Stock market
- Thread starter Borotommo
- Start date
WilliamMunny
Well-known member
My point being that the US stock market had a positive reaction to Friday’s events in the White House, so global markets were not likely to fall on the back of that.
Borotommo
Well-known member
I’m actually stunned. It shows how blasé the markets are. I expected the investment world to go into shock, after Friday. It still might do, and I’m watching very closely
VladKinder
Well-known member
And the thing is no one has to guess where the market is going to go in the short term.
They can just dollar cost average. Sometimes the market is high, sometimes low. It doesn't matter.
Then they can open a SIPP and get tax relief.
Then have a plan when for if they make a lot of money...take some profit but never sell fully out.
And a plan if the market tanks....invest more money into diverse funds if you have spare cash.
People really do make a meal out of something that is really simple.
Craggsy2
Well-known member
You seem to be an expert in this. Are you a Financial Advisor?
VladKinder
Well-known member
No. Investing for myself and a couple of family members is what I do for a living.
It's the only thing I'm good at!
Craggsy2
Well-known member
Maybe you should broaden your horizons if you're that good.
VladKinder
Well-known member
Some last nerdy stats:
Historically on average (but not always) the best way to invest at any point in time is:
1. Lump Sum at any point. Even if the market tanks you still have a lump sum invested, just a small one than you started with. It's the most scary method, but still the best. Just ride out the volitilty.
2. DCA (drip feeding). Invest the same amount month after month into a diverse portfolio.
3. Buy The Dip. This is the worse strategy most of the time. It sounds good, you wait for dip and buy cheaper, but the market moves up most of the time and bull markets last 3 times longer than bear, so the next dip is likely to come at a higher price than you could have got in.
The stats:
Anyone can open a SIPP regardless of working or not. Pay up to £2880 a year into it and get £720 a year top up due to tax relief.
A good global index etf:
Why this is best over say the S&P 500 is that it is global. The same thing that happened to Japan in the late 80's when it was the biggest stock market in the world could happen to the U.S (although unlikely), so you need to be diversified over sectors and countries. Keep costs as low as possible.
Not Financial Advice.
Historically on average (but not always) the best way to invest at any point in time is:
1. Lump Sum at any point. Even if the market tanks you still have a lump sum invested, just a small one than you started with. It's the most scary method, but still the best. Just ride out the volitilty.
2. DCA (drip feeding). Invest the same amount month after month into a diverse portfolio.
3. Buy The Dip. This is the worse strategy most of the time. It sounds good, you wait for dip and buy cheaper, but the market moves up most of the time and bull markets last 3 times longer than bear, so the next dip is likely to come at a higher price than you could have got in.
The stats:
Anyone can open a SIPP regardless of working or not. Pay up to £2880 a year into it and get £720 a year top up due to tax relief.
A good global index etf:
Why this is best over say the S&P 500 is that it is global. The same thing that happened to Japan in the late 80's when it was the biggest stock market in the world could happen to the U.S (although unlikely), so you need to be diversified over sectors and countries. Keep costs as low as possible.
Not Financial Advice.
VladKinder
Well-known member
No point. If you get it right people say you were lucky. If you get it wrong you look like a mug.
northernrower
Well-known member
DCA.
Benjamin Cowen taught me that. I've been doing it ever since with good results.
Andy_W
Well-known member
Yup, I've given up trying to predict anything, at least with 90% of my pot. I still mess about with the other 10% though, but haven't even done anything with that in a while. I think I only have one or two individual picks now, the rest is in indexes.
What I've realised is by the time in anyone in my position realises anything, the market already has that priced in, and knew about it weeks or months ago, unless it's a catastrophic event, but in that even everyone's in the same boat anyway.
Now, going forward and for the last few years, I just buy every month, regardless, it's all set up automatically.
The only think I'm really thinking about now is whether to do that every week, rather than ever month, as there will literally be millions of people with an auto invest set for each month, and my bet is most have it set to the 1st. Wonder if I'm basically buying at the worst time of the month, or whether the millions of people doing that are still a drop in the ocean, so it doesn't matter.
There is a crash coming though, there's always a crash coming, but the fear of the crash will just lead to so many missed opportunities. There's been so much fear over the last decade but the S&P is still up ~200% over 10 years, 100% over 5 years, 50% over two years. This year has been all over the place but still 16% up.
