Finance/Investment tips?

RandallFlagg

ToneControl said:

RandallFlagg said:

ToneControl said:

another mate put his £1m pension pot into index trackers last year after retiring, against my advice
He lost £200-£300k, and has now gone back to work

He hadn't lost anything unless he cashed out and crystallised the losses. Which UK based Index fund has dropped 20/30%?

Vanguards VUSA S&P500 is down 7% YTD and VWRL All World ETF is down 9% YTD

it doesn't sound like he had a very well planned retirement or drawdown plan if he panicked, sold and went back to work after a 20% drop. A well set up long term plan will handle such expected and routine drops with ease.

Last week, the S&P500 had gone down 27% since the start of 2022, it's recovered a little, now only 22% down



I think he likes working, and it was a good excuse to return to work

Personally, I think someone like him, with an excellent scientific brain and a £1m pension pot would be better off learning how to actively invest: learning how to read company annual reports, understanding how options and futures work, and investing carefully. Basically investing in a Buffet style

I understand that for most people with average abilities in maths, a passive index-fund approach is a good option, I'd back that up with BTL investments too. However, for someone like him with a STEM degree from a top Uni, I think a hands-on investment style is viable, and could reduce risk

Not an answer is it? Which UK index fund was he invested in? I'm well aware the S&P500 index is down by those amounts, but not the total return with dividends reinvested, or any UK fund tracking it with the benefit of the falling pound vs dollar.

RaymondLin

By the way, one of the points I said is - Diversify.

Don't put all your eggs in 1 basket.

What does that mean?

Don't put all your eggs into 1 stock, don't put all your money into the stock market, don't put all your wealth into crypto, don't put all your money into Gold, don't put all your money into Pokemon cards, don't put all your money into property.

But it doesn't mean you can't have a bit of each.

Diversify, and invest often and regularly. 

Neil

RaymondLin said:

By the way, one of the points I said is - Diversify.

Don't put all your eggs in 1 basket.

What does that mean?

Don't put all your eggs into 1 stock, don't put all your money into the stock market, don't put all your wealth into crypto, don't put all your money into Gold, don't put all your money into Pokemon cards, don't put all your money into property.

But it doesn't mean you can't have a bit of each.

Diversify, and invest often and regularly. 

Is exactly right. Although I am/was an equities/wristwatch investor it is sound advice with the caveat of only invest in what you know.

If going into the market drip feed your investment over time as you can never time the markets successfully and you get the value of pound cost averaging.

I'm a self taught investor (aren't we all?) who was rather disenchanted with what IFA's had to offer. After all who has the most interest in your money?

RaymondLin

Neil said:

RaymondLin said:

By the way, one of the points I said is - Diversify.

Don't put all your eggs in 1 basket.

What does that mean?

Don't put all your eggs into 1 stock, don't put all your money into the stock market, don't put all your wealth into crypto, don't put all your money into Gold, don't put all your money into Pokemon cards, don't put all your money into property.

But it doesn't mean you can't have a bit of each.

Diversify, and invest often and regularly. 

Is exactly right. Although I am/was an equities/wristwatch investor it is sound advice with the caveat of only invest in what you know.

If going into the market drip feed your investment over time as you can never time the markets successfully and you get the value of pound cost averaging.

I'm a self taught investor (aren't we all?) who was rather disenchanted with what IFA's had to offer. After all who has the most interest in your money?

Exactly, if you are into watches and know about watches then invest in watches.  Just like buying stocks, don't invest in companies you don't understand.  It's the same principles really.

I know a bit about Japanese anime figures collecting, it's a very niche thing, some of these appreciate, same as Lego, some of these also appreciates, but you need to do lots of research, know a bit about the audience and the market and know all of it carries an element of risk.  Hence diversify the portfolio. 

ToneControl

RaymondLin said:

Why are you only looking at the last 30 years?  I said historic, like going back to 100 years. Going back to the start.

Don't pick and choose your statistic, don't cherry pick to suit your argument, include ALL of it.  If you pick just the numbers in the 50's, that's quite flat too.  This is why I can't take you seriously.  You pick examples just to suit your argument, whereas I am looking at the whole picture.

