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How are we doing?

Stocks and Shares ISA , Choosing funds for ISA's, risk factors for funds etc
Investment strategy discussions not dealt with elsewhere.
AleisterCrowley
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Re: How are we doing?

#138144

Postby AleisterCrowley » May 10th, 2018, 6:52 pm

A high market is a prerequisite for a massive crash. :D
Things are looking too good at the moment, so I may move from 25℅ cash to 50℅
And probably miss a boom..

moorfield
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Re: How are we doing?

#138157

Postby moorfield » May 10th, 2018, 8:08 pm

FredBloggs wrote:I 100% guarantee a huge crash is coming. I defy anyone to contradict that, it is a fact. But presently the doom mongers are looking like they predicted 10 out of the last 3 crashes.


So put your money where your mouth is and short spread bet the FTSE or S&P. Even a conservative level of gearing (say 2x) should be enough to test your conviction there.

swill453
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Re: How are we doing?

#138158

Postby swill453 » May 10th, 2018, 8:11 pm

moorfield wrote:So put your money where your mouth is and short spread bet the FTSE or S&P. Even a conservative level of gearing (say 2x) should be enough to test your conviction there.

Who's going to take the bet "there will be a huge crash between now and the end of eternity"?

Scott.

tjh290633
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Re: How are we doing?

#138161

Postby tjh290633 » May 10th, 2018, 8:28 pm

As everyone says, a crash is inevitable sometime. However, there may just be a number of corrections along the way to an ever higher summit.

As you will all be aware, I prefer to invest to obtain a stream of dividend income, rather than going purely for capital gains. Therefore for me a crash involves a major fall in income, which is likely to be accompanied by a major fall in capital values, but the converse is not necessarily true. At the present time, dividends are growing, so if capital values are to fall, then some other influence must come into play. That could be politics in some form, such as taxes or regulators. Perhaps interest rates or inflation.

What might precipitate a major fall in the markets? Do previous retreats of the markets tell us anything? My feeling is that the oil prices may be significant, as in 1974. Armed conflict could come into play, with Iran and it's client states a constant threat.

Happy forecasting.

TJH

OhNoNotimAgain
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Re: How are we doing?

#138170

Postby OhNoNotimAgain » May 10th, 2018, 8:54 pm

This is the sort of fear mongering that keeps investors away from equities and makes them cheap relative to other asset classes.

Short term volatility is what you have to endure to achive long term capital growth.

AleisterCrowley
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Re: How are we doing?

#138181

Postby AleisterCrowley » May 10th, 2018, 9:30 pm

if the FTSE falls by 50% and thus yields 8% dividends, how long do we think that crash will last? Not very long is my take. I believe this provides pretty solid support at current levels
The dividends could fall as well.. you could end up with half the capital with the same yield and a 50% drop in income!
OK, not likely, but I seriously do think some things look a bit overvalued at the moment. Trouble is i can never decide from day to day which particular shares are the 'worst'
I may well do a quick screen on P/E , div cover, whatever and trim back some of the more risky ones.
I'm also overweight in oilies at the moment (RDSB/BP) - dont know which way that's going...

richfool
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Re: How are we doing?

#138182

Postby richfool » May 10th, 2018, 9:32 pm

tjh290633 wrote:As you will all be aware, I prefer to invest to obtain a stream of dividend income, rather than going purely for capital gains. Therefore for me a crash involves a major fall in income, which is likely to be accompanied by a major fall in capital values, but the converse is not necessarily true.

..... But surely a crash wouldn't mean a fall in income. For someone already invested, dividends would continue to be paid as usual.

Yes, capital values would fall, but it shouldn't follow that dividends are cut, (unless any particular company was to cut its dividends for some other particular reason). That surely is one of the advantages of investing for dividend income.

colin
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Re: How are we doing?

#138196

Postby colin » May 10th, 2018, 10:20 pm

But surely a crash wouldn't mean a fall in income

might do, in 2008 FTSE 100 fell 30% , worst year ever, dividends did not fall till 2009 then by about 10% and by about 15% on 2007/8 payouts in 2010.
But if you had specifically targeted banks for their high yield, well...

tjh290633
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Re: How are we doing?

#138201

Postby tjh290633 » May 10th, 2018, 10:42 pm

richfool wrote:
tjh290633 wrote:As you will all be aware, I prefer to invest to obtain a stream of dividend income, rather than going purely for capital gains. Therefore for me a crash involves a major fall in income, which is likely to be accompanied by a major fall in capital values, but the converse is not necessarily true.

..... But surely a crash wouldn't mean a fall in income. For someone already invested, dividends would continue to be paid as usual.

Yes, capital values would fall, but it shouldn't follow that dividends are cut, (unless any particular company was to cut its dividends for some other particular reason). That surely is one of the advantages of investing for dividend income.

What I am saying is that a crash for me is if the income falls, not if the capital value falls and the income stays the same.

