Whoa! ISA plummets
Discussion
The only certainties,
- Financial commentators don't back their "wisdom" with their own cash. They collect their salary and go home.
- Financial advisors get paid whether the market goes up, down or sideways.
- Investment managers get paid whether the market goes up, down or sideways.
- If your money increases it's due to the brilliance of advisers/managers.
- If your money decreases it's "due to market forces" beyond the control of advisers/managers.
- A personal hobby-horse of mine - Robert Peston is an idiot.
KTF said:
He was sporting a very fetching plaster under his glasses on the 10 tonight.
I am sure he isn't daft but his delivery is awful.
Was that what it was? I couldn't work it out. I am sure he isn't daft but his delivery is awful.
I think the big question is whether this is still just a bubble correction, or something more serious. We're too close to it to know for certain. The only thing I do know is that the Chinese government should stop fiddling.
davepoth said:
I think the big question is whether this is still just a bubble correction, or something more serious. We're too close to it to know for certain. The only thing I do know is that the Chinese government should stop fiddling.
I thought the PH view was that politician should stay out of markets (as St. Margaret said "You can't buck the market")?The only exception to letting the market provide a solution is when bankers need to be bailed out.
Ozzie Osmond said:
The only certainties,
My mum always says how Robert Peston is so clever. My reply is that if he's that clever, he wouldn't be standing outside the LSE at 6am in the pouring rain. He'd be on his yacht in the Bahamas.- Financial commentators don't back their "wisdom" with their own cash. They collect their salary and go home.
- Financial advisors get paid whether the market goes up, down or sideways.
- Investment managers get paid whether the market goes up, down or sideways.
- If your money increases it's due to the brilliance of advisers/managers.
- If your money decreases it's "due to market forces" beyond the control of advisers/managers.
- A personal hobby-horse of mine - Robert Peston is an idiot.
iantr said:
Hmmm. I always enjoy your reasoned and insightful posts here, but I'm not sure about this statement. Markets have perhaps always been efficient in the long run. In recent years they have become very fast also. But that speed is not always allied with the requisite accuracy in (re)pricing. I think that markets have actually become less efficient in the short term, as evidenced by the S&P500 thrashing about like a carp in a boat for the first hour or two of trading yesterday. Anything but efficient, and best viewed from a distance!
Hi Ian,Great analogy! Good points too.
I suppose that I do focus on the long term. In the short term, they're like a fighter at low level, with only the slightest input required to avoid it from skidding through thick air. In the long distance, they're an airlifter at 30,000 feet.. course set, autopilot engaged.. now let's focus on operating the crew microwave.
I refer to efficiency because (yes, they're fast - too fast) we forget. They make money for people as well. Sure, folk have lost billions but folk have made billions too (least of all, H-L and other brokers, and opportunistic traders too). That will all get fed back in and never reported on.
If you subscribe to Lipper, looking at where the big money is going and what it's doing.. fascinating!
Ozzie Osmond said:
Every single market fall in the last century has subsequently recovered over the course of a few years. Why should this one be any different?
Translated for ordinary humans, sequential return risk simply means that it's harder for a "pot" to recover if you are spending from it day-to-day. But with the typical retiree now having a life expectancy around 25 years I think they'd have to be crackers to give up on risk investments. Take for example 2009 when "the end of the world was nigh" and the market fell to 4000. The market has even today substantially recovered at 6000 (compared with the 7000 high) and anyone who invested in 2009 is sitting on a 50% capital gain as well as having received a nice 6 years of income.
Don't panic.
You've just demonstrated why sequential risk (or pound cost ravaging, the antithesis of pound cost averaging) *is* important. Unless a client is suitably well heeled or has inter generational planning on his mind, this past 6 weeks IS going to affect him.Translated for ordinary humans, sequential return risk simply means that it's harder for a "pot" to recover if you are spending from it day-to-day. But with the typical retiree now having a life expectancy around 25 years I think they'd have to be crackers to give up on risk investments. Take for example 2009 when "the end of the world was nigh" and the market fell to 4000. The market has even today substantially recovered at 6000 (compared with the 7000 high) and anyone who invested in 2009 is sitting on a 50% capital gain as well as having received a nice 6 years of income.
