Sell Tesla?

ToneControl · March 2022

RandallFlagg said:

ToneControl said:

An interesting narrative here:

The view in late 2020:
https://www.fool.com/investing/2020/12/30/move-over-warren-buffett-theres-a-new-must-follow/

whereas all the news now says the tables are turned:

https://www.thestreet.com/memestocks/reddit-trends/cathie-wood-vs-warren-buffett-who-will-win-in-2022

So the benefit with value investing is that you have a logical reason to expect your investments to weather economic storms, whereas when pursuing growth stocks, your life savings are exposed to much more short to medium term risk. If retirement is 25 years away, this is less important.

Reversion to the mean. Is this not a reinforcement for holding a blended index fund? A mix of growth and value, best of both worlds?

indirectly, yes, but Hathaway is not an index fund

For Buffet , it's all about value investing, so when this less-risky approach brings the same returns as long-term investment in a growth fund, it's worth doing some analysis

ArchtopDave · March 2022

This Berkshire Hathaway/ARK graph shows relatively short term performance for how I look at investing. I'm not saying it's of no value, but, in general I'm more interested assessing funds with 5 to 10 year performance graphs and figures. Graphs, like this one, I'd more use to assess timing of buying or selling.

RandallFlagg · March 2022

ToneControl said:

RandallFlagg said:

indirectly, yes, but Hathaway is not an index fund

For Buffet , it's all about value investing, so when this less-risky approach brings the same returns as long-term investment in a growth fund, it's worth doing some analysis

I'm well aware of that and Warren Buffet's approach to investing. Investing in well established businesses that have no plans to grow could carry as much risk as investing in a well funded high tech startup.

Buffet's contempt for the pigeon holing of companies into terms such as “value” or “growth” is well known. My point is that the graph suggests a fund that contained stocks of both new technology innovation and more established mainstream companies would capture the best of both worlds as a long term investor. But terms “growth” and “value” are interchangeable depending on what a companies age, ambitions and strategy is for use of the future cash it generates and any borrowings.

Warren Buffet:

“Common yardsticks such as dividend yield, the ratio of price to earnings or to book value, and even growth rates have nothing to do with valuation, except to the extent they provide clues to the amount and timing of cash flows into and from the business. Indeed, growth can destroy value if it requires cash inputs in the early years of a project or enterprise that exceed the discounted value of the cash that those assets will generate in later years. Market commentators and investment managers who glibly refer to "growth" and "value" styles as contrasting approaches to investment are displaying their ignorance, not their sophistication. Growth is simply a component - usually a plus, sometimes a minus - in the value equation.”

ToneControl · March 2022

RandallFlagg said:

ToneControl said:

RandallFlagg said:

indirectly, yes, but Hathaway is not an index fund

For Buffet , it's all about value investing, so when this less-risky approach brings the same returns as long-term investment in a growth fund, it's worth doing some analysis

I'm well aware of that and Warren Buffet's approach to investing. Investing in well established businesses that have no plans to grow could carry as much risk as investing in a well funded high tech startup.

Buffet's contempt for the pigeon holing of companies into terms such as “value” or “growth” is well known. My point is that the graph suggests a fund that contained stocks of both new technology innovation and more established mainstream companies would capture the best of both worlds as a long term investor. But terms “growth” and “value” are interchangeable depending on what a companies age, ambitions and strategy is for use of the future cash it generates and any borrowings.

Warren Buffet:

“Common yardsticks such as dividend yield, the ratio of price to earnings or to book value, and even growth rates have nothing to do with valuation, except to the extent they provide clues to the amount and timing of cash flows into and from the business. Indeed, growth can destroy value if it requires cash inputs in the early years of a project or enterprise that exceed the discounted value of the cash that those assets will generate in later years. Market commentators and investment managers who glibly refer to "growth" and "value" styles as contrasting approaches to investment are displaying their ignorance, not their sophistication. Growth is simply a component - usually a plus, sometimes a minus - in the value equation.”

I'm not sure that's an accurate description of Buffett's methodology
https://www.investopedia.com/articles/01/071801.asp#:~:text=He looks at each company,extremely capable of generating earnings.

Describing specific shares as value or growth is simplistic

But that's not what I'm talking about, I'm talking about doing the value investment research - looking for undervalued companies and then waiting for earnings and a likely share price improvement.

This is a good quote:

Buffett, however, isn't concerned with the supply and demand intricacies of the stock market. In fact, he's not really concerned with the activities of the stock market at all. This is the implication in his famous paraphrase of a Benjamin Graham quote: "In the short run, the market is a voting machine but in the long run it is a weighing machine."

RandallFlagg · March 2022

It's all academic to me as I don't look to invest in individual companies, to confidently place a large sum of my money in a single company I would want to meet the management team in person once a year. Satisfying yourself that the company is a worthy investment on day one needs to be a decision under annual review.

I have no time or inclination for that level of professional investing so index funds it is for me and I'll happily take average market returns accordingly.

