to do some more reading on investing as you are not ready to be investing in single sector funds yet.   You should be on a multi-asset fund considering your lack of investing knowledge.

CreditCardChris

dunstonh said:

 I decided to go with a US 500 index tracker as the UK market has been a complete shambles for with old (oil, banking and insurance) dinosaur companies at the helm for far too long. 
Its funny as many models have been reducing their US exposure and increasing their UK exposure.   Not the large cap (as that is poor as you mention but the stronger mid and small cap).     
Single sector investing is bad investing at any time.   So, you are not off to a good start.   And picking the stand out sector in this cycle is a recipe for lower returns.    The sector that performs best in one cycle is often near the bottom in the following cycle.  The threats to the US economy are strong. Especially if Trump doesn't get in and Sanders does  (a case of the least worst option - who would have thought that a worse option than Trump exists).

I might split that £500 between the US index tracker and a FTSE index tracker at some point but I need to see this country get back on the world stage again before I do that.
You really need to do some more reading on investing as you are not ready to be investing in single sector funds yet.   You should be on a multi-asset fund considering your lack of investing knowledge.

I am investing in a multi asset fund as the SPX 500 covers a wide range of sectors. I think what you meant is I should not be investing in single countries or markets? Well as I said the initial lump sum was in the US 500 as it's constantly out performed the FTSE since 1920. A trend I seriously doubt is going to change considering the US has more land for development, more tech driven culture and they're obsessed with being the biggest and best which naturally drives them to create global powerhouse companies.

The UK hasn't created a billion pound company since 2002, why on Earth would I invest in this country when it has absolutely no drive to create powerhouse companies anymore? The only reason investors might be looking to move away from US stocks into UK stocks is to take advantage of the exchange rate as the pound is low against the dollar but there's no guarantee that the pound will regain is previous dominance. Failing economy = failing currency. Until the economy changes, the pound won't change.

I know as a Brit you're inclined to be biased towards your home countries stock market but look at the data, look at the historical charts. Investing in the UK just because its your home country is a very weak reason in my opinion. I see America leading the world in technology, space flight, electric cars, probably AI when the time comes. Meanwhile the UK is still chugging along with mostly oil, banking and insurance,

dunstonh

I am investing in a multi asset fund as the SPX 500 covers a wide range of sectors. I think what you meant is I should not be investing in single countries or markets? 
Sector has multiple meanings depending on what you are reading.  I was referring to sector as in the fund sector. e..g US equity.

Well as I said the initial lump sum was in the US 500 as it's constantly out performed the FTSE since 1920
Of course it has.  Most of the 20th Century, the US was classed as an emerging economy.  The UK is a mature economy.  The US is no longer an emerging economy. So, you should totally disregard past performance.

The UK hasn't created a billion pound company since 2002, why on Earth would I invest in this country when it has absolutely no drive to create powerhouse companies anymore?
The UK's strength is not large cap. It is small and mid cap.   

I know as a Brit you're inclined to be biased towards your home countries stock market but look at the data, look at the historical charts.
Indeed. And you will find the UK does quite well.  Out of the 12 main IA sectors from 2009 to 2018, UK equity was third place.  US equity was top, Asia/Japan 2nd and UK third.  
History will also tell you that the sector that is top in one cycle is rarely near the top in the next.  Yet, with your gambling approach to investing, you seem to think that the US will make it two in a row.

 I see America leading the world in technology, space flight, electric cars, probably AI when the time comes. Meanwhile the UK is still chugging along with mostly oil, banking and insurance,
Actually, UK small and mid cap is very strong in those areas.  The UK is often a leader in the development of technology but companies get bought out and it is the US and Asia that goes on to product it.    Your analysis of the UK is too UK large cap focused and no sensible investor focuses on UK large cap alone.   Just as no sensible investor goes into US equity alone.

Albermarle

I am investing in a multi asset fund as the SPX 500 covers a wide range of sectors.

The normal definition of a multi asset fund is one that contains different types of assets . Usually a mix of equities and bonds but can contain smaller amounts of property, cash etc . Normally the equities and bonds are globally mixed as well.

CreditCardChris

"America was an emerging market"
"Cycles, aka it's our turn for epic growth soon"
"But small and mid cap is where the strength is "
"We're a mature country"
You can come up with a hundred different excuses for why the UK stock markets have performed so badly for the last 20 years and things are about to change but there's been a fundamental shift in culture of this country. Obviously I'm generalising but  people in this country don't have the ambition and drive to create billion pound companies that completely revolutionise the way the world operates, like the US does. 

We're more geared towards politics, banking and law which creates wealthy individuals, not wealthy companies and this is the key difference. The UK just isn't as tech or science driven as the US and that is where the money is now. The money isn't in oil or banking or insurance, that is where the money was in the 1900's... If the UK doesn't dive headfirst into the tech and science industries soon we're going to be just another stock market in the sea of stock markets that exists but nobody really cares about except their own countrymen. 

dunstonh

You can come up with a hundred different excuses for why the UK stock markets have performed so badly for the last 20 years
UK large cap - AKA the FTSE100 has performed badly for over 25 years.   However, UK mid cap and small cap has not performed badly.  You seem to be mistaking UK equity as only being large cap.
The fact you refer to the comments as excuses really does suggest you don't know much about investing.  That is not a bad thing but if you start acting as if you do, when you do not, the it is a recipe for failure.

You are making a mistake with your investing style.   It seems to be based on poor perception and understanding.   What you do, at the end of the day, is totally up to you.  However, I do suggest you try and learn more as you may well regret it.   You are going to be reliant on the US being the best consistently and that will not happen.

grumiofoundation

The OP seems to have a very strange attitude. By their own admission a complete novice but then proceeds to dismiss every bit of advice given to them...

CreditCardChris

I'm not saying the US will be the best forever, but currently as it stands right now it is by far the strongest economy of the two and I don't see that changing just because the US is approaching the end of it's "cycle". Which cycle are we talking about by the way? 

Like I said I am open to investing in the UK when I see signs that it's regaining its desire to create world changing companies again. I get it, the UK is good at creating small cap companies but with the UK rapidly running out of land to place these businesses, we run the risk of young entrepreneurs setting up shop in the states. 


Also because US tech companies have so much money they can just buy any decent company we create, like DeepMind for example. A fantastic AI company valued at £300million before Google bought them up. 

CreditCardChris

grumiofoundation said:

The OP seems to have a very strange attitude. By their own admission a complete novice but then proceeds to dismiss every bit of advice given to them...

Well when I'm being told that buying US stocks is "wrong" when they've outperformed the UK since 1940 of course I'm going to dispute that. Sure there's a chance that I'm incredibly unlucky and I've bought US stocks at a time when for the first time in 80 years the UK market is going to !!!!!! on the US markets but I'm not seeing any evidence at all that is going to be the case.


But please do provide me with evidence that's the case if you have any.

dunstonh

Well when I'm being told that buying US stocks is "wrong" when they've outperformed the UK since 1940 of course I'm going to dispute that. 
Buying 100% of any sector is bad investing.   Past performance is no guide to the future and comparing the US in 1940 to today is just daft.    

For the last 20 years, UK smaller companies sector has beaten North America smaller companies by a little and North America by a lot.


Sure there's a chance that I'm incredibly unlucky and I've bought US stocks at a time when for the first time in 80 years the UK market is going to !!!!!! on the US markets but I'm not seeing any evidence at all that is going to be the case.
first time?   The previous cycle had the US as the worst performer.   

The world you live in appears to have the US and UK as the only countries.   For the rest of us, it isn't a binary choice.