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Post by johnc on May 22, 2020 8:17:00 GMT
So what do people think is going to happen to the price of shares?
I have two people who's judgement I respect but recently they have being giving totally conflicting views.
One got out of the market when the FTSE was in the low 7,000's and when it hit 5,000 a couple of months ago, he got back in big time. He believes we might see a few more blips but generally it is upwards from here. As far as he is concerned, the market has already priced in the potential costs and downsides.
The other put about half his money in cash when the FTSE was in the mid 7,000's, didn't sell when the market fell, bought cautiously when the market was in the low 5,000's and has sold again when the FTSE rebounded to around 6,000. He reckons there is a much bigger fall on the horizon when the full cost and tax implications are clear and dividends are slashed. He is keeping his money for when the FTSE hits 4,000 (or worse).
Does anyone have any thoughts?
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Post by Tim on May 22, 2020 8:28:18 GMT
In the past we've generally planned for 3% annual growth and our CIO is sort of in agreement with that with the unspoken caveat that it could be anywhere between plus and minus 20%! I'm in the process of preparing a variety of budgets for work and the house view is that from 1st June we'll have 6 months of 3% annual growth and assuming things have settled down later in the year a further 6 months at 6%. These are the FTSE, not the economy. I've had the feeling in the last week or so that the market is desperate to move beyond 6000 with a few days of slow growth but its down a chunk this morning and as far as I can see from a quick look that's based on the April borrowing figures. However, it did something similar last week and recovered very quickly so I suspect a lot of the anticipated bad news is already priced in and that on the days when the costs are released over the next few months there'll be a short term fall and then it'll go back to growth again. Clearly though I'm not authorised to give financial advice so don't listen to me and DYOR
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Post by alf on May 22, 2020 9:59:38 GMT
I don't know, but it's a subject dear to my heart currently as in my divorce settlement (which I assume has not been ratified by a judge yet anyway) gave her most (85%) of the house capital and I kept my pensions. Almost as soon as this was agreed they took a big hit thanks to the crisis....
I was looking at some currency charts the other day and it feels like the markets are again assuming the UK will come out of all this disproportionately badly - since the millenium we (the Pound) seem to have been in a long term slide vs the Euro. The 2008/9 recession saw a drop, then we picked up until the genius of an idea which Brexit was dropped it again, now in the current crisis we have dropped again. That is a worry.
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Post by Deleted on May 22, 2020 10:09:59 GMT
I'm broadly in the former camp, but no-one knows - this is not-in-living-memory time.
I don't buy and sell - a well-diversified and managed portfolio will make adjustments and tends to fare better than the market anyway, but especially when times are bad. Threw some more cash in around 5,000 and pay in £2.5k each month anyway, so pound cost averaging and all that.
I repeat though - no-one knows - especially those who think they do.
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Post by Martin on May 22, 2020 10:19:52 GMT
I don't know either, but the current and future bad news must be built into prices and future profit expectations etc.
I only keep a close eye on our share price and have been buying/selling over the last couple of months and have done well, but I've decided to quit while I'm (over £2k) ahead and move the cash back to savings. The share price is 10% up on when I last sold....but I've got a couple of RSUs that are benefiting from the rise, so it's all good.
I really don't want to know what's happened to my pension pot.
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Post by Big Blue on May 22, 2020 10:31:12 GMT
I repeat though - no-one knows - especially those who think they do. Best thing I've ever seen written about the stock market. I saw this week a couple of kids in France found two kgs of gold their grandma had stashed in the attic of their country house in the 60s. She knew. The boys have told their dad they want a pool with the money they realise from the sale of the gold. They know too.
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Post by garry on May 22, 2020 11:22:17 GMT
When I was younger I was in a high profile dot com business. We floated on the Nasdaq, price spiralled upwards. I used to meet analysts at roadshow events. These guys were apparently advising investors. For the most part they had no clue what we did (we made network management solutions), but they’d happily spew out advice. My takeaway from my experience there was you’d be just as well picking a company name from a tombola as listen to them.
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Post by johnc on May 22, 2020 11:30:40 GMT
I have experience of the apparent skills of a previously successful (lucky) London fund manager in the real business world and let's just say he wouldn't have a clue how run a sweet shop located next to a school but he would steadfastly stick to the belief that the only person that knew what to do was him! He permeated arrogance from every pore.