This is akin to debate with a flat earther, that their evidence of the earth is flat is because what they see with their eyes everything is flat.  They refuse to look at the bigger picture. 

Stop doing that.

(Well you could if you want, I will continue can't take you seriously because your argument is skewed) 

I thought you were a nice guy, why are you being so stupidly rude in comparing me with a flat earther? Bit of a "being a dick" thing to do I'd say.

I'm not "just looking at the last 30 years"
Even if I were, it would be valid, since people can't postpone their retirement by 30 or 40 years to wait for a new boom in stock prices

I've raised the subject of the Japanese stock market going into reverse for 30 years, and supplied a graph showing this. Too many people naively believe that stock markets always go up on average, I've demonstrated this to be not true

I've discussed the widespread worry that after years of QE interventions, the US stock market could follow the trend seen in Japan, supplying evidence from FT and investopedia, which it seems you must think are tin-foil-hat conspiracy-theorist sites 

If you don't understand this stuff, just say so

ToneControl

RandallFlagg said:

ToneControl said:

https://www.investopedia.com/ask/answers/021015/how-does-quantitative-easing-us-affect-stock-market.asp

 When the Flow Stops

At some point, a QE policy ends. It is uncertain what happens to the stock market for good or ill when the flow of easy money from central bank policy stops.

The Federal Reserve added more than $4 trillion to its balance sheet in the half-decade between 2009 and 2014. Those are huge liabilities for the Fed, and they represent an important value for debt issuers everywhere.

If the Fed lets the bonds mature and does not replace them, it is equally unclear what impact this could have on the bond market.

Companies that stretch their capital into future operations may discover there is not sufficient demand to buy their goods. Some believe the low-interest rate policy of the Federal Reserve after the dot-com crash in the late 1990s helped to inflate the early 21st-century housing bubble in exactly this manner.

It is theoretically possible stock market prices could crash like those housing prices in 2008-09 if the same phenomenon results from QE. 

"uncertain" "if" "unclear" "may" "some believe" "theoretically possible" "could"

Sounds like FUD to me.

Is this a wind up? 
This is a serious and widely-held concern 
QE interventions have created a massive effect

You are just going to ignore this risk, and pretend it doesn't exist?

ToneControl

RandallFlagg said:

ToneControl said:

RandallFlagg said:

ToneControl said:

another mate put his £1m pension pot into index trackers last year after retiring, against my advice
He lost £200-£300k, and has now gone back to work

He hadn't lost anything unless he cashed out and crystallised the losses. Which UK based Index fund has dropped 20/30%?

Vanguards VUSA S&P500 is down 7% YTD and VWRL All World ETF is down 9% YTD

it doesn't sound like he had a very well planned retirement or drawdown plan if he panicked, sold and went back to work after a 20% drop. A well set up long term plan will handle such expected and routine drops with ease.

Last week, the S&P500 had gone down 27% since the start of 2022, it's recovered a little, now only 22% down



I think he likes working, and it was a good excuse to return to work

Personally, I think someone like him, with an excellent scientific brain and a £1m pension pot would be better off learning how to actively invest: learning how to read company annual reports, understanding how options and futures work, and investing carefully. Basically investing in a Buffet style

I understand that for most people with average abilities in maths, a passive index-fund approach is a good option, I'd back that up with BTL investments too. However, for someone like him with a STEM degree from a top Uni, I think a hands-on investment style is viable, and could reduce risk

Not an answer is it? Which UK index fund was he invested in? I'm well aware the S&P500 index is down by those amounts, but not the total return with dividends reinvested, or any UK fund tracking it with the benefit of the falling pound vs dollar.

LOL
Has the SP500 gone down or not?

I have no idea what exact funds he invested in, I felt it would be rude to ask, I'd be sounding like "I told you so" when he's made a massive loss

He hadn't lost anything unless he cashed out and crystallised the losses. 

Really? Oh yes, I remember - stock markets are guaranteed to always go up in value

How big have dividends been this year btw?

ToneControl

I'm quite surprised here, I'm seeing the investment strategies of many professional investors including Buffett being rubbished by people who think they know more, and that index funds are the answer for everyone
 

RaymondLin

ToneControl said:

RaymondLin said:

Why are you only looking at the last 30 years?  I said historic, like going back to 100 years. Going back to the start.