Don't panic.
I'm not panicking.
But those people who need to rely on funds to bolster a modest retirement, the reality means they will probably have to change their plans and spending habits considerably. The markets giveth and the markets taketh away, they don't suffer fools lightly.
Savers must get rid of stupid ideas of making 12/15/18% because they've been told of someone's mate who got onboard some wacky index, and focus instead on planning early, planning realistically (hitting 5/6% over the long term with metronome like efficiency) and planning sensibly and paying cheaply.
Talk of troughs, peaks, crashes and bubbles can become some other idiot's problem. This will correct itself, losing money on paper is a bugger. But making money on paper is equally illusionary.
Ginge R said:
But those people who need to rely on funds to bolster a modest retirement, the reality means they will probably have to change their plans and spending habits considerably.
I just don't believe that - and I know that you of all people should know - so it's a little worrying.Some MAJOR markets are broadly flat YTD e.g. the EuroStoxx.
Sure the FTSE and the Yanks are down but then the Yanks had a great 2014.
So if you have retirees who saw a good 18 months up to March and adjusted their spending habits as a result then they are getting BAD advice.
You shouldn't be seeing short term performance (18 months) and banking on it.
That's madness.
croyde said:
I did ask earlier.
I have a Neil Woodford fund bought in April. Was doing very well but all the gains have now been lost and I now have less than I put in.
I realise it should do well in the long term but as his quote above speaks about fully expecting the China crash, how come I've just lost a load of money.
Do the managers continue to look after these funds after they are bought or do they just invest your money at the beginning and then just leave it?
They will be changing things regularly don't worry about that and he has many many years under his belt so will be experienced in these things. See where your at in 12 months Woodford doesn't have huge exposure to China. I have a Neil Woodford fund bought in April. Was doing very well but all the gains have now been lost and I now have less than I put in.
I realise it should do well in the long term but as his quote above speaks about fully expecting the China crash, how come I've just lost a load of money.
Do the managers continue to look after these funds after they are bought or do they just invest your money at the beginning and then just leave it?
walm said:
R11ysf said:
And that is one of the biggest cons of the entire industry - outperform the market. So if the market is off 20% and you are only down 10% then you did "well". I'd prefer totally discretionary funds where they can go short or write/sell options against the position and try and MAKE money in ANY market, not just outperform.
That's what I'd pay my management fee for, spotting the market weaknesses and doing something about it in advance to capitalise on it, not just pick stocks that don't get hit as hard by it.
You just described the entire genesis of the hedge fund.That's what I'd pay my management fee for, spotting the market weaknesses and doing something about it in advance to capitalise on it, not just pick stocks that don't get hit as hard by it.
The retail market get screwed through lack of knowledge and bulls
t talk to confuse the general public. Why do I give a fk if you "outperform" if I lost 20% of my money....oh and I paid you for the privilege of losing it!! Every time I hear the name Woodford I just think PR and spin and some people in the industry getting very rich. davepoth said:
Was that what it was? I couldn't work it out.
Yes, others spotted it as well. http://forums.digitalspy.co.uk/showthread.php?t=20...I guess his glasses were rubbing or something. Very odd all the same.
Hoofy said:
My mum always says how Robert Peston is so clever. My reply is that if he's that clever, he wouldn't be standing outside the LSE at 6am in the pouring rain. He'd be on his yacht in the Bahamas.
Anyway, back on topic
Ozzie Osmond said:
Every single market fall in the last century has subsequently recovered over the course of a few years. Why should this one be any different?
Translated for ordinary humans, sequential return risk simply means that it's harder for a "pot" to recover if you are spending from it day-to-day. But with the typical retiree now having a life expectancy around 25 years I think they'd have to be crackers to give up on risk investments. Take for example 2009 when "the end of the world was nigh" and the market fell to 4000. The market has even today substantially recovered at 6000 (compared with the 7000 high) and anyone who invested in 2009 is sitting on a 50% capital gain as well as having received a nice 6 years of income.