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Post by racingteatray on May 22, 2020 11:51:24 GMT
So what do people think is going to happen to the price of shares? I have two people who's judgement I respect but recently they have being giving totally conflicting views. One got out of the market when the FTSE was in the low 7,000's and when it hit 5,000 a couple of months ago, he got back in big time. He believes we might see a few more blips but generally it is upwards from here. As far as he is concerned, the market has already priced in the potential costs and downsides. The other put about half his money in cash when the FTSE was in the mid 7,000's, didn't sell when the market fell, bought cautiously when the market was in the low 5,000's and has sold again when the FTSE rebounded to around 6,000. He reckons there is a much bigger fall on the horizon when the full cost and tax implications are clear and dividends are slashed. He is keeping his money for when the FTSE hits 4,000 (or worse). Does anyone have any thoughts? No idea, quite frankly. Not my area of expertise. But like you, I have heard or read broadly the two above opinions. It's sort of irrelevant for us in terms of taking action, as, pensions apart (about which we can't do much), we don't have significant stock market investments.
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Post by Deleted on May 22, 2020 13:00:01 GMT
I've had the feeling in the last week or so that the market is desperate to move beyond 6000 with a few days of slow growth but its down a chunk this morning and as far as I can see from a quick look that's based on the April borrowing figures. This is interesting, as when you think about it there is no 'market' - just the collective prognostications/greed/fears of humanity. A round thousand means absolutely jack shit in anything other than emotional terms. This tells you everything you need to know about how grounded in precise numbers the markets are. But it affects us all - I recall feeling pretty grim when it briefly went below 5k.
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Post by Big Blue on May 22, 2020 13:07:27 GMT
When I was younger I was in a high profile dot com business. We floated on the Nasdaq, price spiralled upwards. I used to meet analysts at roadshow events. These guys were apparently advising investors. For the most part they had no clue what we did (we made network management solutions), but they’d happily spew out advice. My takeaway from my experience there was you’d be just as well picking a company name from a tombola as listen to them. When previously working within the financial regulation sector (post crash!) we had a roadshow from the investment managers from the major banks telling us how they created new investment products; how they stress tested them to make sure they were fit for the market etc. Walking out the Head of Risk said, fairly loudly, that having now sat through that he wouldn't trust any of them with his money for more than a minute.
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Post by racingteatray on May 22, 2020 14:00:42 GMT
When I was younger I was in a high profile dot com business. We floated on the Nasdaq, price spiralled upwards. I used to meet analysts at roadshow events. These guys were apparently advising investors. For the most part they had no clue what we did (we made network management solutions), but they’d happily spew out advice. My takeaway from my experience there was you’d be just as well picking a company name from a tombola as listen to them. When previously working within the financial regulation sector (post crash!) we had a roadshow from the investment managers from the major banks telling us how they created new investment products; how they stress tested them to make sure they were fit for the market etc. Walking out the Head of Risk said, fairly loudly, that having now sat through that he wouldn't trust any of them with his money for more than a minute. That reminds me of an anecdote my father once recounted. Dad spent his entire career, post-Navy, at the same major UK bank. He said he was once having lunch (I think) with the Chairman and somehow my father happened to make some negative remark about his experience as a customer of the bank. To which the Chairman gasped in reply " Good God, you don't mean to say that you...actually...bank with us, do you?!"
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Post by Tim on May 22, 2020 14:22:23 GMT
I've had the feeling in the last week or so that the market is desperate to move beyond 6000 with a few days of slow growth but its down a chunk this morning and as far as I can see from a quick look that's based on the April borrowing figures. This is interesting, as when you think about it there is no 'market' - just the collective prognostications/greed/fears of humanity. A round thousand means absolutely jack shit in anything other than emotional terms. This tells you everything you need to know about how grounded in precise numbers the markets are. But it affects us all - I recall feeling pretty grim when it briefly went below 5k. You sound like my wife - querying why I'll set the alarm at 6:30 rather than, say 6:32 or 6:27 However the round thousand is a handy reference point. We use the FTSE 100 at work as a guide for our own turnover and financial performance but actually something like the 250 would be better. If you want a laugh have a look at the AIM all share index. It often appears to do the opposite of the main FTSE.
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Post by Big Blue on May 22, 2020 14:34:35 GMT
If you want a laugh have a look at the AIM all share index. It often appears to do the opposite of the main FTSE. AIM is the Wild West! If you watch stock moves on the AIM market and then review them against the subsequent RNSs you'll discover that most small-cap investment bodies should be imprisoned for insider trading There's lots to be made (pure luck - I've had it twice in five years) and loads to be lost (95% definite). Absolutely fits Garry's description of picking names from a tombola hat.