Don't pick and choose your statistic, don't cherry pick to suit your argument, include ALL of it.  If you pick just the numbers in the 50's, that's quite flat too.  This is why I can't take you seriously.  You pick examples just to suit your argument, whereas I am looking at the whole picture.

This is akin to debate with a flat earther, that their evidence of the earth is flat is because what they see with their eyes everything is flat.  They refuse to look at the bigger picture. 

Stop doing that.

(Well you could if you want, I will continue can't take you seriously because your argument is skewed) 

I thought you were a nice guy, why are you being so stupidly rude in comparing me with a flat earther? Bit of a "being a dick" thing to do I'd say.

I'm not "just looking at the last 30 years"
Even if I were, it would be valid, since people can't postpone their retirement by 30 or 40 years to wait for a new boom in stock prices

I've raised the subject of the Japanese stock market going into reverse for 30 years, and supplied a graph showing this. Too many people naively believe that stock markets always go up on average, I've demonstrated this to be not true

I've discussed the widespread worry that after years of QE interventions, the US stock market could follow the trend seen in Japan, supplying evidence from FT and investopedia, which it seems you must think are tin-foil-hat conspiracy-theorist sites 

If you don't understand this stuff, just say so

I am not being nasty at all.  Your argument is akin of a flat earther.  The FACT that you are looking at a VERY narrow set of data, like a flat earther does.  The comparison is just, because of your arguments.  (I am not saying you are a flat earther, the argument is akin to one, note the difference)

Which is what you are doing, that is not being nasty, that is pointing out what you are doing wrong.  If you understand what i mean by that then you would look at the wider set of data, not just 30 years.  Why stop at 30 years anyway? Why not just the last 30 days?  

You know why, so why are you doing it?

Because the set of data you cherry-picked supports your argument, when the ENTIRE set of data available does not.  You know that...I know you do, so why are you ignoring it.

RaymondLin

ToneControl said:

I'm quite surprised here, I'm seeing the investment strategies of many professional investors including Buffett being rubbished by people who think they know more, and that index funds are the answer for everyone
 

I think you misunderstood.  Nobody said Index Fund is the answer for EVERYONE, but an index fund is the best answer for most people.  Especially if you don't know what you are doing, and even if you know what you are doing, the index fund will most likely beat it.

Considering the OP, if you read his question, who has no idea, would you suggest he go pick a stock and buy that? put all his money into a single basket?

Your advice to someone who has no experience in investing is to time the market, and a narrow field of choices, because "your mate" has done well. 

That is illogical. 

(btw, index fund is only 1 form of investment, there are plenty other)

RandallFlagg

ToneControl said:

LOL
Has the SP500 gone down or not?

I have no idea what exact funds he invested in, I felt it would be rude to ask, I'd be sounding like "I told you so" when he's made a massive loss

He hadn't lost anything unless he cashed out and crystallised the losses. 

Really? Oh yes, I remember - stock markets are guaranteed to always go up in value

How big have dividends been this year btw?

Yes it has, but you have claimed a UK investor has lost 20-30% in a year by index fund investing and then point to a US based index priced in USD which isn't the same as being invested in a non hedged index fund for a UK investor, the UK trackers of which Vanguard's is actually currently down less than 3.5% as of yesterday. Either he made those losses by index fund investing or he didn't? I would like to know which fund. 

There are no guarantees in investing, who has claimed that? but, data does show that markets have always risen over 20-30 years, studies also shows that market timing is a likely route to below average returns for the majority of people as is stock picking.

Dividends? FTSE UK equity index around 4% FTSE US Equity Index around 1.5%

If your trading strategies are so sound why not post some hard data or your own or your mate's performance over the last 3 years to add credo to your arguments? You always seem to point to fear of events or conditions that may affect the future as reasons to be wary of buy and hold index investing and seem to prefer to ignore past performance as evidence.

As for trashing Warren Buffet, no-one has done that but he is true exception and not representative of what people can realistically achieve for theirselves. He himself advises regular non-professional investors to use index funds.

