UK stocks doubts

RobHT

What's the point to invest in UK if:
- Exponential growth is a dream, I don't see such companies around unless ultra penny stocks like PowerHouseEnergy, but I wouldn't risk too much money with such low penny stocks...
- Options are not in my knowledge
- Dividents are a bit useless unless you take BP, Vodafone, BT etc (above 6%)... Many of them stopped to pay during this pandemy, and anyway this is nothing compared to exponential growth that you can have in US, China, Japan etc.
- I can only see the advantage of not taking care of the currency fluctation and FX charges in buy and sell, for example on HL is extremely expensive!

What's your opinion?

Another_Saver

My time to shine 😍

But it's late, maybe I'll do a detailed response another time but this looks like another declinist falsely nostalgic domestic pessimist (i.e. stereotypical Brit). If you look through my replies I have some much more detailed previous posts explaining my thoughs on UK plc (and yes, we all know that UK plc is not UK GDP, the FTSE 100 and 250 are very different etc.)

Re: growth ... Dunno what you mean mate. Are you saying you think growth in the UK has stopped but will continue elsewhere? Because there is no evidence to support that opinion and plenty to the contrary. Japan has flatlined for 30 years, China I'm extremely sceptical of whether they can continue (capitalism secondary to national harmony, demographics, dependence on Globalisation, OPEC dependence, fraud and corruption, Australian commodities dependence, limited and worse capital markets access for foreigners, "catching up" growth, middle income trap, credit bubble...). As for the US, our economies and markets are highly correlated, apart from the dot com bubble and the past 5 years.

Why are options relevant?

Dividends aren't useless, dividends are historically where most of your real total return comes from. A higher dividend yield counter intuitively indicates higher growth potential (the marginal utility of retained earnings necessarily tends to zero on aggregate), I think around a 2/3 payout ratio as the UK currently has is ideal. The myth that the UK (namely the FTSE 100) has been "underperforming" for decades is a myth, it's mainly since the referendum, mostly explained by speculation rather than earnings growth and dividend yields. The idea that the UK is permanently continuing to underperform the wider global or us market is baseless. I've debunked it in an earlier post which ill probably edit in a link to later. Right now the UK is the cheapest and highest yielding developed market and I am splurging while it's on sale. There was another thread about high yield defensive sticks you may find interesting in that regard - have you seen the ridiculous yields on BATS and imperial brands?

Don't use HL then?

I have probably already responded in previous to all the points other posters night make disagreeing with me. I have yet to be dissuaded.

But anyway if you don't want to invest in the UK... Just don't?

MaxiRobriguez

OP, maybe you will find it easier to work out what you need your portfolio to do, rather than try and second guess how to play the market? If for example your portfolio needs 6% annual growth over X number of years to get to the position you need, then it would be almost silly not to include the UK as part of a balanced portfolio precisely because there are a decent chunk of large, industry leading companies in UK markets that pay dividends (even during this pandemic) at yields of 5... 6%. 

We don't know what the future will hold. It's not that far fetched to see a world where inflation and interest rates do finally start increasing in the near future which leaves many growth companies with a less compelling story, and a large rotation into value starts. 

Apodemus

The trouble with exponential growth - in anything - is that it can't go on forever.  All markets and industries ultimately mature, at which point the only way to achieve further exponential growth is through mergers or acquisitions.  Eventually you would get to the point where a "Facebook" has to buy a "Google" this year, before next year buying out the newly combined Amazon/Tesla.  The following year they would "weep for there were no more lands to conquer".   Most likely, long before that the company would bite off more than it could chew and fail - we could call this the RBS/ABN Amro effect.

Another_Saver

Apodemus said:

The trouble with exponential growth - in anything - is that it can't go on forever.  All markets and industries ultimately mature, at which point the only way to achieve further exponential growth is through mergers or acquisitions.  Eventually you would get to the point where a "Facebook" has to buy a "Google" this year, before next year buying out the newly combined Amazon/Tesla.  The following year they would "weep for there were no more lands to conquer".   Most likely, long before that the company would bite off more than it could chew and fail - we could call this the RBS/ABN Amro effect.