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Post by Tim on May 22, 2020 14:39:01 GMT
If you want a laugh have a look at the AIM all share index. It often appears to do the opposite of the main FTSE. AIM is the Wild West! If you watch stock moves on the AIM market and then review them against the subsequent RNSs you'll discover that most small-cap investment bodies should be imprisoned for insider trading There's lots to be made (pure luck - I've had it twice in five years) and loads to be lost (95% definite). Absolutely fits Garry's description of picking names from a tombola hat.There's a whole tax break industry set up around the AIM market and the reliefs available for investing in it though. I'm sure it makes stock picking hair raising, even for the seasoned pros.
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Post by Deleted on May 22, 2020 15:24:53 GMT
It's easy to forget how unrepresentative the FTSE100 is, even if people understand it's only the 100 largest companies.
Don't ask me for dates, but I recall a point where the index was 16.67% Vodafone (that 1/6th), and another where is was rather more than 40% Oil & Gas and Telecomms. Representative it is not...
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Post by Alex on May 22, 2020 19:30:06 GMT
I've never had any dealings with the stock market other than during my annual pension review but over the last few years since I started being able to properly start saving having got to a point where my outgoings were less than my incoming I've managed to rack up a few grand in my ISA and do wonder if I should look at investing it, especially as share prices are low, but given that I haven't a clue how to safely invest I'm rather reluctant. Especially as share prices could be hit quite significantly when the government furlough scheme finishes and unemployment is no longer being kept artificially low.
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Post by franki68 on May 24, 2020 10:48:29 GMT
Pretty much every investment I have ever made in the stock market has been disastrous . I lost faith in its integrity and what I have seen since my old company floated on the ftse (I still have shares and knowledge of its dealings) confirms that suspicion .
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Post by Stuntman on May 24, 2020 19:18:00 GMT
I think that the markets may fall again from their current levels, perhaps by another 15-20%, before slowly recovering. But if they go upwards from their currently levels I'll be happier than if they fall.
My combined ISA and SIPP portfolio is down by about 20% from its high point earlier this year, with UK small and medium sized companies and European companies being the worst affected.
I am putting monthly amounts into my SIPP but at the moment I am holding these as cash. When I do invest them in the markets I will probably put them into Asian and Emerging Markets as I see these being a better bet over the next 5 years than the UK, US and Europe. But I am well diversified geographically anyway.
Most of my new money in the ISA and SIPP over the last 2 years has gone into Gold, Silver and Platinum funds and these have done relatively well. I have been watching the price of precious metals pretty closely for the last 3 years and still think there is value to be had in that sector.
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Post by johnc on May 25, 2020 7:36:50 GMT
I think that the markets may fall again from their current levels, perhaps by another 15-20%, before slowly recovering. But if they go upwards from their currently levels I'll be happier than if they fall. My combined ISA and SIPP portfolio is down by about 20% from its high point earlier this year, with UK small and medium sized companies and European companies being the worst affected. I am putting monthly amounts into my SIPP but at the moment I am holding these as cash. When I do invest them in the markets I will probably put them into Asian and Emerging Markets as I see these being a better bet over the next 5 years than the UK, US and Europe. But I am well diversified geographically anyway. Most of my new money in the ISA and SIPP over the last 2 years has gone into Gold, Silver and Platinum funds and these have done relatively well. I have been watching the price of precious metals pretty closely for the last 3 years and still think there is value to be had in that sector. I haven't bought any silver or platinum but I did buy a few gold related stocks and they are all up over 50%. However others like Astrazeneca and Aveva are still up over 100% and a couple of Biomedical Science ones are up over 200% boosted recently no doubt by Covid vaccine research. I do have a few horror stories with Lloyds and M&S which I hung on to for too long and Standard Life which has fallen more than I expected. I would expect Standard Life and Lloyds to come back over time but not sure M&S will ever recover. None of this is intended to be advice of any kind.
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Post by Tim on May 26, 2020 12:00:36 GMT
I received something this morning from someone who is paid to monitor investments and find good ones to put (other people's) cash into.
"Forecasting investment returns is part empirical and part art, or luck.
Financial markets are always in dynamic equilibrium between different forces; sometimes gentle, sometimes violent. As everyone is aware, we are in one of those violent periods.