I seem to recall you posting that you lost a lot of money some years ago by selling out in a market crash and didn't wait for a recovery, and now fear seeing declines impact your capital so are looking for ways to minimise exposure yet achieve market beating gains. I get it, it is a noble ambition and I wish you good luck with it but I would suggest it's very hard to do consistently and carries a high risk of below average market returns over the long term. 

You do recall Buffets $1M bet with the hedge funds?

Fancy a rerun?

RandallFlagg

ToneControl said:

RandallFlagg said:

ToneControl said:

https://www.investopedia.com/ask/answers/021015/how-does-quantitative-easing-us-affect-stock-market.asp

 When the Flow Stops

At some point, a QE policy ends. It is uncertain what happens to the stock market for good or ill when the flow of easy money from central bank policy stops.

The Federal Reserve added more than $4 trillion to its balance sheet in the half-decade between 2009 and 2014. Those are huge liabilities for the Fed, and they represent an important value for debt issuers everywhere.

If the Fed lets the bonds mature and does not replace them, it is equally unclear what impact this could have on the bond market.

Companies that stretch their capital into future operations may discover there is not sufficient demand to buy their goods. Some believe the low-interest rate policy of the Federal Reserve after the dot-com crash in the late 1990s helped to inflate the early 21st-century housing bubble in exactly this manner.

It is theoretically possible stock market prices could crash like those housing prices in 2008-09 if the same phenomenon results from QE. 

"uncertain" "if" "unclear" "may" "some believe" "theoretically possible" "could"

Sounds like FUD to me.

Is this a wind up? 
This is a serious and widely-held concern 
QE interventions have created a massive effect

You are just going to ignore this risk, and pretend it doesn't exist?

No, not a wind up. Central Bank action and unconventional monetary policy both current and expected action in the future is just one factor that affects asset prices. Fear of QE effects is not a reason to avoid investing in the stock market and fixating on it to a point where it influences your investing decisions would be a mistake.

ToneControl

RaymondLin said:

I think you misunderstood.  Nobody said Index Fund is the answer for EVERYONE, but an index fund is the best answer for most people.  Especially if you don't know what you are doing, and even if you know what you are doing, the index fund will most likely beat it.

Considering the OP, if you read his question, who has no idea, would you suggest he go pick a stock and buy that? put all his money into a single basket?

Your advice to someone who has no experience in investing is to time the market, and a narrow field of choices, because "your mate" has done well. 

That is illogical. 

(btw, index fund is only 1 form of investment, there are plenty other)

you'll see that I replied directly to the OP, giving constructive and appropriate advice, I didn't suggest buying individual shares  

What I did do was challenge your assertion that 

the current school of thought are

1 - do it regularly and often
2 - dollar cost average
3 - never time the market
4 - don't put all your eggs in 1 basket
5 - don't invest in stocks of companies you don't understand
6 - Index funds out performs trying to pick best stocks in the long run

because these articles of faith are not "the" current school of thought. They are popular with some investors 

If you read about the Buffet bet, you'll see that it does not "prove" that index funds always do better than "the best stocks"
It doesn't even try to do that, he took a bet that a group of managed hedge funds would not perform as well, and wanted to publicize the large fees that they charge. For the previous period, the hedge fund would have won the bet
Buffett's Bet with the Hedge Funds: And the Winner Is … (investopedia.com)
Managed hedge funds are a very different thing to a basket of handpicked stocks

If you wanted to compare the SP500 with someone collecting "the best stocks", you'd compare it with Buffet's funds.

Berkshire Hathaway vs S&P 500: Which Is Best? (financhill.com)

over time, Warren Buffett’s strategy has proven to be far more effective than relying on the market to rise. Berkshire Hathaway stock has generated a compound annual return of just over 20 percent from 1965 to 2021. The S&P 500’s compound annual return for the same period was 10.5 percent.

So, Buffet achieved DOUBLE what the SP500 did (remember that most indices have not performed anything like as well as the SP500)

Therefore, the evidence is that careful value investing can be twice as successful as the most successful index, i.e. completely the opposite of what you claim to be true.