TJH

Bubblesofearth
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Re: How are we doing?

#138232

Postby Bubblesofearth » May 11th, 2018, 7:34 am

tjh290633 wrote:
What might precipitate a major fall in the markets?

TJH


Expectations of recession.

Quint
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Re: How are we doing?

#138254

Postby Quint » May 11th, 2018, 9:28 am

FredBloggs wrote:It seems the "we're all doomed" brigade are wrong again as the UK market is back up towards all time highs. How are we all doing?

This week my portfolio has exceeded its all time high valuation by around 3%. Thanks mainly to PFC and HUR. Fundsmith has perked up again after a couple of months comparatively in the doldrums. Chelverton Growth simply keeps ticking upwards. I have sold out of a small gold position as it has been pretty much a dead loss. I should have clicked the take profits button on Card Factory a couple of weeks ago and didn't. I won't miss an opportunity again on CARD should it present itself. So far, so good for 2018.


All my portfolio's (2 x ISA and 2 x SIPP) are doing well, as you say Fundsmith has bounced back, interestingly my other large holding in Lindsell Train Global equity barely fell and has pulled ahead of Fundsmith. Watching these two grow is a bit like the tortoise and the hare, with the tortoise in front at the moment.

Scottish mortgage is performing strongly as well as my smaller companies holdings Henderson smaller companies trust and Marlborough micro cap growth fund.

Wmnr
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Re: How are we doing?

#138281

Postby Wmnr » May 11th, 2018, 11:26 am

Nobody has mentioned sterling. The weaker it is the higher the FTSE goes. I wouldn't be surprised if the FTSE hits 8000 before this Brexit malarky is over.

BrummieDave
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Re: How are we doing?

#138287

Postby BrummieDave » May 11th, 2018, 11:41 am

Fred has beaten me to it, as I have been thinking for a few weeks now about raising the question about when do the 'sitting on cash' cohort conclude they've missed a trick in being out of the market. Posters on here and numerous fund managers in the press have sometimes rather smugly stated how high a proportion of cash they are sitting awaiting the impending crash at which point they'll enter the market. Inevitably, at some stage, they will of course be correct by their own definition. However there must also be a point at which had they stayed in the market they'd have been better off regardless. My math isn't up to working out when this would be based on time periods of recent mini bull runs within the overall multi-year bull run, and it depends on many other elements too like the % drop if/when we crash, if you re-enter at the best point, how quickly the market recovers etc.

I am reminded of a very good video I watched that showed how after a certain time in the market, and a certain regular investment amount, the return generated by accumulated dividends outstrips the return generated by the actual invested sum. It blew my mind. You miss out on all that if you're out of the market of course, and without opening up the 'Terry Smith said...' debate again here, at some point the power of compounding negates any benefit of timing the market anyway.

Good post Fred!

AleisterCrowley
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Re: How are we doing?

#138309

Postby AleisterCrowley » May 11th, 2018, 12:43 pm

I'm sitting on 25% cash in my ISA (un-smugly)
I don't 'predict' a crash in the near future (<1yr) but I can't find much I want to invest in at the moment. It's not like I'm sitting on the sidelines waiting and hoping for a crash - if one occurred my 75% in the market would take a hit that would outweigh any benefits

The obvious question is- "If you wouldn't invest in something right now, why are you prepared to hold it rather than cashing in ?"

No idea...

Itsallaguess
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Re: How are we doing?

#138325

Postby Itsallaguess » May 11th, 2018, 1:16 pm

BrummieDave wrote:
I have been thinking for a few weeks now about raising the question about when do the 'sitting on cash' cohort conclude they've missed a trick in being out of the market.

Posters on here and numerous fund managers in the press have sometimes rather smugly stated how high a proportion of cash they are sitting awaiting the impending crash at which point they'll enter the market. Inevitably, at some stage, they will of course be correct by their own definition.

However there must also be a point at which had they stayed in the market they'd have been better off regardless. My math isn't up to working out when this would be based on time periods of recent mini bull runs within the overall multi-year bull run, and it depends on many other elements too like the % drop if/when we crash, if you re-enter at the best point, how quickly the market recovers etc.

I am reminded of a very good video I watched that showed how after a certain time in the market, and a certain regular investment amount, the return generated by accumulated dividends outstrips the return generated by the actual invested sum. It blew my mind.

You miss out on all that if you're out of the market of course, and without opening up the 'Terry Smith said...' debate again here, at some point the power of compounding negates any benefit of timing the market anyway.


Surely anyone has 'only missed a trick' if they decided to cash in all their chips and sit in a 100% cash position over the period that you're referring to?

Your reference to 'smugness' is uncalled for, by the way, and is likely to put people off discussing their views and positions, which is something I'm sure you'd prefer to avoid on a lively discussions board like this, where people's honest appraisals are often highly valued, no matter how much you may disagree with them....

