Want to Invest but worried about Markets
- Thread starter Thargor
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Who would have thought that in January with the huge pessimism and the big sell off and now after the brexit vote we are now reaching new highs again in some markets. Everyone was talking about 2008 crash again, all the technical analysis was saying bear market. Yet nobody predicted that within 6 months we would be reaching new highs. Nobody in January predicted that
Who would have thought that in January with the huge pessimism and the big sell off and now after the brexit vote we are now reaching new highs again in some markets. Everyone was talking about 2008 crash again, all the technical analysis was saying bear market. Yet nobody predicted that within 6 months we would be reaching new highs. Nobody in January predicted that
galway_blow_in
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the people who move markets shorted for all they were worth in january and early february , shook out the small guys and scooped up cheap stocks , the market is rigged in the short to medium term as in its big money which moves it in either direction
Any evidence to support this?
The best advice is simply to buy equities if you want a return on your savings. There is no other way.
It's not easy advice to follow - at every single point in time since I first bought some ETFs over 15 years ago, it's been a bad time to buy equities by all accounts. In fact the more informed you are about world economic affairs, the more pessimistic it always looks. My biggest purchase of ETFs happened at close to the worst time possible over the last 20 years. Many times, having read and studied the state of the global economy, I've come to the conclusion that I should cash out but I'm a procrastinator and lazy. These character flaws surprisingly worked to my advantage.
Generally speaking the last couple of decades have not been great for equities in terms of volatility. And yet when I last checked my portfolio - something I only do once a year - nominally it's increased in value by over 120% during the 15 years. The annualised return must be higher than this number would suggest since I've been adding to it on and off.
I do not recommend following the official AAM "top 10 Irish shares" advise for equity investors - it's too much work dealing with individual shares, messing around with quarterly dividend cheques and the portfolio has horrible geographical and sectoral diversification. There's simply no reason to waste time on that nonsense when you can buy properly diversified and automatically rebalancing ETFs these days with tiny expense ratios.
Everything else I "invested" in has been a waste - BES schemes, Forestry Funds, managed unit funds, etc.
It's not easy advice to follow - at every single point in time since I first bought some ETFs over 15 years ago, it's been a bad time to buy equities by all accounts. In fact the more informed you are about world economic affairs, the more pessimistic it always looks. My biggest purchase of ETFs happened at close to the worst time possible over the last 20 years. Many times, having read and studied the state of the global economy, I've come to the conclusion that I should cash out but I'm a procrastinator and lazy. These character flaws surprisingly worked to my advantage.
Generally speaking the last couple of decades have not been great for equities in terms of volatility. And yet when I last checked my portfolio - something I only do once a year - nominally it's increased in value by over 120% during the 15 years. The annualised return must be higher than this number would suggest since I've been adding to it on and off.
I do not recommend following the official AAM "top 10 Irish shares" advise for equity investors - it's too much work dealing with individual shares, messing around with quarterly dividend cheques and the portfolio has horrible geographical and sectoral diversification. There's simply no reason to waste time on that nonsense when you can buy properly diversified and automatically rebalancing ETFs these days with tiny expense ratios.
Everything else I "invested" in has been a waste - BES schemes, Forestry Funds, managed unit funds, etc.
Gordon Gekko
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Agreed...virtually my entire investment strategy is based around putting the maximum into the world equity market over a 40 year period in the cheapest manner possible.
To be fair, that's not the consensus view around here - much less the official line.
I personally think it's nuts for anybody to invest any significant portion of their net worth in such a concentrated portfolio.
D
Dan Murray
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Hi Gordon
A comment and a question.....
I think I understand the rationale for your approach. However, it takes liathróidí to do - not everyone is so equipped, metaphorically speaking!
My questions is: why stop at 100%, why not say 110% or 115% equities to get an extra "kicker"?
Completely agree - it just has slightly more support that the world equity market rigging theory espoused earlier in this thread!
Gordon Gekko
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Hi Dan
It's all pension money, but if I end up with a decent slug of personal cash, I probably will layer around 20% gearing on to a well diversified all-equity strategy.