My view is that someone intelligent who puts the effort in is better off doing value investing, and very much timing the market.
5 Wildly Successful Value Investors (investopedia.com)
Quite a few people on this forum are bright enough to take this route, but for some reason you disagree
Buying an index means who get the good and the bad in the index: the FTSE 100 is not the 100 top profit-making companies trading on the LSE, it's the 100 largest market caps, plenty of them are not good investments.


this comment makes no sense to me:

Your advice to someone who has no experience in investing is to time the market, and a narrow field of choices, because "your mate" has done well. 

That is illogical. 

The largest field of choices are the whole stock market, i.e. all the shares, bonds etc. In what way is that "narrower" than the current range of ETFs of indices

my advice to the OP did not include any recommendations to buy shares, I'm seriously wondering if you are reading the stuff I'm writing, or just guessing what I've written

RaymondLin

You don’t need to write all that….i honestly am bored now because your advice to the OP is disagree to my suggestion and follow “your mate”.

Using a narrow set of “evidence” cherry picked to suit your argument.

Again, every time you say “some people” and every time you pick a name, it is akin to an flat earther’s defence. Or it reminds me of Trump when he says “my sources says i know this election is stolen” and never EVER give out any names.  Please could you stop doing that, it does you no favours.  Don’t say “my mate”, or “some people”.  1 or 2, or 10 is not evidence, how many times do i need to explain that.  That is statistically flawed.

If i am going to use your angle of debate.  I have done nothing, only started my vanguard account 3 years ago, and it’s currently sitting at 23% gain, even after the fall in the past month.  I spent no time timing anything.   That means i am right now? Doesn’t it?  Using a sample of 1?  

My goal isn’t short term, my goal isn’t to get rich now, or even get rich, my goal is simply steady growth.  If i want risk and high growth, i would be in Vegas and putting it all on Black.

tone1

I just follow my Mum’s advice…..spend a bit, save a bit…

ThePrettyDamned

My investments are in two funds. One is pretty resilient to current market, the other one is losing a lot of value (lots of tech in that).

It'll likely bounce back one day, I'm hoping to access it in a few more years. Glad I chose two funds. They have some similarities, but enough different to set them apart. 

ToneControl

RandallFlagg said:

ToneControl said:

LOL
Has the SP500 gone down or not?

I have no idea what exact funds he invested in, I felt it would be rude to ask, I'd be sounding like "I told you so" when he's made a massive loss

He hadn't lost anything unless he cashed out and crystallised the losses. 

Really? Oh yes, I remember - stock markets are guaranteed to always go up in value

How big have dividends been this year btw?

Yes it has, but you have claimed a UK investor has lost 20-30% in a year by index fund investing and then point to a US based index priced in USD which isn't the same as being invested in a non hedged index fund for a UK investor, the UK trackers of which Vanguard's is actually currently down less than 3.5% as of yesterday. Either he made those losses by index fund investing or he didn't? I would like to know which fund. 

There are no guarantees in investing, who has claimed that? but, data does show that markets have always risen over 20-30 years, studies also shows that market timing is a likely route to below average returns for the majority of people as is stock picking.

Dividends? FTSE UK equity index around 4% FTSE US Equity Index around 1.5%

If your trading strategies are so sound why not post some hard data or your own or your mate's performance over the last 3 years to add credo to your arguments? You always seem to point to fear of events or conditions that may affect the future as reasons to be wary of buy and hold index investing and seem to prefer to ignore past performance as evidence.

As for trashing Warren Buffet, no-one has done that but he is true exception and not representative of what people can realistically achieve for theirselves. He himself advises regular non-professional investors to use index funds.

I seem to recall you posting that you lost a lot of money some years ago by selling out in a market crash and didn't wait for a recovery, and now fear seeing declines impact your capital so are looking for ways to minimise exposure yet achieve market beating gains. I get it, it is a noble ambition and I wish you good luck with it but I would suggest it's very hard to do consistently and carries a high risk of below average market returns over the long term. 

You do recall Buffets $1M bet with the hedge funds?

Fancy a rerun?