I've had a cash amount roughly equivalent to around 14% of overall investible capital for some time now, but I'm at the stage of my life when I most definitely 'know myself' in terms of risk-tolerance, and you might be surprised to hear that it's only being in that '14% cash' position that's actually allowing me to stay fully invested with the other 86%, without any sleepless nights whatsoever.

There's no way that I'd go 100% cash, and there's no way I can foresee myself going 100% invested. Am I not allowed to reach a position between the two that I'm personally comfortable with, without being called out as someone who 'might be better off' if I'd only allow myself to be 100% invested?

Whilst I agree that the 14% cash might not be exposed to any subsequent market rise, the other 86% will be, and I'm actually quite content with that. On a personal basis, I'm covering both angles with my 14%/86% position, and the looney-tunes 'devil and angel' on each shoulder have little to bother me about on a day-to-day basis.

This is very important to me, and allowing myself to discover my risk-tolerance as my portfolio has grown is also very important to me. It's not been an easy journey to get here, and I'm sure it's the same for other investors too, so for someone to dismiss being in cash as 'missing a trick', then to me that suggests that they might be looking for the wrong trick....

Investing doesn't have to be a one-way-bet, and finding the right personal balance that enables us all to achieve the best outcome that we are comfortable with in the long term, is much more important to me personally than perhaps losing a few percent on my cash, or near-cash balance....

Cheers,

Itsallaguess

BrummieDave
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Re: How are we doing?

#138330

Postby BrummieDave » May 11th, 2018, 1:40 pm

I don't really refer to 'smugness' as you suggest, I said "sometimes rather smugly" which is quite different in tone IMHO and was more aimed at the 'informed' fund managers who inhabit the Sunday newspapers, and my post wasn't suggesting they are wrong or indeed right. I was (at least) trying to give a balanced view, asking at what point does one approach become 'more right' than the other, and the tone was meant to be light-hearted which I thought Fred was also being in his OP.

I have no desire to drive people away from discussing their views openly, but reserve the right for me to do so too.

Perhaps a smiling face will help... :)

BTW I too hold cash!

Itsallaguess
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Re: How are we doing?

#138338

Postby Itsallaguess » May 11th, 2018, 1:54 pm

BrummieDave wrote:
I was (at least) trying to give a balanced view, asking at what point does one approach become 'more right' than the other.


I think that's part of the problem though; that we often try to decide that something might be 'right' or 'wrong' by looking at a perceived final 'outcome' that's purely 'technical' in terms of profit or loss, but which loses sight of the fact that, for me at least, the process is far less to do with 'technical rightness' (profit-or-loss-outcome), and very much more to do with carrying a long-term, ongoing risk-tolerance at a level that is sustainable for the very long-term.

For me, being in 14% cash isn't really about the cash, it's all about being 'able' to continue with the other 86% 'fully invested' in a way that gives me very little day-to-day concern, and allows me to continue reaping the long-term market-rewards on the vast bulk of my investible capital, whilst allowing me to sleep at night and also provide some ammo for some of the sporadic market-opportunities that arise from time to time. Being in that position is very important to me....

I note your point regarding the use of the word 'smug', and perhaps if the sentence involved hadn't started with 'Posters on here' then it would have made the point you were trying to make in a less confrontational manner. If I hadn't already posted in the past regarding my approach to the portfolio cash-position situation, then it would certainly make me think twice about doing so if I thought people might really be thinking that it would be 'smug' to do so...

Cheers,

Itsallaguess

BrummieDave
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Re: How are we doing?

#138340

Postby BrummieDave » May 11th, 2018, 2:01 pm

And if I thought people would tell me what words it's not appropriate to use at the beginning of a sentence I'd think twice about posting too.

Like Ian Pickering said on another thread yesterday, this isn't school.

I'm at 11% cash btw :D

Itsallaguess
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Re: How are we doing?

#138342

Postby Itsallaguess » May 11th, 2018, 2:11 pm

BrummieDave wrote:
And if I thought people would tell me what words it's not appropriate to use at the beginning of a sentence I'd think twice about posting too.


Please - I didn't say that it's not appropriate to use them - I was simply trying to suggest that starting a sentence with 'Posters on here', that then referred to people 'smugly' stating things, is likely to stop people wanting to 'state things' in the future, which isn't likely to lead to balanced and informed views being expressed.

Cheers,

Itsallaguess

Steveam
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Re: How are we doing?

#138379

Postby Steveam » May 11th, 2018, 3:54 pm

I keep about 3 year’s expenditure as a cash buffer made up of cash or cash equivalents such a premium bonds and index linked certificates. This is a relatively small proportion of the portfolio but includes my emergency fund. My aim here is to never be a forced seller. We’re dividend income to drop substantially id still be able to carry on my (rather extravagant) lifestyle for 4 or 5 years without tremendous stress. (I live entirely off my investments and do not have a fall back income such as a pension, other than the availability of the state pension should I decide to claim it).

Best wishes,

Steve


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