Funds vs Individual shares

lozzy1965

Hmmm, I guess in the same way one 'trusts' a fund to invest sensibly or as stated, I trust to writers of the articles I read to have done the research for me.  There's a certain amount of experience or maybe gut feeling  as well.  I probably spend an hour a day - every day - looking at trends, past performance, reading articles.  That is not for everyone, but it interests me.  I may have more time to do it when I am not working, or may have more interesting things to do when work isn't getting in the way!
It doesn't always work but you just have to be right 51% of the time.

Thrugelmir

lozzy1965 said:

Hmmm, I guess in the same way one 'trusts' a fund to invest sensibly or as stated, I trust to writers of the articles I read to have done the research for me.  There's a certain amount of experience or maybe gut feeling  as well.  I probably spend an hour a day - every day - looking at trends, past performance, reading articles.  That is not for everyone, but it interests me.  I may have more time to do it when I am not working, or may have more interesting things to do when work isn't getting in the way!
It doesn't always work but you just have to be right 51% of the time.

Do you use your "lifetime experiences" in deciding which companies to invest in? 

Having an insight over many years does indeed lead to one having a gut instinct. 

My 10 key rules are:-

1. “Successful investing is only common sense. Each system for investing will eventually become obsolete.”

2. Be mindful that companies are about people, not assets

3. Remember, balance sheet strength is critical
4. Understand what you’re buying
5. Be wary of over-ambition
6. Think long-term
7. Benchmarks are just measuring devices
8. Take advantage of irrational behaviour
9. Do your own research
10. Make sure that any competitive advantage is sustainable.

 

lozzy1965

Thrugelmir said:

lozzy1965 said:

Hmmm, I guess in the same way one 'trusts' a fund to invest sensibly or as stated, I trust to writers of the articles I read to have done the research for me.  There's a certain amount of experience or maybe gut feeling  as well.  I probably spend an hour a day - every day - looking at trends, past performance, reading articles.  That is not for everyone, but it interests me.  I may have more time to do it when I am not working, or may have more interesting things to do when work isn't getting in the way!
It doesn't always work but you just have to be right 51% of the time.

Do you use your "lifetime experiences" in deciding which companies to invest in? 

Having an insight over many years does indeed lead to one having a gut instinct. 

My 10 key rules are:-

1. “Successful investing is only common sense. Each system for investing will eventually become obsolete.”

2. Be mindful that companies are about people, not assets

3. Remember, balance sheet strength is critical
4. Understand what you’re buying
5. Be wary of over-ambition
6. Think long-term
7. Benchmarks are just measuring devices
8. Take advantage of irrational behaviour
9. Do your own research
10. Make sure that any competitive advantage is sustainable.

 

Yes, my lifetime experiences are part of it.  As you know, but for others reading this thread, no one can 100% guaranteed pick a winner.

Interesting to know how you would measure/research 2 and 10 particularly.  9 is always a bit of a bugbear of mine.  DYOR is so easy to say, but as I posted previously, a guy I know trained years ago to analyse company accounts in order to become a trader.  He isn't a trader yet!  Company accounts are only as good as the auditors that audit them, and the rules in place that say what can and can't be written, the rules in the country in which they operate.   Short of working in the company, or physically walking round it enough to get a real feel for its worth then DYOR is very subjective.

One of mine is:  Past performance is no guarantee of future performance, but it's the only 100% accurate measure you have.

adindas

Thrugelmir said:

adindas said:

Nowadays there are a lot of real time news, 

Retail investors are behind the curve. RNS are released to subscribers first with general access blocked for an hour for example. The market will have traded the good or bad news before you've had a chance. A few % here and there adds up over time. 

I agree with you in majority of cases. But the information is not coming only from paid RNS. Some have different business models relying on the advertisement rather than subscribers. Another point here is that some stock news, company news are available on social medias even before some of the institutional investors are aware of it. Example some retailers might watch and get information from social media of what "Nancy Pelosi (and her husband)" are investing, the news are not publicly available in public as the official news content providers are afraid of experiencing a witch hunt or to get sued. Also, the comparison here is that thousands of retail investors eyes vs only two eyes (from one institutional investor managing the fund). But it also needs skills to navigate the fake or real news. It is working the same way on how MSE members are finding the best newly launched best RSA, Instants saving account, current account switching game, Creditcards BT/MTgame, or match betting arbitrage. You could often see MSE member are beating the institution such as MSE itself, or other comparison websites.

Thrugelmir said:

Limit orders don't work as people expect them too. Needs somebody else on the other side of the trade. Prices can and do fall beneath set stop loss limits.

Well, that occasion is rare. How many retailer traders need a limit order execution in a matter of milli second? You might need that if you are doing a robo trading and you trust that robot will make a better decision than you.

GeoffTF

Thrugelmir said:

A well balanced portfolio should be able to perform in all weathers.