Not sure where you are going with this really:
Several of my mates have recently told me over the last few months that their pensions are down  (another one just yesterday said 30%-40% down) I don't question them much, or wind them up by telling them my pension fund is 30% up, because I "incorrectly" timed the market and chose to cherry-pick value shares

Certainly some of my friends' recent losses may have been tempered for some by the surge in USD against other countries, but that may be temporary, it was last time.  However, that can't be used as proof that indices are always the best option. hadn-picked US shares would also have benefitted from the currency rate change, so it's not a valid point. I won't be asking to see their portfolios, it would be rude.

There are no guarantees in investing, who has claimed that? but, data does show that markets have always risen over 20-30 years, studies also shows that market timing is a likely route to below average returns for the majority of people as is stock picking.

As I already proved, the data shows that several markets have not risen over 20-30 years

Agreed that index funds are a good default choice for most, however I'm not "the majority of people", and plenty of others here also have more understanding of investments and companies that the majority of people

If your trading strategies are so sound why not post some hard data or your own or your mate's performance over the last 3 years to add credo to your arguments? You always seem to point to fear of events or conditions that may affect the future as reasons to be wary of buy and hold index investing and seem to prefer to ignore past performance as evidence.

Hard data? my mate has made several hundred K since I started joining in during Feb 2020
I've increased my pension fund by over 30% over that period, I'm currently about 50% invested, in stocks that are undervalued by the market

The losses I made in the 2008/9 crash were because I had everything in China managed funds, which I was surprised to find halved in value when the USA had problems with sub-prime mortgages. I've learned a lot since then.

Anyway, I'm not a regular "non-professional investor". I suppose my mate is a professional.
I find it hard to understand why you believe that value investing is riskier than buying Index funds

As I mentioned to Raymond, that Buffett/Hedge bet does not prove what you think it does, read the link please

RaymondLin

^^^ still saying “my mate” LOL

Statistic of 1.

For every person who wins in Vegas, millions lose.

As long as you keep referencing your mate, i will consider your argument is flawed.  I will not and cannot take you seriously.  I would be crazy to.  That is because everything you say lacks credibility, include every link you link to, i would not read it, it is cherry picked to suit your narrow set of argument.  

You would do the same if the tables are turned.

This is all because your train of thought of using narrow sets of statistic and blind to the wider set of evidence, as oppose to what you are saying, you have lost all credibility from the beginning with the “my mate” argument.  I just can’t trust you after that.  (They may be right and have truth to it, but you’ve lost all credibility)

Stop referencing your mate, stop picking a narrow time table, show me statistic for the entire stock market…perhaps then i will listen.

ToneControl

RandallFlagg said:

ToneControl said:

RandallFlagg said:

ToneControl said:

https://www.investopedia.com/ask/answers/021015/how-does-quantitative-easing-us-affect-stock-market.asp

 When the Flow Stops

At some point, a QE policy ends. It is uncertain what happens to the stock market for good or ill when the flow of easy money from central bank policy stops.

The Federal Reserve added more than $4 trillion to its balance sheet in the half-decade between 2009 and 2014. Those are huge liabilities for the Fed, and they represent an important value for debt issuers everywhere.

If the Fed lets the bonds mature and does not replace them, it is equally unclear what impact this could have on the bond market.

Companies that stretch their capital into future operations may discover there is not sufficient demand to buy their goods. Some believe the low-interest rate policy of the Federal Reserve after the dot-com crash in the late 1990s helped to inflate the early 21st-century housing bubble in exactly this manner.

It is theoretically possible stock market prices could crash like those housing prices in 2008-09 if the same phenomenon results from QE. 

"uncertain" "if" "unclear" "may" "some believe" "theoretically possible" "could"

Sounds like FUD to me.

Is this a wind up? 
This is a serious and widely-held concern 
QE interventions have created a massive effect

You are just going to ignore this risk, and pretend it doesn't exist?

No, not a wind up. Central Bank action and unconventional monetary policy both current and expected action in the future is just one factor that affects asset prices. Fear of QE effects is not a reason to avoid investing in the stock market and fixating on it to a point where it influences your investing decisions would be a mistake.

I disagree
What effect do you think increased interest rates (like the ones we actually have now) will have on companies with large debts who have done lots of share buybacks?