It doesn't need to go on forever, but world GDP has been growing slowly and steadily since the dawn of agriculture and civilisation, particularly since the mid 1600s. Anyone who thinks the world has reached peak productivity, I think suffers from a lack of imagination. Over this century I think we can look forward to the advances in goods manufacturing being applied to services and admin (basically modern factories and supply chains are unrecognisable from 50 years ago with modern production methods, shipping containers, globalisation etc but services are still run the same way just on computers), the development of emerging market, decentralisation of activity and wealth perhaps accelerated by the great demographic reversal and the great reset, commercialisation of space coinciding with the inevitable transition to renewable energy sources effectively eliminating scarcity of energy and commodities... However there are great capital outlays and risks ahead from climate change and decarbonisation to the destabilising effects of a perhaps less globalised world, and a world with more medium and great powers rather than one or two dominant superpowers.
But that's academic.

Apodemus

Another_Saver said:

It doesn't need to go on forever, but world GDP has been growing slowly and steadily since the dawn of agriculture and civilisation...

Indeed, but the OP's comment (and my response) was about exponential growth...

Personally, I don't need exponential growth in my investments, my aims are much more modest - underlying portfolio growth that matches inflation, while being able to take income (for either expenditure or reinvestment) of 3% of inflation-adjusted historic portfolio value.  With reasonable expectations, the OP will find a world of investment opportunities available...including many in the UK.

Another_Saver

Apodemus said:

Another_Saver said:

It doesn't need to go on forever, but world GDP has been growing slowly and steadily since the dawn of agriculture and civilisation...

Indeed, but the OP's comment (and my response) was about exponential growth...

Personally, I don't need exponential growth in my investments, my aims are much more modest - underlying portfolio growth that matches inflation, while being able to take income (for either expenditure or reinvestment) of 3% of inflation-adjusted historic portfolio value.  With reasonable expectations, the OP will find a world of investment opportunities available...including many in the UK.

... That is exponential real growth of 3%.

RobHT

Another_Saver said:

My time to shine 😍

But it's late, maybe I'll do a detailed response another time but this looks like another declinist falsely nostalgic domestic pessimist (i.e. stereotypical Brit). If you look through my replies I have some much more detailed previous posts explaining my thoughs on UK plc (and yes, we all know that UK plc is not UK GDP, the FTSE 100 and 250 are very different etc.)

Re: growth ... Dunno what you mean mate. Are you saying you think growth in the UK has stopped but will continue elsewhere? Because there is no evidence to support that opinion and plenty to the contrary. Japan has flatlined for 30 years, China I'm extremely sceptical of whether they can continue (capitalism secondary to national harmony, demographics, dependence on Globalisation, OPEC dependence, fraud and corruption, Australian commodities dependence, limited and worse capital markets access for foreigners, "catching up" growth, middle income trap, credit bubble...). As for the US, our economies and markets are highly correlated, apart from the dot com bubble and the past 5 years.

Why are options relevant?

Dividends aren't useless, dividends are historically where most of your real total return comes from. A higher dividend yield counter intuitively indicates higher growth potential (the marginal utility of retained earnings necessarily tends to zero on aggregate), I think around a 2/3 payout ratio as the UK currently has is ideal. The myth that the UK (namely the FTSE 100) has been "underperforming" for decades is a myth, it's mainly since the referendum, mostly explained by speculation rather than earnings growth and dividend yields. The idea that the UK is permanently continuing to underperform the wider global or us market is baseless. I've debunked it in an earlier post which ill probably edit in a link to later. Right now the UK is the cheapest and highest yielding developed market and I am splurging while it's on sale. There was another thread about high yield defensive sticks you may find interesting in that regard - have you seen the ridiculous yields on BATS and imperial brands?

Don't use HL then?

I have probably already responded in previous to all the points other posters night make disagreeing with me. I have yet to be dissuaded.

But anyway if you don't want to invest in the UK... Just don't?

Good one, my plan is financial freedom.