The problem is a small percentage of shares is responsible for most of the stock market return. If you do not get your fair share of the rare big winners, you will under-perform the market. It would appear that the OP has been invested in the UK. If he has beaten a global tracker he has been doing exceptionally well. If he had invested overseas he would have faced higher costs. Claiming back withholding tax from umpteen countries would also have been an issue.

coastline

Nothing wrong with stock picking but it's not for everyone. Could say Fundsmith equity are stock pickers as it only contains 30 odd companies.? They're making a good return. Timing is key as they don't all go up and down together .DIY investors can do all the research in the world and still get it wrong.
Not surprised many just buy a global tracker looking at 2000-2021 .Index up 322%.

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There's always some outperforming..

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Just 35% outperforming this year.

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Note in the year 2000 the top companies are different to 2021.

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On here stretching back to 1965 we have a similar situation as today. From that year until 1982 the markets had a bad run and you can see the top companies were hit just as bad. Another rally in the dotcom 2000 era and then lower until 2015. Will those top five in 2021 be the growth story for the next few years.?

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I'm in and out all the time with ETF's, IT's and stocks but much of it is based on timing using charts and a bit of TA. Again a subject which get's the thumbs down by most. Not to worry my returns are much better than using the FA's I had years ago. 

Audaxer

lozzy1965 said:

Based on what I have read previously on this forum, here's a topic to get the emotions flowing!

I invest in individual shares.  I am nearing retirement and wonder if I should lower my risk by moving to funds.  The lowest fees I can find are 0.15% per annum.  If I have a pot of £500K when I retire I will be quite well diversified in individual shares (not the 1000's of different shares worldwide that get mentioned as a 'benefit' of holding a fund - but a diversification I am happy with).

To switch it all into a fund at 0.15% would cost me £750 per year.  If a platform charged that for me to belong to it, that would be considered extremely expensive,  Why should I switch to funds?

Discuss...

Interested to know what reward you get from taking more risk by investing in individual shares? For example how has your portfolio performed, net of all costs, over the past 5 and 10 years, compared to that of a global tracker?

Thrugelmir

GeoffTF said:

Thrugelmir said:

A well balanced portfolio should be able to perform in all weathers.

The problem is a small percentage of shares is responsible for most of the stock market return. If you do not get your fair share of the rare big winners, you will under-perform the market.

 “Successful investing is only common sense. Each system for investing will eventually become obsolete.”

Thrugelmir

Audaxer said:

lozzy1965 said:

Based on what I have read previously on this forum, here's a topic to get the emotions flowing!

I invest in individual shares.  I am nearing retirement and wonder if I should lower my risk by moving to funds.  The lowest fees I can find are 0.15% per annum.  If I have a pot of £500K when I retire I will be quite well diversified in individual shares (not the 1000's of different shares worldwide that get mentioned as a 'benefit' of holding a fund - but a diversification I am happy with).

To switch it all into a fund at 0.15% would cost me £750 per year.  If a platform charged that for me to belong to it, that would be considered extremely expensive,  Why should I switch to funds?

Discuss...

Interested to know what reward you get from taking more risk by investing in individual shares? For example how has your portfolio performed, net of all costs, over the past 5 and 10 years, compared to that of a global tracker?

Ten years ago no one was discussing global trackers. Exxon was never a high growth stock. Despite being the largest capitalised company in the world at the time. 

Five years ago. Vanguard 60/40 was still the in fad. 

In 5 years time I suspect we'll be back here discussing another as yet undetermined trade. 

GeoffTF

Thrugelmir said:

Audaxer said:

lozzy1965 said:

Based on what I have read previously on this forum, here's a topic to get the emotions flowing!

I invest in individual shares.  I am nearing retirement and wonder if I should lower my risk by moving to funds.  The lowest fees I can find are 0.15% per annum.  If I have a pot of £500K when I retire I will be quite well diversified in individual shares (not the 1000's of different shares worldwide that get mentioned as a 'benefit' of holding a fund - but a diversification I am happy with).

To switch it all into a fund at 0.15% would cost me £750 per year.  If a platform charged that for me to belong to it, that would be considered extremely expensive,  Why should I switch to funds?

Discuss...

Interested to know what reward you get from taking more risk by investing in individual shares? For example how has your portfolio performed, net of all costs, over the past 5 and 10 years, compared to that of a global tracker?

Ten years ago no one was discussing global trackers. Exxon was never a high growth stock. Despite being the largest capitalised company in the world at the time. 

Five years ago. Vanguard 60/40 was still the in fad. 

In 5 years time I suspect we'll be back here discussing another as yet undetermined trade. 

No, a global tracker has long been and will always be the benchmark for investment. The theoretical framework dates back to CAPM in the early 1960s:

https://en.wikipedia.org/wiki/Capital_asset_pricing_model