ToneControl · June 2022

ToneControl said:

RandallFlagg said:

ToneControl said:

Not sure why people think that short-term investments are such a bad idea
with day trading, you can keep your money in zero risk cash, and only invest when something is clearly underpriced

like my mate did yesterday, bought 5000 POLY shares at 550p
sold today for 800p

that's £12.5k profit, in one day

It's always “my mate” that made the money isn't it? And we never hear about the trades that didn't work out or what trades you did

Day trading is a bad idea for the majority of people because statistically, more people lose money than make money day trading, trying to time the market. We always hear about the teenager who made a million in 6 months trading crypto but we don't hear about the people who slowly lose money over a few years through fees and bad trades.

Many millions of people, who have a career, profession or full time job and family that they want to focus on, have no interest in becoming a Wall Street wannabe. They want to take their earnings and invest in a simple way to build up a sum of money they can use in retirement while they get on with their lives.

Buying and holding a low cost index fund or funds, invested in a selection of assets that match your risk appetite and regions that interest you, for the long term, through the ups and downs of the stock market, is a perfectly sensible and proven solution that requires little more than rudimentary knowledge and no effort whatsoever once set up. My investments increased 27.7% (£67K investment growth net of additional contributions) last year by simply doing just that. No trading, no transactions, nothing.

What will the returns be this year? I have no idea, but I do know that over the next 20 years I will do OK. Trying to time the market is incredibly difficult.

On Feb 24 you posted: “I hope you guys are all watching your investments today, time to pay attention” as the Russian invasion of Ukraine commenced and a wave of fear and shock swept around the world.

The S&P500 increased by 1.5% on 24th and 2.24% on 25th. So what exactly was I supposed to be watching and paying attention to?

my mate shut down his other businesses about 15 years ago, and just does trading now
he runs on the basis that 2 successful trades to one unsuccessful is an acceptable ratio
I think he makes over £100k a year typically, last year was more like £300k-£400k
I made a lot last year too, I've not been trading much this year, too busy with work
My mate's predictions are more frequently correct, on Thursday morning he said
S+P will "bounce into 4350 area on friday"
He thinks it will drop to 3660 in April or May, we'll see if he's right

Why did I post?
Even relatively passive investors should be aware of how world events affect their life savings

S+P down to 3656 today, looks like my mate was correct, the dip being just 2-3 weeks later than expected
He's been very busy shorting the S+P, so will have made lots of cash

Lebarque · June 2022

ToneControl said:

ToneControl said:

RandallFlagg said:

ToneControl said:

Not sure why people think that short-term investments are such a bad idea
with day trading, you can keep your money in zero risk cash, and only invest when something is clearly underpriced

like my mate did yesterday, bought 5000 POLY shares at 550p
sold today for 800p

that's £12.5k profit, in one day

It's always “my mate” that made the money isn't it? And we never hear about the trades that didn't work out or what trades you did

Day trading is a bad idea for the majority of people because statistically, more people lose money than make money day trading, trying to time the market. We always hear about the teenager who made a million in 6 months trading crypto but we don't hear about the people who slowly lose money over a few years through fees and bad trades.

Many millions of people, who have a career, profession or full time job and family that they want to focus on, have no interest in becoming a Wall Street wannabe. They want to take their earnings and invest in a simple way to build up a sum of money they can use in retirement while they get on with their lives.

Buying and holding a low cost index fund or funds, invested in a selection of assets that match your risk appetite and regions that interest you, for the long term, through the ups and downs of the stock market, is a perfectly sensible and proven solution that requires little more than rudimentary knowledge and no effort whatsoever once set up. My investments increased 27.7% (£67K investment growth net of additional contributions) last year by simply doing just that. No trading, no transactions, nothing.

What will the returns be this year? I have no idea, but I do know that over the next 20 years I will do OK. Trying to time the market is incredibly difficult.

On Feb 24 you posted: “I hope you guys are all watching your investments today, time to pay attention” as the Russian invasion of Ukraine commenced and a wave of fear and shock swept around the world.

The S&P500 increased by 1.5% on 24th and 2.24% on 25th. So what exactly was I supposed to be watching and paying attention to?

my mate shut down his other businesses about 15 years ago, and just does trading now
he runs on the basis that 2 successful trades to one unsuccessful is an acceptable ratio
I think he makes over £100k a year typically, last year was more like £300k-£400k
I made a lot last year too, I've not been trading much this year, too busy with work
My mate's predictions are more frequently correct, on Thursday morning he said
S+P will "bounce into 4350 area on friday"
He thinks it will drop to 3660 in April or May, we'll see if he's right

Why did I post?
Even relatively passive investors should be aware of how world events affect their life savings

S+P down to 3656 today, looks like my mate was correct, the dip being just 2-3 weeks later than expected
He's been very busy shorting the S+P, so will have made lots of cash

Is your mate Mystic Meg?

ToneControl · June 2022

Lebarque said:

ToneControl said:

ToneControl said:

RandallFlagg said:

ToneControl said:

Not sure why people think that short-term investments are such a bad idea
with day trading, you can keep your money in zero risk cash, and only invest when something is clearly underpriced

like my mate did yesterday, bought 5000 POLY shares at 550p
sold today for 800p

that's £12.5k profit, in one day

It's always “my mate” that made the money isn't it? And we never hear about the trades that didn't work out or what trades you did

Day trading is a bad idea for the majority of people because statistically, more people lose money than make money day trading, trying to time the market. We always hear about the teenager who made a million in 6 months trading crypto but we don't hear about the people who slowly lose money over a few years through fees and bad trades.

