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Newbie Panic Attack
geoffrey Walton
Posted: 11 February 2018 16:03:20(UTC)
#43

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A lot must depend on why people are "investing" It must be quite hard if it is for a pension.
I guess TP's method is the best if you are just making money, and more money.

For myself I wrote a while ago

"My aim is being achieved - which is to grow a few percent after inflation and costs, so as to make up what I am losing on my cash. So overall I am happy.

Witan
Finsbury Growth and Income
RCP
Rathbone Global
Linsdell Train Global"

That still stands, but I was still not excited this last few days
2 users thanked geoffrey Walton for this post.
john brace on 11/02/2018(UTC), gillyann on 11/02/2018(UTC)
King Lodos
Posted: 11 February 2018 16:23:26(UTC)
#44

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I still say high dividend yields have made unprofitable companies seem more attractive than they are.

You might only be getting 2.5% with Unilever or Diageo, but 2.5% of an investment that's 2,500% up is a lot more than a 6% yield on something that's not gone anywhere

https://i.imgur.com/myJf6WK.png
3 users thanked King Lodos for this post.
kWIKSAVE on 11/02/2018(UTC), Keith Cobby on 11/02/2018(UTC), Sara G on 11/02/2018(UTC)
Alan Selwood
Posted: 11 February 2018 16:57:27(UTC)
#45

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To those that don't like volatility :

Remember the Duke of York :
("and when they were up they were up, and when they were down, they were down, and when they were only halfway up they were neither up not down").

Much like a graph of the stock market!

Very difficult to tell where on the up/down scale you are at any moment, because the bottom and top points aren't fixed, so you can't measure the distance up or down from the peak and trough.

Usually, an extreme drop is followed by an enormous bounce (June 1972 to Dec 1974 down into the abyss, followed by doubling the next year, from 6th Jan 1975 onwards) and a stratospheric rise is followed by a damp squib plummet (1999 to 2000; 1987 Jan to July up, stagger in August to Sept, recovery, then plummet again in October; or recent Bitcoin prices).

The stock market is not unlike a trampoline:
Generally, the greater the rise, the greater the fall back, and the worse the fall, the greater the subsequent rise, all other things being equal.

For those like General Zod, try to rationalise what you are doing and why.

Things like:
How long do you intend to invest? If for 20-30 years, what looks like a big drop becomes (relatively) a tiny dent on the graph of 30 years. Equally, a big surge upwards will doubtless be scarcely more visible than an ant's back seen from 500 metres/yards on a graph of 30 years.
How much risk do you need to take? If you are like the heavily-indebted young lady who goes into the casino and puts her last £50 on a single number on the roulette wheel, only to lose that as well, it's clear that it was a do-or-die situation (definitely lose everything if you don't gamble, risk losing everything if you do, but with a faint chance that the problem would be solved). If you could survive without high-stakes odds, don't place high-stakes bets.
Are there lower-risk alternatives? (Not an easy one at the moment).
Suppose all investments fall in value to zero? Very, very unlikely, if you have created a geographical spread of risk, and if everything does fall to zero, that will be the least of your problems.

Everyone changes his investment ethos and story based on events ("Events, dear boy, events!" is what Harold Mcmillan is quoted as saying when he was prime minister and was asked by a journalist what could blow his agenda off the rails). Don't expect posters on here to be 100% consistent, because "circumstances alter cases". It's called 'being flexible'.

Let's hope for a reasonably steady few weeks in the market.

3 users thanked Alan Selwood for this post.
gillyann on 11/02/2018(UTC), Sara G on 11/02/2018(UTC), Cameron Jake on 20/02/2018(UTC)
Keith Cobby
Posted: 11 February 2018 17:05:44(UTC)
#46

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Anyone who is worried by the last few days turbulence shouldn't be in the markets.
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dyfed on 11/02/2018(UTC), Tony Peterson on 11/02/2018(UTC)
kWIKSAVE
Posted: 11 February 2018 17:19:16(UTC)
#49

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What causes volatility

Events Dear Boy, Events such as Profit Warnings contrasted with Earnings Expectations Exceeded.