HundredRoom
Well-known member
DAX is where the action is.
Up 25% since Aug 2024
Up 25% since Aug 2024
Frozen Horse
Well-known member
I don't have any really knowledge about this; I have a stocks and shares ISA, but that is all managed for me. However, looking at the all-time performance, would I be right in saying that while crashes will always happen, the long-term trend is always in an upward direction? I know this graph doesn't allow for inflation so it's not as if value has increased in real terms this much? You can pick out certain events: Covid, the sub-prime mortage crisis, the second Iraq war on the timeline, but the market has always recoved.
Last edited:
SmallTown
Well-known member
In short yes, the stock markets are a mechanism for transferring money from the impatient to the patient. Major historical events tend to cause a slight blip but then the market recovers
Redwurzel
Well-known member
As a generalisation - When interest rates are dropping its normally a good time to be in shares as the price of money is declining so cash is giving a lower return than it did, say 12 months earlier, Borrowers are able to borrow money at lower rates and hence have a bit more money to spend. Interest rates are slowly declining at present.
Ref: Ukraine War - If the war finishes it would be good for shares. What is bad for shares is when new wars start. For example if the war stopped the gas supply would increase and more food produced, which would push gas and food prices lower which again pushes inflation lower.
Ref: Ukraine War - If the war finishes it would be good for shares. What is bad for shares is when new wars start. For example if the war stopped the gas supply would increase and more food produced, which would push gas and food prices lower which again pushes inflation lower.
Pretty much. You are better looking at a different index though like the S&P. The FTSE is mostly made up of dividend paying stocks so you don't see the returns from dividends in that chart. It's quite flat over the last 20 years.
There is a difference between a crash cause by an event like the GFC and Covid and one caused by prices being overvalued though. The dotcom bubble was caused by massive overvaluations and took 15 years to get back level (inflation adjusted) and that included the GFC which only took 5 years to fully recover. Covid took 6 months but then over-corrected and boomed. The subsequent drop took 3 years to get back to. They have always recovered though. People need somewhere to save/invest so there is always money flowing to those assets because they generally give a better return than cash.
It all depends when you need the money. If you are investing for your retirement that is 20 years away you can ride out any drop but if you are investing for your retirement that is 2 years away then you might not have time.
Redwurzel
Well-known member
The U K market was 1,000 points in January 1984 so £1 invested in 1984 would be worth £8.87 now. That's well above inflation rise - my guess is prices in general have gone up just under 4 times since Jan 1984. The UK market has struggled relative to to other markets.
Andy_W
Well-known member
I'm not an expert on this, far from it, and take it with a pinch of salt, but do follow a lot of what the experts are saying.
But yeah, it always goes back up, or has done, as the world has always grown/ recovered/ got better etc. Not sure what is going to happen going forwards like, as the birth rate in all the developed world is basically through the floor and population age going through the roof. The world could be in population decline by 2050, not sure what that will do for growth, but doubt it will be good. Hard to say as it's never happened since the stock market started.
I think world indexes average ~8% growth over time, and say with 2% inflation that takes it down to 6%, but for like pensions etc, they advise a ~4% withdrawal rate so you don't run out of money, and so you're not taking out too much when markets drop.
I wouldn't use the FTSE 100 as a gauge though, as the UK has been in the shitter for some time. I would more look at the S&P 500 or even better the all world market.
Not that I'm saying FTSE 100 is a bad buy now, a lot see that as good value, as it's been relatively flat for ages (compared to say the US and all world). When I last looked, the P/E ratio (price of stock v earnings) of the S&P 500 is like ~30, and the FTSE 100 is like ~15. So The S&P 500 is expensive and the FTSE 100 quite cheap. Feels like S&P 500 is in a bubble to me (AI) and a similar situation to the .com bubble, although that may be totally wrong and AI could make everything super easy and cheap, whether that's good for the people or just the super rich is another matter altogether. IF the US bubble bursts I doubt the FTSE 100 would escape.
The S&P 500 and all world charts look similar, as the S&P 500 is ~60-70% of the all world I think.
Last edited:
HundredRoom
Well-known member
There you are definitive answer. All clear now