Many millions of people, who have a career, profession or full time job and family that they want to focus on, have no interest in becoming a Wall Street wannabe. They want to take their earnings and invest in a simple way to build up a sum of money they can use in retirement while they get on with their lives.

Buying and holding a low cost index fund or funds, invested in a selection of assets that match your risk appetite and regions that interest you, for the long term, through the ups and downs of the stock market, is a perfectly sensible and proven solution that requires little more than rudimentary knowledge and no effort whatsoever once set up. My investments increased 27.7% (£67K investment growth net of additional contributions) last year by simply doing just that. No trading, no transactions, nothing.

What will the returns be this year? I have no idea, but I do know that over the next 20 years I will do OK. Trying to time the market is incredibly difficult.

On Feb 24 you posted: “I hope you guys are all watching your investments today, time to pay attention” as the Russian invasion of Ukraine commenced and a wave of fear and shock swept around the world.

The S&P500 increased by 1.5% on 24th and 2.24% on 25th. So what exactly was I supposed to be watching and paying attention to?

my mate shut down his other businesses about 15 years ago, and just does trading now
he runs on the basis that 2 successful trades to one unsuccessful is an acceptable ratio
I think he makes over £100k a year typically, last year was more like £300k-£400k
I made a lot last year too, I've not been trading much this year, too busy with work
My mate's predictions are more frequently correct, on Thursday morning he said
S+P will "bounce into 4350 area on friday"
He thinks it will drop to 3660 in April or May, we'll see if he's right

Why did I post?
Even relatively passive investors should be aware of how world events affect their life savings

S+P down to 3656 today, looks like my mate was correct, the dip being just 2-3 weeks later than expected
He's been very busy shorting the S+P, so will have made lots of cash

Is your mate Mystic Meg?

nah, but he's made a living for 20 years by trading (well into 6 figures a year), and finds the S&P the easiest to predict, and the least noisy, most of the time he makes his cash betting that the S+P will lose value, he is very good at it

I got interested in 2020, and in April 2020 he predicted the October 2020 falls. It's a strange blend of looking at patterns on charts, and an understanding of the group think psychology of the markets

as well as the way companies work, balance sheets, annual reports, bonds, lending, etc

RandallFlagg · June 2022

ToneControl said:

Lebarque said:

ToneControl said:

ToneControl said:

RandallFlagg said:

ToneControl said:

Not sure why people think that short-term investments are such a bad idea
with day trading, you can keep your money in zero risk cash, and only invest when something is clearly underpriced

like my mate did yesterday, bought 5000 POLY shares at 550p
sold today for 800p

that's £12.5k profit, in one day

It's always “my mate” that made the money isn't it? And we never hear about the trades that didn't work out or what trades you did

Day trading is a bad idea for the majority of people because statistically, more people lose money than make money day trading, trying to time the market. We always hear about the teenager who made a million in 6 months trading crypto but we don't hear about the people who slowly lose money over a few years through fees and bad trades.

Many millions of people, who have a career, profession or full time job and family that they want to focus on, have no interest in becoming a Wall Street wannabe. They want to take their earnings and invest in a simple way to build up a sum of money they can use in retirement while they get on with their lives.

Buying and holding a low cost index fund or funds, invested in a selection of assets that match your risk appetite and regions that interest you, for the long term, through the ups and downs of the stock market, is a perfectly sensible and proven solution that requires little more than rudimentary knowledge and no effort whatsoever once set up. My investments increased 27.7% (£67K investment growth net of additional contributions) last year by simply doing just that. No trading, no transactions, nothing.

What will the returns be this year? I have no idea, but I do know that over the next 20 years I will do OK. Trying to time the market is incredibly difficult.

On Feb 24 you posted: “I hope you guys are all watching your investments today, time to pay attention” as the Russian invasion of Ukraine commenced and a wave of fear and shock swept around the world.

The S&P500 increased by 1.5% on 24th and 2.24% on 25th. So what exactly was I supposed to be watching and paying attention to?

my mate shut down his other businesses about 15 years ago, and just does trading now
he runs on the basis that 2 successful trades to one unsuccessful is an acceptable ratio
I think he makes over £100k a year typically, last year was more like £300k-£400k
I made a lot last year too, I've not been trading much this year, too busy with work
My mate's predictions are more frequently correct, on Thursday morning he said
S+P will "bounce into 4350 area on friday"
He thinks it will drop to 3660 in April or May, we'll see if he's right

Why did I post?
Even relatively passive investors should be aware of how world events affect their life savings

S+P down to 3656 today, looks like my mate was correct, the dip being just 2-3 weeks later than expected
He's been very busy shorting the S+P, so will have made lots of cash

Is your mate Mystic Meg?

nah, but he's made a living for 20 years by trading (well into 6 figures a year), and finds the S&P the easiest to predict, and the least noisy, most of the time he makes his cash betting that the S+P will lose value, he is very good at it

I got interested in 2020, and in April 2020 he predicted the October 2020 falls. It's a strange blend of looking at patterns on charts, and an understanding of the group think psychology of the markets

Good for him, are you putting your cock on the block and trading?

i've increased my salary sacrifice to the max allowable within the tax advantaged £40K annual limit and in a contrarian move I am hoovering up a sizeable chunk of low fee US index fund units, at an increasing discount, each month for long term future rewards, dividends are being reinvested every quarter as well.