Snakes & Ladders - who remembers playing that ?

A few weeks ago I sold a few holdings to create losses to be rolled forward to next tax year when I will be selling investments that came to me from a trust some months ago with "rolled over" trust gains. Purely to save Trust CGT but also to curtail stock market exposure.

The holdings sold, mainly FTSE 250 had done poorly, and were re-invested in FT100 companies such as WPP which were also down on their knees but which should recover and meanwhile pay a solid dividend (King Lodos' point).

Let's see what the next ISA season brings with cash on bank account.

Will be stalking National Grid , MicroFocus International , Diageo and Intercontinental Hotels in the interim, even though the latter two are on quite high p/e's.
dyfed
Posted: 11 February 2018 17:32:08(UTC)
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Keith Cobby;56971 wrote:
Anyone who is worried by the last few days turbulence shouldn't be in the markets.


Agreed, but if u r new to any situation/career/enterprise then a bit of hand-holding is fair enough.
2 users thanked dyfed for this post.
Lemanie on 11/02/2018(UTC), Tim D on 12/02/2018(UTC)
Jay Mi
Posted: 11 February 2018 17:35:42(UTC)
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GeneralZod;56934 wrote:

I should be buying into funds when they're down, not up. Hmmm. So why do so many keep buying into Terry Smith's loyally?!


Probably something to do with a ~67% gain over three years as of today on HL.

In another post you said you was up £8000 at the beginning of the year over 3 years, and was now down about half of that in the last few weeks.

You was up about 20%, now you're up around 10%. If you had loyally invested in Fundsmith 3 years ago your 38000 would now be worth £63000.

You seem so proud and condescending on how you market time, yet you clearly cannot tell the difference between Vanguard 20 and Vanguard 80. Van 80 is up 30% in three years (including last weeks drop), also better than you.


If you buy into funds when they are down, you will make much more on the increase if their price recovers back to its previous high. This has happened many times before on previous crashes/corrections/dips/sell offs.

I know i'm a fairly new investor and will get things wrong, but i can see you are not the one I would allow to make investing decisions for me.

Cameron Jake
Posted: 20 February 2018 11:42:05(UTC)
#48

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dyfed;56973 wrote:
Keith Cobby;56971 wrote:
Anyone who is worried by the last few days turbulence shouldn't be in the markets.


Agreed, but if u r new to any situation/career/enterprise then a bit of hand-holding is fair enough.


Ha ha ha ... I may have used a more appropriate riposte, how very aimable of you.



Cameron Jake
Posted: 20 February 2018 11:48:14(UTC)
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jeffian;56919 wrote:
Cameron, 2 stories for you from my own life.

1) In 1972, at age of 21, I received some shares in a family-related business from a Trust. What nobody thought to tell me - and I suppose they thought it didn't matter as shares were riding high and would probably go higher- was that this incurred a charge to Capital Gains Tax. That bill arrived in January 1974................. Anybody who wasn't around in the 1970's cannot begin to imagine how bad things were (a history lesson for Corbinistas, but don't let's go there!). The FTSE hit a low of 163 or thereabouts. The value of the shares I held at that point did not cover the CGT! Only a loan from a friendly bank manager (you won't know what those are either!) got me through, but I didn't sell the shares.

2) My father died on 10 October 1987. On Black Monday 19/10/87 the stockmarket suffered its biggest ever one day fall. By the end of October, UK markets were down around 27%. Luckily, Inheritance Tax rules even then allowed you to replace Probate Values at date of death with actually realisation values, but the estate took a very substantial hit.

Now I won't deny to you that I didn't feel extremely sick at those times but the point is that, viewed with hindsight as a 66yo, they were a blip (albeit quite big ones!) in a lifetime of prolonged growth. I won't bore readers again with the tale of My Old Mum, who only ever bought shares and never sold, but believe me it worked.

As for Panic Attacks, at the end of the day it all comes down to your own character and appetite for risk. If you're going to suffer sleepless nights and worry every time markets fall, the stockmarket may not be the place for you but if you have the stomach for it, let things run for 10, 20, 30 years and today's worries will be forgotten.



