Equities Strategy

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  • TBC15
    TBC15 Posts: 1,452 Forumite
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    ChesterDog wrote: »
    It wasn't you I meant, Alex.

    Our posts crossed.

    Genuinely interested to see results of the different strategies, even if short term.

    You need to look here, The GBIO http://forums.moneysavingexpert.com/showthread.php?t=5719527
    Do feel free to join.
  • ChesterDog
    ChesterDog Posts: 1,112 Forumite
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    TBC15 wrote: »
    You need to look here, The GBIO http://forums.moneysavingexpert.com/showthread.php?t=5719527
    Do feel free to join.

    Thank, I know about that.

    I was particularly looking for Inflationbuster's self-picked equity performance, to compare both with my own funds' performance and that of the chart which was linked.
    I am one of the Dogs of the Index.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    edited 11 March 2018 at 1:23PM
    League tables of funds are worse than useless because they don't tell you about future performance
    and it's usually the inexperienced or unsophisticated investor who thinks of investing as a horse race. The only things you need to achieve are your own financial goals, you aren't competing against the people on this forum or Mr. Woodford. If a 2% annual return will meet your needs then you can get that with very little risk and you'd be foolish to have a very risky portfolio.

    Personally I had a 60/40 equity to bond tracker fund portfolio for 25 years (its now closer to 70/30) and that averaged 8.5% annual return.......people should be making their plans based on historical market returns of 5% to 6%, not on the recent performance of equities or a "top 25" list.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    edited 11 March 2018 at 3:33PM
    ChesterDog wrote: »
    I really only started investing post 2008, and then took a while to establish how I would go about it.

    So I'm not suggesting those figures maintain through thick and thin, simply that investing in funds does not mean you have to accept poor returns.

    Percentage returns for previous years (heading backwards from 2017)...

    20, 34, 9, 21, 22, 3, -3, 3

    I don't change things about very much (just peripheral stuff) and Trustnet is currently showing annualised returns of: 1 year 20.9, 3 years 20.9, 5 years 21.2.

    It's all equities (in OEICs and ITs). I hold quite a bit of cash, plus p2p, shared BTL and others to spread the risk.

    Let's revisit this topic. When you've some more decades of investing experience under your belt. As you've yet to encounter an extended period of market underperformance. With Central Banks influencing markets, the past decade has been somewhat unusal to say the least. As hasn't required any great skill to make money if you've the capital to invest. You'll find that many investors are akin to buffalo. Safety in numbers , stick with the herd.

    Stock markets just happen to be the current fad. Like everything in life. Markets are cyclical. When confidence evaporates. So will prices of many stocks. As there's few gems out there. There's an lot of underperforming dross. That is simply being dragged higher by the forced buying of index funds. Creating a self perpetuating cycle that some investors have mistaken for the holy grail.
  • ChesterDog
    ChesterDog Posts: 1,112 Forumite
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    Oh, I am certainly not in a 'stocks (or funds) are a holy grail' camp.

    Witness how many non-equity investments I also hold.

    I hold over ten years worth of outgoings in cash for that very reason.

    Indeed, looking at longterm historical returns on equities, I felt that lots of research and some reasonably favourable winds might produce an annualised double-digit return above inflation.

    And I have been through the financial crisis with investments, but they were managed then by a third party.

    So I have been around the block quite a bit.

    Again, I wasn't making out that good returns are easy or reliable, simply that the statement that funds deliver paltry returns (and individual equities will trounce them) is easily countered.
    I am one of the Dogs of the Index.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    ChesterDog wrote: »
    Witness how many non-equity investments I also hold.

    I hold over ten years worth of outgoings in cash for that very reason.

    I agree that people should be diversified; cash, bonds and real estate are complimentary to equities. I bought an income property 20 years ago and it now produces half of my retirement income. Having that takes a lot of pressure of my equity and bond portfolio....well in reality the pressure is off me as I don't fret about the markets.
    Indeed, looking at longterm historical returns on equities, I felt that lots of research and some reasonably favourable winds might produce an annualised double-digit return above inflation.

    That's being far too optimistic, you'd be better to plan on 6% return after inflation.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    edited 11 March 2018 at 5:48PM
    bostonerimus wrote: »
    That's being far too optimistic, you'd be better to plan on 6% return after inflation.

    With income reinvested the past century is only an average of 5%.

    Only around 800 out of the 25,000 US listed stocks. Have actually beaten inflation in the past 30 years. What people assume to be the case often isn't. Likewise bonds have been in a 30 year bull market. As interest rates have fallen. Complacency is an investors worst enemy.

    More interestingly stock prices isn't reflecting actual company financial performance. How much of the rise in the major tracker funds is down to the holdings in the FAANG stocks?
  • Prism
    Prism Posts: 3,797 Forumite
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    ChesterDog wrote: »
    Indeed, looking at longterm historical returns on equities, I felt that lots of research and some reasonably favourable winds might produce an annualised double-digit return above inflation.
    .

    For what its worth, the S&P has returned 5.96% above inflation and the Nikkei 5.84% above inflation over the last 50 years. These both assume dividends are reinvested.
    Over the last 20 years its only 4.4% and 1.7%. Now you could do better than that probably by investing in smaller companies but pushing it up to double digits might be asking a bit much.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    Prism wrote: »
    the Nikkei 5.84% above inflation over the last 50 years.

    What's the Nikkei over the past 30 years?
  • ChesterDog
    ChesterDog Posts: 1,112 Forumite
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    I agree, but I did say "with reasonably favourable winds", and I am seeking above-market returns.

    Which is not to say that I expect to achieve them consitently or over a long period, simply that I am seeking them.

    Edit: although that's heading a bit off-topic as far as the point I was making goes.
    I am one of the Dogs of the Index.
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