Since WWII, units purchased of the S&P500 on the day it goes into bear market (-20%) have, on average, yielded a 22.7% gain within the next 12 months, in 10 out of the 12 bear markets, in 2 cases it took longer.

Regardless of the FUD and panic selling by the weak willed, I buy, month in month out. I reckon we are not at the bottom of the bear market yet so I look forward to buying more units at knock down sale prices for the rest of the year, or as long as it goes on for.

There is not enough capitulation and despair yet to call a bottom but it will come and these cheap units will serve me well in retirement and all I have to do is…nothing.

ToneControl · June 2022

RandallFlagg said:

ToneControl said:

Lebarque said:

ToneControl said:

S+P down to 3656 today, looks like my mate was correct, the dip being just 2-3 weeks later than expected
He's been very busy shorting the S+P, so will have made lots of cash

Is your mate Mystic Meg?

nah, but he's made a living for 20 years by trading (well into 6 figures a year), and finds the S&P the easiest to predict, and the least noisy, most of the time he makes his cash betting that the S+P will lose value, he is very good at it

I got interested in 2020, and in April 2020 he predicted the October 2020 falls. It's a strange blend of looking at patterns on charts, and an understanding of the group think psychology of the markets

Good for him, are you putting your cock on the block and trading?

i've increased my salary sacrifice to the max allowable within the tax advantaged £40K annual limit and in a contrarian move I am hoovering up a sizeable chunk of low fee US index fund units, at an increasing discount, each month for long term future rewards, dividends are being reinvested every quarter as well.

Since WWII, units purchased of the S&P500 on the day it goes into bear market (-20%) have, on average, yielded a 22.7% gain within the next 12 months, in 10 out of the 12 bear markets, in 2 cases it took longer.

Regardless of the FUD and panic selling by the weak willed, I buy, month in month out. I reckon we are not at the bottom of the bear market yet so I look forward to buying more units at knock down sale prices for the rest of the year, or as long as it goes on for.

There is not enough capitulation and despair yet to call a bottom but it will come and these cheap units will serve me well in retirement and all I have to do is…nothing.

I am trading, but not doing the day trading on the indices with large exposure, it's too risky when you have a full time job

At present, a lot of the "dogs" got caned about a month ago, typically they drop before the big shares. Some of them are quite attractive at present, trading far below net value.

ToneControl · October 2022

RandallFlagg said:

ArchtopDave said:

I find the above interesting. I'm on a somewhat different tack. I have got some cash reserves for largely non investment emergency needs if needed, but I accept that this is actually a loss maker when you take inflation into account, as saving interest rates are way below the inflation rate.

On the investment side, I'm selling some of my bond funds on the basis that recently they've held up better than global share prices, and I see this as an opportunity to increase the holdings of the funds (ones invested in shares) that have given me consistent long term performance. Additionally once we get into the 2022/2023 financial year in a couple of weeks, I'll be putting next year's allowance into my ISA, and may be buy a couple of new funds. Clearly, a careful eye needs to be kept on the performance of markets across the globe, and any decision making modified as circumstances evolve.

I have purposefully left building retirement cash until last so it gets eroded by inflation for as less time as possible before being used in drawdown. The rationale being that the source of the cash, ie my wages is index linked through annual pay increases (hopefully).

I already have an emergency fund, a fully funded minimum of 6 months+ of household expenses kept on the sidelines, it's more now. It's been invaluable for unexpected car repairs and vets bills, having an emergency cash fund is probably the best thing I did when getting my financial shit together, along with getting out of debt.

I'm aiming for a total retirement portfolio across my pension, wife's pension and ISA of 70% stocks, 20% bonds (Gilts) and 10% cash plus a separate cash emergency fund. I have built the stocks allocation first and as mentioned above will redirect salary sacrifice contributions to bonds and wrapped cash from 2023 onwards plus any additional savings after tax will add to this, maybe sooner if the market bounces back into the green in the 2nd half of 2022. Once I get to the desired asset allocation I will rebalance annually. I keep things simple, one low cost index fund for my pension, one for my wife's pension and one for our S&S ISA.

which index funds are you using?

RandallFlagg · October 2022

ToneControl said:

RandallFlagg said:

ArchtopDave said:

I find the above interesting. I'm on a somewhat different tack. I have got some cash reserves for largely non investment emergency needs if needed, but I accept that this is actually a loss maker when you take inflation into account, as saving interest rates are way below the inflation rate.

On the investment side, I'm selling some of my bond funds on the basis that recently they've held up better than global share prices, and I see this as an opportunity to increase the holdings of the funds (ones invested in shares) that have given me consistent long term performance. Additionally once we get into the 2022/2023 financial year in a couple of weeks, I'll be putting next year's allowance into my ISA, and may be buy a couple of new funds. Clearly, a careful eye needs to be kept on the performance of markets across the globe, and any decision making modified as circumstances evolve.

I have purposefully left building retirement cash until last so it gets eroded by inflation for as less time as possible before being used in drawdown. The rationale being that the source of the cash, ie my wages is index linked through annual pay increases (hopefully).

