coronavirus and personal pensions

[Deleted User]

dunstonh said:

The US spent most of the 20th Century as an emerging market.  So, looking at historic 20th Century returns is not a good idea

Why not? Firstly, US has been the largest world economy since the early 1920s. Secondly, it has had one of the most liquid and developed trade markets and integrated economy. Thirdly, there are large emerging markets today one can invest in. 

dunstonh

Why not? Firstly, US has been the largest world economy since the early 1920s. 
As I said, it had the profile of an emerging market for much of that period.   It does not have that profile now.    It is a very different country today than it was 50 years or 100 years ago.   So, looking at returns during that period as a guide to the future is pointless.

MarkCarnage

Looking at any historic returns has caveats. All that can be said is that there is a range of real returns over rolling periods which fit a large part of the historic experience. Similarly, trying to correlate GDP growth to equity market returns is not a great way to make money. 

[Deleted User]

dunstonh said:

Why not? Firstly, US has been the largest world economy since the early 1920s. 
As I said, it had the profile of an emerging market for much of that period.   It does not have that profile now.    It is a very different country today than it was 50 years or 100 years ago.   So, looking at returns during that period as a guide to the future is pointless.

Over the last 50 years SP500 returned 10.6% annualised. Or you can look at the world. We don’t know about the future but it’s not just the dividends. Dividends are an artificial parameter; easily redirected to buybacks for tax efficiency and don’t have the significance people tend to assign them. A very crude indicator for value at best. 

MarkCarnage

Dividends are an artificial parameter; easily redirected to buybacks for boosting EPS and executive remuneration

Corrected that for you. 

[Deleted User]

MarkCarnage said:

Dividends are an artificial parameter; easily redirected to buybacks for boosting EPS and executive remuneration

Corrected that for you. 

Incorrect. In some cases -yes, when the company is mismanaged. That’s easily spotted.  In general, this is the most tax efficient way to get the profits back to investors. Like me. I like it, even if politicians don’t understand them

MarkCarnage

A buyback programme can destroy value by doing so at an inappropriate price, it can also weaken the company's balance sheet, perhaps fatally. 
The tax efficient argument is irrelevant if done in a tax wrapped account. Personally, I like the certainty of dividends, clearly while it's appropriate to pay them. 

Thrugelmir

MarkCarnage said:

A buyback programme can destroy value by doing so at an inappropriate price, it can also weaken the company's balance sheet, perhaps fatally. 
The tax efficient argument is irrelevant if done in a tax wrapped account. Personally, I like the certainty of dividends, clearly while it's appropriate to pay them. 

Not all buy backs are paid for from generated cash , some are debt financed. Financial engineering is an art of large corporate entities. 

[Deleted User]

MarkCarnage said:

A buyback programme can destroy value by doing so at an inappropriate price, it can also weaken the company's balance sheet, perhaps fatally. 
The tax efficient argument is irrelevant if done in a tax wrapped account. Personally, I like the certainty of dividends, clearly while it's appropriate to pay them. 

Anything can be mismanaged. That’s a given. Dividends have been; eg by companies borrowing just so they won’t reduce payouts because that would in turn hammer the share price.  Dividends could look high just because the share price has dropped. 

Tax efficiency argument is relevant to me; and even those having investments within a tax efficient account ought to like companies that care about investors in general. 

I do find it interesting that people still make arguments that all the “profit” for investors equals dividends in this day and age, with companies such as BRK (who never payed a dividend), Apple, Amazon and others who either don’t pay dividends or pay little or started recently, having made trillions for investors. 

 

GrandadSteve

I retire in 6 months but I am past the original retirement date my pension was set at and I am seeing it drop quite drastically but my pension provider says it would take almost a month to cash the pension in by which time I could have lost a significant amount ..I hear talk on here that it will recover but have I got time for that to happen ..I think not but do not know what to do