Before to go for dividents and sit on a chair basically, I need a lot of cash...
Dividents are useless for me, example: 10k investment and 6% dividents, if I invest these 10k in AMD for example, how do you think is gonna finish in few years?  
That's a very simple and reductive example, but I hope you understand that I haven't 1M where to sit on it with dividents.

I need to accumulate at least 250k, for my needs actually 1M, I could be happy with 500k and then think to dividents.

Am I wrong or you are all millionares? Supposing we have the same goals.

RobHT

Another_Saver said:

Apodemus said:

Another_Saver said:

It doesn't need to go on forever, but world GDP has been growing slowly and steadily since the dawn of agriculture and civilisation...

Indeed, but the OP's comment (and my response) was about exponential growth...

Personally, I don't need exponential growth in my investments, my aims are much more modest - underlying portfolio growth that matches inflation, while being able to take income (for either expenditure or reinvestment) of 3% of inflation-adjusted historic portfolio value.  With reasonable expectations, the OP will find a world of investment opportunities available...including many in the UK.

... That is exponential real growth of 3%.

What do you mean? If you are 3% over inflaction, you are growing around 6%, or not?
Not many companies pay 6% dividents, let's start from there...

Another_Saver

RobHT said: 

Another_Saver said:

My time to shine 😍

But it's late, maybe I'll do a detailed response another time but this looks like another declinist falsely nostalgic domestic pessimist (i.e. stereotypical Brit). If you look through my replies I have some much more detailed previous posts explaining my thoughs on UK plc (and yes, we all know that UK plc is not UK GDP, the FTSE 100 and 250 are very different etc.)

Re: growth ... Dunno what you mean mate. Are you saying you think growth in the UK has stopped but will continue elsewhere? Because there is no evidence to support that opinion and plenty to the contrary. Japan has flatlined for 30 years, China I'm extremely sceptical of whether they can continue (capitalism secondary to national harmony, demographics, dependence on Globalisation, OPEC dependence, fraud and corruption, Australian commodities dependence, limited and worse capital markets access for foreigners, "catching up" growth, middle income trap, credit bubble...). As for the US, our economies and markets are highly correlated, apart from the dot com bubble and the past 5 years.

Why are options relevant?

Dividends aren't useless, dividends are historically where most of your real total return comes from. A higher dividend yield counter intuitively indicates higher growth potential (the marginal utility of retained earnings necessarily tends to zero on aggregate), I think around a 2/3 payout ratio as the UK currently has is ideal. The myth that the UK (namely the FTSE 100) has been "underperforming" for decades is a myth, it's mainly since the referendum, mostly explained by speculation rather than earnings growth and dividend yields. The idea that the UK is permanently continuing to underperform the wider global or us market is baseless. I've debunked it in an earlier post which ill probably edit in a link to later. Right now the UK is the cheapest and highest yielding developed market and I am splurging while it's on sale. There was another thread about high yield defensive sticks you may find interesting in that regard - have you seen the ridiculous yields on BATS and imperial brands?

Don't use HL then?

I have probably already responded in previous to all the points other posters night make disagreeing with me. I have yet to be dissuaded.

But anyway if you don't want to invest in the UK... Just don't?

Good one, my plan is financial freedom.

Before to go for dividents and sit on a chair basically, I need a lot of cash...
Dividents are useless for me, example: 10k investment and 6% dividents, if I invest these 10k in AMD for example, how do you think is gonna finish in few years?  
That's a very simple and reductive example, but I hope you understand that I haven't 1M where to sit on it with dividents.

I need to accumulate at least 250k, for my needs actually 1M, I could be happy with 500k and then think to dividents.

Am I wrong or you are all millionares? Supposing we have the same goals.

RobHT said:

Another_Saver said:

My time to shine 😍

But it's late, maybe I'll do a detailed response another time but this looks like another declinist falsely nostalgic domestic pessimist (i.e. stereotypical Brit). If you look through my replies I have some much more detailed previous posts explaining my thoughs on UK plc (and yes, we all know that UK plc is not UK GDP, the FTSE 100 and 250 are very different etc.)