I already have an emergency fund, a fully funded minimum of 6 months+ of household expenses kept on the sidelines, it's more now. It's been invaluable for unexpected car repairs and vets bills, having an emergency cash fund is probably the best thing I did when getting my financial shit together, along with getting out of debt.

I'm aiming for a total retirement portfolio across my pension, wife's pension and ISA of 70% stocks, 20% bonds (Gilts) and 10% cash plus a separate cash emergency fund. I have built the stocks allocation first and as mentioned above will redirect salary sacrifice contributions to bonds and wrapped cash from 2023 onwards plus any additional savings after tax will add to this, maybe sooner if the market bounces back into the green in the 2nd half of 2022. Once I get to the desired asset allocation I will rebalance annually. I keep things simple, one low cost index fund for my pension, one for my wife's pension and one for our S&S ISA.

which index funds are you using?

Our portfolio allocation is sure to attract criticism even from index fund advocates due to the extremely heavy US and 100% stocks bias but it's my money and my choice and is a considered choice:

Blackrock US Equity Tracker (tracks the FTSE US Index) - my pension 100% (0.16% total annual fees)
Vanguards VUSA S&P500 ETF - wife's SIPP 100% (0.15% + 0.07% annual fees)
L&G Global Technology Index - S&S ISA 100% (0.70% total ISA annual fees)

I have been toying with switching to Global Equity Indexes (as is the commonly recommended path for indexers) such as the Blackrock MSCI World Index (non hedged) which I have access to for my pension and/or Vanguard's VWRL for my wife's but remain in the above funds, as we have been for a a few years now and I have no fears or concerns about the US's economic outlook for the next 30-50 years that deter me enough. Global funds are 60+% US anyway and it's not the US element that worry's me with global funds, it's the ROW!

My comment above regarding asset allocation - 70% stocks, 20% bonds & 10% cash is under review, it was made before the full effect of this year's bonds crash had unfolded.

I may just carry on holding 80% stock funds and 20% cash and forego the bonds completely. The bonds crash this year has been a bit of an eye opener and I don't like the idea of being in a bond fund that has long duration bonds that are stuck in the mud for years ahead. Some of the bond funds are going to take some time to get back to parity and interest rates haven't stopped rising yet.

My plan is to put all salary sacrifice contributions to cash for 2023 to build up a cash buffer for retirement but I will be tempted to keep buying the equity indexes if the markets keeps dropping.

Feel free to critique, I am at peace and sleep like a baby at night

ToneControl · October 2022

RandallFlagg said:

ToneControl said:

RandallFlagg said:

which index funds are you using?

Our portfolio allocation is sure to attract criticism even from index fund advocates due to the extremely heavy US and 100% stocks bias but it's my money and my choice and is a considered choice:
Blackrock US Equity Tracker (tracks the FTSE US Index) - my pension 100% (0.16% total annual fees)
Vanguards VUSA S&P500 ETF - wife's SIPP 100% (0.15% + 0.07% annual fees)
L&G Global Technology Index - S&S ISA 100% (0.70% total ISA annual fees)
I have been toying with switching to Global Equity Indexes (as is the commonly recommended path for indexers) such as the Blackrock MSCI World Index (non hedged) which I have access to for my pension and/or Vanguard's VWRL for my wife's but remain in the above funds, as we have been for a a few years now and I have no fears or concerns about the US's economic outlook for the next 30-50 years that deter me enough. Global funds are 60+% US anyway and it's not the US element that worry's me with global funds, it's the ROW!

My comment above regarding asset allocation - 70% stocks, 20% bonds & 10% cash is under review, it was made before the full effect of this year's bonds crash had unfolded.

I may just carry on holding 80% stock funds and 20% cash and forego the bonds completely. The bonds crash this year has been a bit of an eye opener and I don't like the idea of being in a bond fund that has long duration bonds that are stuck in the mud for years ahead. Some of the bond funds are going to take some time to get back to parity and interest rates haven't stopped rising yet.

My plan is to put all salary sacrifice contributions to cash for 2023 to build up a cash buffer for retirement but I will be tempted to keep buying the equity indexes if the markets keeps dropping.

Feel free to critique, I am at peace and sleep like a baby at night

I was just surprised to notice you said you had all your pension in one tracker

I think a lot of people have had most cash invested in the US.
AFAIK the world tracker is more than 50% US too

In the FT investing guide I read (by Glen Arnold), btw I recommend reading this, and he starts with the same complaints we all agree on - fund managers performing badly compared to index funds. But also says what I keep going on about - that bright normal, numerate people should be learning this stuff for themselves

Anyway he talked about not keeping US equities in 2019 (since earnings ratio being worst since 1929), but buying "deep value" OK shares, but (since US market drives changes in UK market) also hedging by buying some out-of-the-money put options on the Dow Jones.

I'd recommend learning about this.

RandallFlagg · October 2022

ToneControl said:

RandallFlagg said:

ToneControl said:

RandallFlagg said:

which index funds are you using?