Lovely post sir, I came back to read it again.

Still not checked where I am at financially but maybe that is best having read it.

From now on. I will refer to this WISDOM, a true credit to the internet you are mate.


2 users thanked Cameron Jake for this post.
jeffian on 20/02/2018(UTC), dlp6666 on 21/02/2018(UTC)
Tony Peterson
Posted: 20 February 2018 12:21:18(UTC)
#50

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I'm still laughing at that young whippersnapper's claim above that my method is the best if you just want to make money and more money.

Apparently I was under a delusion that this was precisely what the aims of the majority of posters actually were.

On reflection, however, I realise that most of you are public spirited enough to want to make millions for the likes of geniuses such as Woodford, and Smith, and Buffet.

(Incidentally I did read the thread discussing Buffet winning his bet against hedgies. Not surprisingly. However, anyone investing in direct UK equities that can't beat Buffet's seven percent annualised with FTSE 100 companies over the last ten years isn't really trying. ). I would have beaten Buffett by....no mustn't boast.

I do hope the partial recovery has eased Cameron's panic. Once I had built up a stake in a score of big dividend paying companies I relish these occasional panics as an opportunity to use the dividend flow to acquire bigger stakes (presumably from the panicked sellers) in my holdings than would otherwise have been possible.

"For the tide comes and the tide goes and the wind blows."
1 user thanked Tony Peterson for this post.
Sara G on 20/02/2018(UTC)
King Lodos
Posted: 20 February 2018 13:48:28(UTC)
#51

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Tony Peterson;57605 wrote:
I would have beaten Buffett by....no mustn't boast.


Buffett's portfolio is over $600bn – there are only about 10 companies in the world he can meaningfully buy.

He's had half his portfolio in cash and bonds over the past 15 years, as there's so little he can buy .. Top-slicing a position could take Buffett 15 months.

It's like driving an aircraft carrier around a race track .. He was doing 50% annually when he had a normal sized portfolio, and says that's still easy to do with small portfolios
1 user thanked King Lodos for this post.
Keith Cobby on 20/02/2018(UTC)
Tony Peterson
Posted: 20 February 2018 13:57:14(UTC)
#52

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The moral of this metaphor is clear.

Drive your own speedboat and don't pay for a ride on an aircraft carrier.
4 users thanked Tony Peterson for this post.
King Lodos on 20/02/2018(UTC), Captain Slugwash on 20/02/2018(UTC), jeffian on 20/02/2018(UTC), dlp6666 on 21/02/2018(UTC)
King Lodos
Posted: 20 February 2018 14:22:50(UTC)
#53

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I have come round to this.

Apparently DIY investors used to match or slightly beat the market back when individual shares were all that was available; you had to read a newspaper for share prices; and orders had to be phoned in.

These days the average return is apparently 2% .. And I think funds play a large part in that .. You see it here – people bet on managers like they're betting on horses .. And if you don't really know what you're invested in, you're much more likely to misbehave
jvl
Posted: 20 February 2018 17:11:01(UTC)
#54

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"...orders had to be phoned in"?

Phoned? That new fangled device?!

Tony remembers when trades were done the proper way; with orders sent on good old fashioned slates on the back of a trusty horse (no whip spared).

At least with funds I guess there would be more chance of diversification, less chance of losing the lot.
1 user thanked jvl for this post.
King Lodos on 20/02/2018(UTC)
King Lodos
Posted: 20 February 2018 17:20:06(UTC)
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Tony was getting in fist fights and drinking contests with Isaac Newton for South Sea Company share certificates .. You don't get to own half the global economy if you've not been doing this a while.

And certainly, only with individual shares is there the scope to do incredibly risky things – like putting everything in a tech startup you read a nice article about.

But reading about the old 'nifty fifty', most retail investors evidently sought the kind of things Fundsmith and LT go for – safe, stable, cash-generative businesses .. Which is how quite boring companies used to command PE ratios over 50
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