Shortest time to invest in shares

sevenhills

The article is poorly written, not sure how professional Nutmeg is.

The article talks about "if you had randomly picked one day during this period and chosen to invest just for that one day". It seems to be meaning that if you took the whole global mid/large cap worldwide markets, not investing for one day.

The whole global mid/large cap worldwide market has a 52.3% chance of making gains, which may include trading costs, does include dividends. But my trading cost on my £1,000 worth of shares will be much different from what has been studied.

csgohan4

Don't forget, equally important is the quality of the share. No matter how long you hold, some shares are really poor value, like BT. So if you pick the wrong share, Funds, your not going to get much no matter how long you hold it.

[Deleted User]

ece9600 said:

I have a vague idea that it's not recommended to buy shares if you're planning to hold them for less than 5 years- does that rule still hold good?

My situation is that I have a large-ish lump sum, 75% of which I am going to spend within the next 5 years (on a house renovation and mortgage overpayments). I'll invest the 25% that I'm not planning to spend. However, I'm not sure what to do about the 75%- my head says just to find the best savings rates available (£85k in each) and try not to think about the fact my money is losing value. My heart says I'm mad to do this given that I think the stock market will rise this year and I should find some relatively low risk fund instead.

I just wondered what other people would do. Obviously attitude to risk is personal and I think I tend to be quite happy with a bit of risk.

Unless favourable conditions change drastically, prices are going to be a lot higher in five years. Builders are going through something of a golden time. So I would follow the old proverb and start the house renovation now, do it once and do it right.

Thrugelmir

csgohan4 said:

Don't forget, equally important is the quality of the share. No matter how long you hold, some shares are really poor value, like BT. So if you pick the wrong share, Funds, your not going to get much no matter how long you hold it.

BT hit over £20 in the Dot Com era. 

eskbanker

sevenhills said:

The article is poorly written, not sure how professional Nutmeg is.

The article talks about "if you had randomly picked one day during this period and chosen to invest just for that one day". It seems to be meaning that if you took the whole global mid/large cap worldwide markets, not investing for one day.

Yes, you may have been taking that quote too literally - the base dataset comprises those two indices but it seems clear to me that the basis of the study is a comparison of the outcomes from notionally holding them for periods of varying durations.  They're not literally meaning that you'd need to buy on day one and sell on day two, but are simply comparing starting and finishing values (including dividends) over different terms!

sevenhills said:

The whole global mid/large cap worldwide market has a 52.3% chance of making gains, which may include trading costs, does include dividends.

As above, IMHO they're not literally suggesting buying one day and selling the next so there's no reason for trading costs to be included, and these will obviously vary according to platform, tracker type (assuming not buying all the equities individually!), domicile, etc.

sevenhills said:

But my trading cost on my £1,000 worth of shares will be much different from what has been studied.

The study only appears to consider fundamental investment growth rather than actual trading, as it would be too complex to include trading costs in any realistic way - apart from the above factors, the significance of typically fixed-price trading costs will obviously have a widely variable effect on differing portfolio values.

In terms of relevance to your own chosen portfolio, of course the study will best fit those who choose to invest in those exact indices (or their constituents), so if you're only considering the FTSE (100?) then naturally its characteristics will differ from those of more diverse global holdings.

[Deleted User]

Thrugelmir said:

csgohan4 said:

Don't forget, equally important is the quality of the share. No matter how long you hold, some shares are really poor value, like BT. So if you pick the wrong share, Funds, your not going to get much no matter how long you hold it.

BT hit over £20 in the Dot Com era. 

In the same era, I remember the valuation of Manchester United rocketing to a billion; mainly on the back of hits counted on its website. 
Understanding how the internet would be monetised was much more naive then. 
There is no parallel with today. 
Many are beguiled to believe that "tech" is due a second fall  because valuations don't correspond with profits. But, as in so many walks of life, "profit", with its attendant tax implications, is something rather to be avoided or deferred.

Pretty terrible chart upthread, to be honest. 

eskbanker

ZingPowZing said:
Pretty terrible chart upthread, to be honest.

In what way?

csgohan4

ZingPowZing said:

Thrugelmir said:

csgohan4 said:

Don't forget, equally important is the quality of the share. No matter how long you hold, some shares are really poor value, like BT. So if you pick the wrong share, Funds, your not going to get much no matter how long you hold it.

BT hit over £20 in the Dot Com era. 

In the same era, I remember the valuation of Manchester United rocketing to a billion; mainly on the back of hits counted on its website. 
Understanding how the internet would be monetised was much more naive then. 
There is no parallel with today. 
Many are beguiled to believe that "tech" is due a second fall  because valuations don't correspond with profits. But, as in so many walks of life, "profit", with its attendant tax implications, is something rather to be avoided or deferred.

Pretty terrible chart upthread, to be honest. 

well tesla has had a rise and then a bit of a fall, either through market rotation, but they are not alone in that. 

[Deleted User]

The visual impression from the chart is the same as the one below (from the same article). 
Both pander to the idea that things work out if only you sit still and wait.
But - since the benchmark is the starting line - crossing it after 13 yrs (or whatever) is not a measure of the success of the strategy but - by then - rather its failure.
So the optics are deceiving.

eskbanker

ZingPowZing said:

The visual impression from the chart is the same as the one below (from the same article). 
Both pander to the idea that things work out if only you sit still and wait.
But - since the benchmark is the starting line - crossing it after 13 yrs (or whatever) is not a measure of the success of the strategy but - by then - rather its failure.
So the optics are deceiving.

Yes, the two charts in that piece are mirror images of each other so it's redundant to show both really!

I don't see the chart as promoting or validating any particular investment strategy as such though, it's just saying that for that specific choice of investment (a broad and reasonably representative one, if looking to condense everything down to a single example) over those historical periods, those were the outcomes.  However, the fact that I've already had to point that out several times on this thread does show that it can be misinterpreted....

Or to put it another way, what sort of chart do you think would be a better illustration of the wisdom of investing generally being more positive over longer periods than shorter ones, or do you not believe that to be the case?