Our portfolio allocation is sure to attract criticism even from index fund advocates due to the extremely heavy US and 100% stocks bias but it's my money and my choice and is a considered choice:
Blackrock US Equity Tracker (tracks the FTSE US Index) - my pension 100% (0.16% total annual fees)
Vanguards VUSA S&P500 ETF - wife's SIPP 100% (0.15% + 0.07% annual fees)
L&G Global Technology Index - S&S ISA 100% (0.70% total ISA annual fees)
I have been toying with switching to Global Equity Indexes (as is the commonly recommended path for indexers) such as the Blackrock MSCI World Index (non hedged) which I have access to for my pension and/or Vanguard's VWRL for my wife's but remain in the above funds, as we have been for a a few years now and I have no fears or concerns about the US's economic outlook for the next 30-50 years that deter me enough. Global funds are 60+% US anyway and it's not the US element that worry's me with global funds, it's the ROW!

My comment above regarding asset allocation - 70% stocks, 20% bonds & 10% cash is under review, it was made before the full effect of this year's bonds crash had unfolded.

I may just carry on holding 80% stock funds and 20% cash and forego the bonds completely. The bonds crash this year has been a bit of an eye opener and I don't like the idea of being in a bond fund that has long duration bonds that are stuck in the mud for years ahead. Some of the bond funds are going to take some time to get back to parity and interest rates haven't stopped rising yet.

My plan is to put all salary sacrifice contributions to cash for 2023 to build up a cash buffer for retirement but I will be tempted to keep buying the equity indexes if the markets keeps dropping.

Feel free to critique, I am at peace and sleep like a baby at night

I was just surprised to notice you said you had all your pension in one tracker

I think a lot of people have had most cash invested in the US.
AFAIK the world tracker is more than 50% US too

In the FT investing guide I read (by Glen Arnold), btw I recommend reading this, and he starts with the same complaints we all agree on - fund managers performing badly compared to index funds. But also says what I keep going on about - that bright normal, numerate people should be learning this stuff for themselves

Anyway he talked about not keeping US equities in 2019 (since earnings ratio being worst since 1929), but buying "deep value" OK shares, but (since US market drives changes in UK market) also hedging by buying some out-of-the-money put options on the Dow Jones.

I'd recommend learning about this.

I really don't want to get into options trading. I want to keep it simple, long term and easy to pass on to my wife and children. Buy & hold index funds forever is my strategy, each to their own.

There are a thousand opinions out there and many roads to Jericho

RandallFlagg · October 2022

In bear markets I recall this sage advice:

"Don't do something, just stand there" John C Bogle

ToneControl · October 2022

RandallFlagg said:

In bear markets I recall this sage advice:

"Don't do something, just stand there" John C Bogle

I've been doing plenty of that!

ToneControl · November 2022

RandallFlagg · November 2022

ToneControl said:

Buy when stocks are down and on sale, that's the path to long term wealth from investing in stocks, not rocket science is it? Cut through the fear as others are selling and buy more. I increased my monthly salary sacrifice 3 fold from February to do just that in US index funds.

Buffet is a master at picking value stocks, and his moves this year are what he's always done, buy when he sees value and holds for the long term.

I'm not, so I take the safer route of buying the whole index, as I realise that while I could learn what Buffet does, just as anyone can study Mike Tyson's moves, it doesn't mean I would be a champion boxer. I know my limits!

ArchtopDave · November 2022

This year's turning out to be very interesting both in terms of the overall bear market, and the very recent sharp recovery (will it be sustained ???). I've been viewing the falls in global markets as providing investment opportunities. It's been a question of trying to avoid being too clever in terms of timing, and I've felt it preferable to invest in funds involved in the more basic areas of commerce.
I came to the decision recently that I'd rather not invest in bond funds. At the beginning of the year I had four, which only represented about 8% of my portfolio. I sold one in April, when I did a bit of rejigging in relation to sorting out the investment of my 2022/2023 ISA allowance, and that included, rather belatedly, buying a holding of Berkshire Hathaway.
In the last 2 weeks, I've sold another of my bond funds, and used the money and this year's accumulated ISA dividend cash to top up a USA fund and two infrastructure funds (the price of both of the latter had held up well this year, until about 3 weeks ago when the price of both dropped about 15% for no obvious reason that I could find). Both have subsequently pleasingly recovered 10%. I've now used up all my ISA cash, though I'll hopefully be looking to boost one of my other holdings, when enough dividend money has accumulated again.

RandallFlagg · November 2022

ArchtopDave said:

This year's turning out to be very interesting both in terms of the overall bear market, and the very recent sharp recovery (will it be sustained ???). I've been viewing the falls in global markets as providing investment opportunities. It's been a question of trying to avoid being too clever in terms of timing, and I've felt it preferable to invest in funds involved in the more basic areas of commerce.
I came to the decision recently that I'd rather not invest in bond funds. At the beginning of the year I had four, which only represented about 8% of my portfolio. I sold one in April, when I did a bit of rejigging in relation to sorting out the investment of my 2022/2023 ISA allowance, and that included, rather belatedly, buying a holding of Berkshire Hathaway.
In the last 2 weeks, I've sold another of my bond funds, and used the money and this year's accumulated ISA dividend cash to top up a USA fund and two infrastructure funds (the price of both of the latter had held up well this year, until about 3 weeks ago when the price of both dropped about 15% for no obvious reason that I could find). Both have subsequently pleasingly recovered 10%. I've now used up all my ISA cash, though I'll hopefully be looking to boost one of my other holdings, when enough dividend money has accumulated again.

