What did the smart pension money do when values dropped in March/April?

Thrugelmir

itwasntme001 said:

Thrugelmir said:

itwasntme001 said:

How much of Buffet's performance is attributable to his public market investments and how much from the rest?

Berkshire Hathaway is a multinational industrial conglomerate. Not purely an investment business as often gets portrayed.  

For somebody that has owned a huge slice of Coca Cola for four decades. Hardly can be described as a market timer. 

Buying a huge slice of Coca Cola for the long term is still saying "it will outperform the rest of the market" so you are getting into market timing because at some point it will be a time to sell because at that point it will start to underperform the market.

Do you personally trade in markets or invest in companies?  

itwasntme001

Prism said:

itwasntme001 said:

Prism said:

I don't think applying the term market timing to all active investing and multinational conglomerates is especially helpful - basically anyone that buys anything that isn't the global index. That would also suggest that anyone using something like the MCSI  World index is market timing because they are purposely not selecting the MCSI All Country World index - which itself is not complete since it ignores frontier markets( if you are purposely not investing in Vietnam are you market timing?). There is no default index.

I think it is because of people's perception of the term market timing as being an awful way to invest and how terrible it is for your finances, especially around these forums.

The thing is when you move away from a global allocation, you are overweighting something at the expense of under-weighting something else, so you are making a market timing call whether you like it or not and whether you plan to hold for 1 year or 100 years.

Maybe that is the case. Everyone selects their fund of choice for one reason or another over another fund. The trouble is that is everybody - so everyone is a market timer - which kind of makes the term pointless.

What is a global allocation?

But the thing is it is important to realise it because the longer you invest and further you move away from a global allocation, the more likely you will be underperforming, because that stock or fund manager will stop performing because the style or macro environment would have changed.  And no one can forecast the macro environment well with any consistency.

Global allocation is how the world allocates wealth between public equity, private equity, real estate, bonds etc.  I think there is only a 40% allocation to public equities?

itwasntme001

Thrugelmir said:

itwasntme001 said:

Thrugelmir said:

itwasntme001 said:

How much of Buffet's performance is attributable to his public market investments and how much from the rest?

Berkshire Hathaway is a multinational industrial conglomerate. Not purely an investment business as often gets portrayed.  

For somebody that has owned a huge slice of Coca Cola for four decades. Hardly can be described as a market timer. 

Buying a huge slice of Coca Cola for the long term is still saying "it will outperform the rest of the market" so you are getting into market timing because at some point it will be a time to sell because at that point it will start to underperform the market.

Do you personally trade in markets or invest in companies?  

Invest in funds and single stocks so yep, I am as guilty as anyone for market timing

Prism

itwasntme001 said:

Prism said:

itwasntme001 said:

Prism said:

I don't think applying the term market timing to all active investing and multinational conglomerates is especially helpful - basically anyone that buys anything that isn't the global index. That would also suggest that anyone using something like the MCSI  World index is market timing because they are purposely not selecting the MCSI All Country World index - which itself is not complete since it ignores frontier markets( if you are purposely not investing in Vietnam are you market timing?). There is no default index.

I think it is because of people's perception of the term market timing as being an awful way to invest and how terrible it is for your finances, especially around these forums.

The thing is when you move away from a global allocation, you are overweighting something at the expense of under-weighting something else, so you are making a market timing call whether you like it or not and whether you plan to hold for 1 year or 100 years.

Maybe that is the case. Everyone selects their fund of choice for one reason or another over another fund. The trouble is that is everybody - so everyone is a market timer - which kind of makes the term pointless.

What is a global allocation?

But the thing is it is important to realise it because the longer you invest and further you move away from a global allocation, the more likely you will be underperforming, because that stock or fund manager will stop performing because the style or macro environment would have changed.  And no one can forecast the macro environment well with any consistency.

Global allocation is how the world allocates wealth between public equity, private equity, real estate, bonds etc.  I think there is only a 40% allocation to public equities?

Yes but nobody invests into a global allocation like that because they don't attempt to balance equities vs their property vs their cash and bonds just to meet a current global wealth distribution. We certainly don't typically invest in derivatives although that by a long way is the biggest market. In the same way somebody who doesn't include Vietnam or Romania in their allocation isn't likely doing it for performance reasons.

Call it market timing if you like. I don't think many others would and it probably just confuses the issue. You are right, people make their own choices which sometimes relate to performance but probably more often relate to laziness (stick it in the default pension fund) or being satisfied with a simple option like a multi-asset fund.

By this definition somebody who invests monthly into the FTSE World index without ever changing is a market timer. 

Reg_Smeeton

With the caveat that my portfolio is small and I have a 25 year+ timescale, this was my first real experience of market volatility. It was quite disconcerting to see many of the hard earned (!) gains evaporate before my eyes so quickly, however the blow was cushioned by the bond funds held in the portfolio. I sold some bonds in order to rebalance back to my target allocation around late March/early April and made a tactical decision to use some of my emergency fund to bring forward some planned contributions at the start of the tax year.

There was also a good cashback offer to open an L&G ISA at the time...so have been making additional regular contributions into this.

AnotherJoe

itwasntme001 said:

Deleted_User said:

itwasntme001 said:

Deleted_User said:

No, Buffett is not a “market timer”.  He invests for the long term.  Nor would I bet against him.  He has achieved annual returns almost double of the index over 35 years, gaining thousands more percent over that period.   Of course, he has major advantages vs a retail investor.   10 years isn’t important. His advice and strategy have been consistent. 

To be a good investor, you need to be a good market timer.  Buffet has obviously done well for a long time.  It remains to be seen whether Berkshire will continue to.

He doesn't just invest in public equities where information is generally widely available (and therefore market timing becomes more important).  He also invests in private investments where he has an edge.

Market timers are bad at investing. Buffett is the exact opposite of a market timer. If you want to make up a new term - fine, but don’t use the ones which already exist and are well defined. 

Then you need to broaden your mind a bit more.  When people hear of market timing they automatically think of day traders or technical analysis or buying when a new trend is formed etc.

Why can't that definition be broadened to stock pickers who are buying a portfolio of stocks and who are looking to make a profit and will eventually have to sell - that is market timing.

Because it's not a useful definition.