Hi all,
I know many of you are invested in S&S - Through robo advisors, FreeTrade or any other investment accounts.
I wondered what your thoughts were on the current situation, with the analysts predicting doom and gloom around Brexit?
I put a chunk of money in Wealthify towards the end of May - Which is down quite a bit (appreciate it’s a long game, and I’m happy to wait).
But what are people thinking? Leave the investments as they are? Or pull them out and wait a bit?
Repeat after me:
You cannot time the market.
You cannot time the market.
You cannot time the market.
It’s noise. Come back in 5 years. If you can’t wait 5 years, you shouldn’t have put it in the market.
I should have probably put a few disclaimers in.
I’m not looking for advice - Purely starting a discussion on something I know other people are interested in.
I absolutely appreciate it’s a long game (which is why I said that in my original post), and I 100% know that no one can predict what is going to happen.
It’s interesting (to me at least), to hear other people (real people, not articles from so called “experts”), talk about their personal experiences etc.
So erm…
You cannot time the market? 
When Fidelity did a study of their best performing investors, the winners were ‘dead people’ and the runners up were people ‘who’d forgotten they had an account’.
Why? Because they didn’t try to time the market.
No one can predict Brexit’s effect but the uncertainty is a huge problem. Once we know the deal the markets will calm a bit
Agreed. Sometimes it will be up, sometimes down. Little and often is the key.
After the way Moneybox is always making a loss on my little ones JISA I don’t really wanna invest any more money, I get the up and down blah blah blah but this has been on a down for nearly a year now.
Personally I’ve sold out of my UK trackers and funds and have started buying into more European and US focused areas. I’m not sure how much difference that will make seeing as FTSE 100 companies are quite international however.
But yes otherwise it’s buying a little every month which should smooth out price fluctuations.
Noise. Really, why are you investing if you don’t understand how the market works?
If you are unlucky it can take 10 years to recover your initial investment.
But over most 5 year periods in the last 100 years, stocks and shares have beaten cash. But not all of them. There was one period where cash beat stocks for almost 20 years IIRC.
I didn’t put a lot in as I wanted to see what would happen and what it was about. Put it this way I spend more on a night out and I make more from interest on her other account so it’s no loss really it was just a test.
Moneybox have pretty high charges which will be a drag on your returns.
But nobody knows what the market will be doing in a year’s time. Loads of people will make predictions and a few of them will get lucky and be right and they’ll spend the next couple of years dining out on how good they are. Then they’ll get it wrong, because they didn’t actually have a crystal ball.
But over 18 years or so of your kid’s JISA? You’d need to pretty damned unlucky to not have beaten most other forms of investment (excluding charges - but that’s not luck).
The market generally goes up. At about 6% per year on average. But boy does it drop sometimes. So only invest what you can leave for at least 5 years, preferably longer. Over an average lifetime, there is almost nothing that will beat it.
But moneybox et al are doing people a huge disservice if they are not pointing this out in BIG LETTERS!
Maybe it’s just because I’ve taken more of an interest in it recently, but there seems to be a huge rise in “robo advisors” - Both independents like Wealthify/Nutmeg, and services from traditional banks as well.
I think the “long game” is implied through the sign up period, but I’m not sure anyone really highlights just how long you should be expected to wait.
I’ve had issues with Wealthily, as they made a shed load of transactions on my account in the first few months - They have admitted their mistake, and are looking to correct the issues.
It really depends on what the robo advisor is trying to do. Modern portfolio theory (which got Markowitz a Nobel prize in Economics https://en.wikipedia.org/wiki/Harry_Markowitz) shows that you can reduce risk by building a portfolio of uncorrelated assets. Some robo advisors attempt to do this.
One of my favourite tools is the Portfolio Charts site, which lets you use real past data to see how portfolios weighted by various selections would have actually performed. The Golden Butterfly is particularly interesting.
But guess what? Markowitz was asked how he sets up his own portfolio seeing as he invented the process. He said he just puts his money 50/50 in a market tracker and bonds. It’s good enough!
It is really simple to get most of the gains the market can give you. The people trying to get your money (yes you moneybox etc) are offering you a cherry on top with promises they have no right making.
Put it this way - anyone with a real edge is not going to give it away to the likes of you and me. They are going to borrow a s$$t load of money and invest it on their own account.
But no one really has an edge in the long term. So they make money by suggesting they have an edge and take their profit in the form of excessive charges on loads of other people’s money.
If anything Nick, market dips present buying opportunities and potential for future upside, but I’d caution against a sell off. Your goal (s), in terms of return and timeframe in which your capital is tied up will ultimately determine how you invest and what you invest in.
Very simply, big macro policies like QE and low rates have helped drive stocks to all time highs, so orthodox thinking would suggest that reversal of these policies (QT) and rate hikes would have a dampening effect on share prices, as liquidity tightens, and other asset classes such as sovereign debt (government issued bonds) become more interesting. The recent US tax reform also injected positive sentiment and cash back in the economy, but I very much view that as kicking the can down the road…
Brexit is but one issue looming large on the horizon, but there are other threats too, such as triple digit oil prices and a Sino-US trade war. Tariffs are a drag on GDP, and that’s no good for anyone. But, despite the recent declines, market volatility has been remarkably absent, even in these politically turbulent times.
The old advice possibly still stands …
Sell in May & buy in October.
I went for the Funding Circle IPO, it was really the worst time to invest. It’s on the climb back but bad timing and over ambition IPO pricing has hurt. But I take a long view on this too.
I’m having quite a few disasters this week, but mainly looking to ride them out unless they’re hitting their stops, as nVidia and Sosandar have done. Luckily I dont have much in Patisserie Valerie, but Fever Tree have tanked badly. Knowing them though, they’ll be back in no time. Even Amazon are down heavily, but again, I wouldn’t bet against them. I’ve given up putting stops on Amazon cos you can get caught out by things like employee share sale windows, only to get left behind when the chart ends up looking like the Nike logo…
So - two months on, has anyone lost their shirt? Mine’s definitely gone sleeveless…
yep - lost about 50% of my gains in the last 2 months 