Bond funds have started to bounce back hard, well the ones I have noted at least, +20-26% in the last month. I don't hold any bond funds at all so not following too closely. The sharp drop in bonds this year is unwinding from the last decade's low interest rates all in a very short space of time due to the very sharp rate of interest rate rises, in the face of a gradual inflation and interest rate rises it may have taken a decade of so to unwind and been far less painful. They will fully recover in time as individual bonds expire and get replaced/or the yields come down.

I have some decisions to make over the next 2/3 years as I want to move from 100% stock index funds, build some cash and maybe hold my nose and buy some bond funds to smooth out the volatility in retirement. But for now it's still 100% buying of US equity funds.

ArchtopDave · November 2022

@RandallFlagg I kept my comment above as succinct as possible. I do appreciate that you are looking to fund your retirement from your investments, so I can understand that having some bonds in your portfolio in the not too distant future makes sense.

I've held a small percentage of bonds in my portfolio for years, and they have always niggled me a bit. I finally came to the conclusion recently that they do not serve a useful purpose for my circumstances, and they're not a source of interest (in the intellectual sense) to me. When I emailed my stockbroker about this decision, I did comment to her that the timing of my decision was somewhat ironic given what is going on with bond markets globally at the present time. I still hold two bond funds, but will dispose of them whenever the money is needed for investing elsewhere.
I'm retired with my main pension being indexed linked to CPI, for which I am very, very, grateful, and a full State Pension (the older cheaper version), the annual increments of which are subject to the vagaries of government. Currently, my basic living costs are substantially less than my pension income, and I'm able to put money into savings most months of the year. I am therefore both happy to live with, and can cope with, market/portfolio volatility.

I do wonder whether you might be wise to diversify your holdings a bit. I know that the companies behind your funds are large and well respected, but there is potentially some safety in not having "all your eggs in one basket". You could argue that I'm potentially over diversified - I don't have any tracker funds, but I currently have thirty six holdings in my portfolio. Whilst I'm not adverse to adding new holdings, one of my current aims is to go through my ISA portfolio in particular and increase the size of individual funds using the dividend income as it comes in.

RandallFlagg · November 2022

ArchtopDave said:

@RandallFlagg I kept my comment above as succinct as possible. I do appreciate that you are looking to fund your retirement from your investments, so I can understand that having some bonds in your portfolio in the not too distant future makes sense.

I've held a small percentage of bonds in my portfolio for years, and they have always niggled me a bit. I finally came to the conclusion recently that they do not serve a useful purpose for my circumstances, and they're not a source of interest (in the intellectual sense) to me. When I emailed my stockbroker about this decision, I did comment to her that the timing of my decision was somewhat ironic given what is going on with bond markets globally at the present time. I still hold two bond funds, but will dispose of them whenever the money is needed for investing elsewhere.
I'm retired with my main pension being indexed linked to CPI, for which I am very, very, grateful, and a full State Pension (the older cheaper version), the annual increments of which are subject to the vagaries of government. Currently, my basic living costs are substantially less than my pension income, and I'm able to put money into savings most months of the year. I am therefore both happy to live with, and can cope with, market/portfolio volatility.

I do wonder whether you might be wise to diversify your holdings a bit. I know that the companies behind your funds are large and well respected, but there is potentially some safety in not having "all your eggs in one basket". You could argue that I'm potentially over diversified - I don't have any tracker funds, but I currently have thirty six holdings in my portfolio. Whilst I'm not adverse to adding new holdings, one of my current aims is to go through my ISA portfolio in particular and increase the size of individual funds using the dividend income as it comes in.

Ah, the "all your eggs in one basket" analogy. So, between the 3 low cost index funds, held one each, in my pension, my wife's pension and ISA we are invested in around 700 individual large cap companies the majority of which, trade globally. That is more than adequate diversification to eliminate individual company risk. Data shows that individual company risk is pretty much eliminated when around 20 or more individual company stocks are held, just leaving the systematic risk of market sentiment volatility, which all investors in the stock market face, as they do the risk of capitalism collapsing, global economic downturns etc.

However, our funds are concentrated in predominantly US companies, which introduces individual country risk for us, but that is conscious and carefully considered personal decision vs the commonly rolled out advice of “invest globally”. Most market cap weighted global funds are 60-70% US holdings, unless they are a strategically themed managed fund. This choice is a known risk for us.

The other "eggs in one basket" risk we face is asset class risk by being invested in 100% stocks and shares only, but again, after consideration of that main asset classes of government/company bonds, commodities, real estate and cash, it is a deliberate and conscious personal decision. In fact not holding cash until just before retirement has proven to be a smart move, in light of this years's 10% inflation, the purchasing power of any cash I had accumulated for retirement before now would have been eroded significantly already!

When you say you have 36 holdings, do you mean funds or individual assets? If it's funds that contain hundreds or thousands of individual assets it sounds an awful lot to me. Having 36 individual funds in a portfolio must make annual asset allocation and rebalancing quite time consuming and you may be paying more in fees that necessary, especially if they are managed mutual funds. Have you checked if there is any overlap in the underlying holdings and keeping an eye on your total fees across the funds? There is a huge drag on a portfolio over time between say 0.2% annual fees and 1-2%, assuming long term market average returns.