It may sound stupidly naive, but my view is that I'll do better over time because I fully accept that I will see huge drawdowns periodically.
It's all pension money, but if I end up with a decent slug of personal cash, I probably will layer around 20% gearing on to a well diversified all-equity strategy.
It may sound stupidly naive, but my view is that I'll do better over time because I fully accept that I will see huge drawdowns periodically.
Great post. The general investment theme over the last 15 years as you pointed out has been extremely negative in general. There have been many predictions of impending crashes and the internet has exaggerated this which has contributed to all the volatility. The last optimistic period was the 90s. Yet even in todays pessimistic period the stock market has delivered once you did not invest in one country or sector. In hindsight the sell off in January was madness and did not make sense especially when compared to now. We have just had a brexit vote, multiple Islamic attacks in Europe, and a likely trump presidency, all highly negative you would think, yet markets are hitting highs, well then what was January about, surely if sell offs were based on logic, then now markets should be selling off
galway_blow_in
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any explanation as to why the s+ p shed 12% from around xmas of 2015 to around february 10th of 2016 and why its recovered more than 16% since then ? , bar a sharp drop in oil prices ( again due to shorting ) , there was no big catalyst at the time
galway_blow_in
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retail investors are a minority , institutional investors dictate market movements on a daily basis , long term the cream rises to the top so earnings and the overall health of a company will be borne out but short term , the market can easily be manipulated , what else explains massive sell offs ?
2008 doesnt count , that was a multi generational event
galway_blow_in
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there are times when its clearly a good time to buy , the s + p was cheaper in early march of 2009 than it was at the end of 1996 and less than half the price of where it was at in mid to late 2007 or even early 2000 , bar a complete armageddon situation , early 2009 was dirt cheap , even late 2008 was extremely cheap , the market is still only 50% more expensive than it was in march 2000 so its not cheap but not remotely as expensive as it was at the time of the dot com bubble if you subscribe to the idea that over the very long term , the markets always go up , it might be best to have a system where you buy every month regardless but from looking at history , it would appear it might be better to instead buy every two or three years instead , as recent as february of this year , the market was the cheapest it had been in nearly two years , today its at an all time high again
galway_blow_in
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the last fifteen years has not been that negative , the biggest bull market in history was from 1982 to march 2000 , the s+ p went up eight fold , prior to 1982 , the markets no more than doubled every twenty years , what has happened since the year 2000 is probably just a levelling out of the enormous bull market from the early eighties to the turn of the millenium , the FTSE has indeed performed horribly this past fifteen years and more however but its not a very well diversified exchange , its top heavy with energy and banks compared to the S + P
as for what january and early february were about , the standout issue was the massive drop in the price of oil , neither demand or supply have changed that much since then , its just shorters over shot to the downside which explains the relatively huge recovery in oil price this past six months , banks were accused to being exposed to oil but the banks were clearly showing what exposure they had to energy debt and it wasnt significant , the market sell off was simply a case of traders capitalising on the sell off in oil and extending it to the overall market , if they can make money on the downside , great ! , this manipulation however if it causes retail to sell is a form of market manipulation by the big dogs
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Really?
Do representatives of these manipulating institutions gather around a large board room table on a quarterly basis in Dr Evil's HQ, high in the Swiss Alps? Or do they communicate (in masonic code, obviously) through the dark-net?
Frankly, the idea that a market as vast and deep as the global stock market can be manipulated by a limited number of institutional participants is the stuff of pure fantasy.
Unlike the dot-com crash, or the Asian crisis, or the 1987 crash...
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The stock market has a 15%+ drawdown every two years, on average.
There is nothing even remotely exceptional about market movements over the first six months of this year.
What moves markets? Fear and greed.
Same as always.
Wow! If you can time markets with such precision you must be extraordinarily wealthy.
Perhaps you could let the rest of us in on the action.
galway_blow_in
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those crashes ( and sharp falls ) had major causes , the sharp sell off in january of this year had no cause , that the market then recovered and made new highs for no apparent reason further distinguishes it from those examples you give , after black monday of 1987 , the market didnt make new highs for nearly two years