Over the last three months almost every day has seen stock markets move by more than ±1% and a significant number by 3-4%+. In other words, forecasting returns of 3 or 4% over short periods (up to a year) is within the current error range of a daily move.
We have no influence or control over what level it is for budgetary purposes. It is what it is. The most sensible thing would be to take whatever the current level is. More important is to set a realistic range of returns, which should be underpinned by long-term investment return assumptions.
My guess is that the FTSE100 trades between 6,200 and 5,500 through the summer, with the central opposing forces of the scale of demand destruction this year (BoE estimate UK GDP could contract 14%) and monetary and fiscal support to counter it (in excess of $15tr globally). This gives limited short-term upside and up to 10% downside.
Likely triggers to go outside this range are, readily available and effective vaccines, on the upside, and secondary spikes in infections causing further lockdown, on the downside. Looking out a couple of years pushes the balance of probabilities more to the upside.
Long term investment returns are underpinned by the ‘risk-free rate’, or government bonds. Currently this is close to zero (actually negative on 2-6 year gilts) in the UK; the same as cash. There is then greater return expected for riskier financial assets. The equity risk premium has normally been 3-4%. The other key factor in determining returns is economic growth.
At the moment there appears a bit of a disconnect between recovering markets and crashing economies. Markets always try to price in future prospects, so they are not pricing for this year’s results. Given that a V shaped recovery looks unlikely, it will probably take several years for GDP to recover to the levels before Covid-19 struck. Assuming similar levels of profitability and assuming the UK stock market was fairly priced at the start of the year, that gives about 20% upside to equities.
The key questions are how long it will take to recover and given the dramatic rise in debt, will tax rates rise (reducing returns to shareholders)?
Lastly, for now, I have completely ignored inflation in any assumptions; but this may become an issue in due course."
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Post by Tim on Jun 3, 2020 14:45:18 GMT
The FTSE's up 2.25% today and now at the dizzy heights of 6362. Not bad considering it was briefly below 5000 in late March.
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Post by johnc on Jun 3, 2020 15:24:22 GMT
The FTSE's up 2.25% today and now at the dizzy heights of 6362. Not bad considering it was briefly below 5000 in late March. I know but I am having real difficulty believing that everything is going to continue to head North from now on. I am glad I have managed to profit a bit from the lows but I am nervous about getting back in fully given the longer term casualties that are now starting to emerge and the announcements about cancelling or reducing dividends.
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Post by Tim on Jun 3, 2020 15:42:21 GMT
I keep getting told certain things are 'priced in'.
My boss just texted to say it could hit 6400 tonight so that's not going to happen!
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Post by Deleted on Jun 4, 2020 7:37:58 GMT
The FTSE's up 2.25% today and now at the dizzy heights of 6362. Not bad considering it was briefly below 5000 in late March. Hard to make any sense of it, but worth bearing in mind that 5,000 represented a 35% fall. At the time I thought that was something of an overreaction.
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Post by Tim on Jun 4, 2020 8:10:02 GMT
I suppose that was part of the initial panic in mid/late March when we thought there might be 500,000 deaths or however many Shagger Ferguson came up with. I hope there's a bit of relative stability for a while rather than a 2nd wave of panic - I want a payrise sometime this year and its already been put back 4 months (and I know that makes me fortunate - I've not suffered furlough followed by redundancy, or at least not yet)!
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Post by Deleted on Jun 4, 2020 8:16:51 GMT
I think I'd be happier of the market tracked sideways for a few months now. On the plus side, most of my clients' portfolios are almost back to where they were pre-COVID19. I've said it before ad I'll say it again, the FTSE 100 is not a representative sampling, it lacks diversity and fuck me it can be volatile. Funnily enough, you don't read much about how a tracker is the best solution these days...
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Post by Tim on Jun 4, 2020 8:40:33 GMT
I just use the FTSE 100 as a guide for our Board but the reality is the 250 is better although given the amount of diversity nothing really gets it right.
Our AIM portfolios are something else though, watching that index is good for a laugh!
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Post by Deleted on Jun 4, 2020 8:46:01 GMT
Indeed - I wasn't singling you out for using it, btw - it's all most people are aware of and it's how the meeja report on such matters.
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Post by Tim on Jun 4, 2020 8:55:02 GMT
No, I understand. I use it for our Board - mainly lawyers - because I don't think they could find the 250 if I suggested it!
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