Personally, if I wanted to hold a global selection of market cap weighted stocks I would hold a single low fees global total market index fund such as Vanguard's VWRL or equivalent. If I wanted multi-asset I would hold one low cost index fund for each asset class only.

You mentioned emailing a “stockbroker”. Personally, the thought of that makes my teeth itch

. I'm not sure I understand the purpose of needing a stockbroker these days with the plethora of online platforms.

ArchtopDave · November 2022

My "eggs in one basket" comment wasn't referring to the ways that you have taken it, though I agree with the comments that you have made. I was simply referring to the fact that both you and your wife are each only invested in a single company's fund. To me that is a risk given how the history of finance and savings is littered with apparently satisfactory, or well known, companies or funds suddenly going pear shaped . You only have to look at last week, where FTX, which promoted itself as being at the respectable end of the Crypto industry, fell apart with considerable rapidity. If you each only bought one other company's fund, then you would be halving this particular risk.

I would also entirely agree with you that a number of my funds are invested to some degree in the same companies, but their overall investment portfolios do vary. I was being a little cheeky mentioning my stockbroker as I'm aware that you prefer to manage your own investments and savings. However I started investing many years before ordinary mortals had either computers at home, let alone access to an internet that actually functioned at any sort of speed. I also learnt a long time ago that I wasn't able to do a job with long hours, involve myself with home life, and keep a regular eye on the financial markets. This was brought home bluntly to me when ordinary investors were allowed access to the options market. I only experimented with a small amount of money for about year, but soon realised that the time scale for 6 or 9 month options disappeared remarkably quickly, and this was wasting money and I didn't have the time to allocate to it. I know that there are costs to using a stockbroker, but I'm happy to continue. My portfolio has done well particularly in recent years to the extent that I begun to feel a bit uncomfortable in 2020/2021 when valuations rose sharply, and when I also knew that Covid and lockdowns were making life very difficult for many people - including my daughter being furloughed twice and then made redundant from her first job.

ToneControl · November 2022

re: the Eggs in one basket
Bear in mind the FSCS limit

Also some Index ETFs are "synthetic"
There were some worries that they might unwind in a way causing extra losses under certain market conditions

RandallFlagg · November 2022

ToneControl said:

re: the Eggs in one basket
Bear in mind the FSCS limit

Also some Index ETFs are "synthetic"
There were some worries that they might unwind in a way causing extra losses under certain market conditions

The £85K protection is worth noting I agree, but it's hard to deal with when it's your workplace pension that has accumulated several times that limit of protection.

Agree also on the synthetic ETF replication risks, we only hold one ETF, via Vanguard, my wife's SIPP and it is physically replicated according to them: “ All Vanguard ETFs are physically replicated. Synthetic ETFs rely on derivatives, mainly swaps, to execute their investment strategy.”

RandallFlagg · November 2022

ArchtopDave said:

My "eggs in one basket" comment wasn't referring to the ways that you have taken it, though I agree with the comments that you have made. I was simply referring to the fact that both you and your wife are each only invested in a single company's fund.

Ah got it, sorry misunderstood the very valid point you were making. Yes, it's a challenge as the bulk of our money is in my workplace pension, way over the FSCS compensation limit. Not sure how that can be mitigated to be honest.

ToneControl · November 2022

RandallFlagg said:

ArchtopDave said:

My "eggs in one basket" comment wasn't referring to the ways that you have taken it, though I agree with the comments that you have made. I was simply referring to the fact that both you and your wife are each only invested in a single company's fund.

Ah got it, sorry misunderstood the very valid point you were making. Yes, it's a challenge as the bulk of our money is in my workplace pension, way over the FSCS compensation limit. Not sure how that can be mitigated to be honest.

Is that one a final salary scheme?

RandallFlagg · November 2022

ToneControl said:

RandallFlagg said:

ArchtopDave said:

My "eggs in one basket" comment wasn't referring to the ways that you have taken it, though I agree with the comments that you have made. I was simply referring to the fact that both you and your wife are each only invested in a single company's fund.

Ah got it, sorry misunderstood the very valid point you were making. Yes, it's a challenge as the bulk of our money is in my workplace pension, way over the FSCS compensation limit. Not sure how that can be mitigated to be honest.

Is that one a final salary scheme?

Yeah

RandallFlagg · November 2022

In other news...

Berkshire Hathaway (Warren Buffet) have piled $4.1BN into Taiwan Semiconductor Manufacturing Co Ltd stock

RandallFlagg · November 2022

Does anyone have any thoughts on currency risk when holding foreign stocks?

Having international stock funds can expose a portfolio to fx variations, which can be good or bad depending on the prevailing winds. It has been favorable to hold US stocks from the last decade as the pound has dropped in value against the dollar, but that's not always been the case.

Internet wisdom appears to recommend against currency hedging equity/stock investments. Even if you hold a global index tracker you are typically only 4% UK so 96% exposed to fx variations. I have access to a hedged and non-hedged global index, but don't hold either currently.

So, should you overweight in UK stocks? forget about it? or balance an overseas equity portfolio with UK based bonds/gilts?

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