Re: growth ... Dunno what you mean mate. Are you saying you think growth in the UK has stopped but will continue elsewhere? Because there is no evidence to support that opinion and plenty to the contrary. Japan has flatlined for 30 years, China I'm extremely sceptical of whether they can continue (capitalism secondary to national harmony, demographics, dependence on Globalisation, OPEC dependence, fraud and corruption, Australian commodities dependence, limited and worse capital markets access for foreigners, "catching up" growth, middle income trap, credit bubble...). As for the US, our economies and markets are highly correlated, apart from the dot com bubble and the past 5 years.

Why are options relevant?

Dividends aren't useless, dividends are historically where most of your real total return comes from. A higher dividend yield counter intuitively indicates higher growth potential (the marginal utility of retained earnings necessarily tends to zero on aggregate), I think around a 2/3 payout ratio as the UK currently has is ideal. The myth that the UK (namely the FTSE 100) has been "underperforming" for decades is a myth, it's mainly since the referendum, mostly explained by speculation rather than earnings growth and dividend yields. The idea that the UK is permanently continuing to underperform the wider global or us market is baseless. I've debunked it in an earlier post which ill probably edit in a link to later. Right now the UK is the cheapest and highest yielding developed market and I am splurging while it's on sale. There was another thread about high yield defensive sticks you may find interesting in that regard - have you seen the ridiculous yields on BATS and imperial brands?

Don't use HL then?

I have probably already responded in previous to all the points other posters night make disagreeing with me. I have yet to be dissuaded.

But anyway if you don't want to invest in the UK... Just don't?

Good one, my plan is financial freedom.

Before to go for dividents and sit on a chair basically, I need a lot of cash...
Dividents are useless for me, example: 10k investment and 6% dividents, if I invest these 10k in AMD for example, how do you think is gonna finish in few years?  
That's a very simple and reductive example, but I hope you understand that I haven't 1M where to sit on it with dividents.

I need to accumulate at least 250k, for my needs actually 1M, I could be happy with 500k and then think to dividents.

Am I wrong or you are all millionares? Supposing we have the same goals.

We are definitely not all millionaires, I haven't even hit £100k yet and I'll only hit £1m if I work til 58 (it'll probably be 60 by then before we can access our pensions). My view is that UK stocks should do better than global stocks over the foreseeable future because of the significant difference in valuation. But if you're new to investing, general consensus on the forum is to stick with a simple global equity index fund (you could ways up weight the UK in your portfolio)

RobHT said:

Another_Saver said:

Apodemus said:

Another_Saver said:

It doesn't need to go on forever, but world GDP has been growing slowly and steadily since the dawn of agriculture and civilisation...

Indeed, but the OP's comment (and my response) was about exponential growth...

Personally, I don't need exponential growth in my investments, my aims are much more modest - underlying portfolio growth that matches inflation, while being able to take income (for either expenditure or reinvestment) of 3% of inflation-adjusted historic portfolio value.  With reasonable expectations, the OP will find a world of investment opportunities available...including many in the UK.

... That is exponential real growth of 3%.

What do you mean? If you are 3% over inflaction, you are growing around 6%, or not?
Not many companies pay 6% dividents, let's start from there...

If inflation is 3% and your portfolio is growing at 6%, that is real growth of 3%.
Plenty in the UK have yields that high.

Prism

RobHT said:

Another_Saver said:

Apodemus said:

Another_Saver said:

It doesn't need to go on forever, but world GDP has been growing slowly and steadily since the dawn of agriculture and civilisation...

Indeed, but the OP's comment (and my response) was about exponential growth...

Personally, I don't need exponential growth in my investments, my aims are much more modest - underlying portfolio growth that matches inflation, while being able to take income (for either expenditure or reinvestment) of 3% of inflation-adjusted historic portfolio value.  With reasonable expectations, the OP will find a world of investment opportunities available...including many in the UK.

... That is exponential real growth of 3%.

What do you mean? If you are 3% over inflaction, you are growing around 6%, or not?
Not many companies pay 6% dividents, let's start from there...

A company is unlikely to grow much if it doesn't spend at least some of its profits back on the business. What is left might get paid out as dividends.