Don't panic.
That's what I keep telling my retired in-laws. They have hundreds of thousands in cash investments earning bugger all (and spread around different banks because of the FSCS limit). They're too worried about the "risk" of equities to invest in them, but are blind to the certain real-terms loss they are making by holding cash.Translated for ordinary humans, sequential return risk simply means that it's harder for a "pot" to recover if you are spending from it day-to-day. But with the typical retiree now having a life expectancy around 25 years I think they'd have to be crackers to give up on risk investments. Take for example 2009 when "the end of the world was nigh" and the market fell to 4000. The market has even today substantially recovered at 6000 (compared with the 7000 high) and anyone who invested in 2009 is sitting on a 50% capital gain as well as having received a nice 6 years of income.
Don't panic.
walm said:
I just don't believe that - and I know that you of all people should know - so it's a little worrying.
Some MAJOR markets are broadly flat YTD e.g. the EuroStoxx.
Sure the FTSE and the Yanks are down but then the Yanks had a great 2014.
So if you have retirees who saw a good 18 months up to March and adjusted their spending habits as a result then they are getting BAD advice.
You shouldn't be seeing short term performance (18 months) and banking on it.
That's madness.
Before I launch a typically Pistonheads pompous blast by way of a retort, let me confirm.. are you suggesting that sequential risk is a fallacy? Some MAJOR markets are broadly flat YTD e.g. the EuroStoxx.
Sure the FTSE and the Yanks are down but then the Yanks had a great 2014.
So if you have retirees who saw a good 18 months up to March and adjusted their spending habits as a result then they are getting BAD advice.
You shouldn't be seeing short term performance (18 months) and banking on it.
That's madness.
I see things top down, I cannot think of a single adviser who would advise spending more (or less) on the basis of having a good eighteen months. If a client needs, say, 5% growth and if a client makes 8, most advisers will quietly ringfence that as contingency for a lean period. Not as spend. To look at an eighteen month period in isolation is pointless.
But rather, and let's forget the guy who had a good eighteen months, what about someone entering drawdown three months ago? To suggest that sequential risk doesn't exist is to deny the logic of mathematics. It's the sort of jumbo jumbo that speculators cling on to. I may have got your point completely wrong; if so, apologies.
The point I made, and which you commented on, was about the impact of a big loss. Not a gain.
Ginge R said:
The point I made, and which you commented on, was about the impact of a big loss. Not a gain.
The point you made was that the recent drop entailed people having to change their spending habits.It seemed like a real world comment - I thought. Talking about real people making life-changing decisions. Not a hypothetical. (I may have that wrong, in which case sorry.)
I replied that we had a big run-up ahead of this recent drop so for someone to have to materially change their spending plans NOW implies that they ramped them up during the "good times" of the preceding 18 months.
i.e. We are essentially back where we were 18 months ago - ish. Therefore whatever plan was in place THEN is surely still relevant NOW. So unless they ramped up (which they shouldn't) there is no need to change???
Of course if we had slow steady 5-6% growth and suddenly a 30% drop then YES you need to change but that isn't what happened here is it?!
R11ysf said:
I know and that's why I invest (and work) in one of them
The retail market get screwed through lack of knowledge and bullst talk to confuse the general public. Why do I give a fk if you "outperform" if I lost 20% of my money....oh and I paid you for the privilege of losing it!! Every time I hear the name Woodford I just think PR and spin and some people in the industry getting very rich.
I'd like to see a cost benefit analysis for a DFM that can achieve that, and safely. I saw a DFM fund fact sheet yesterday, that promoted an 85% equity holding as acceptable for a below average capacity for risk/loss. It isn't just about making money, it's about doing it safely, over the medium/long term (however unfashionable that phrase might be).The retail market get screwed through lack of knowledge and bulls
t talk to confuse the general public. Why do I give a fk if you "outperform" if I lost 20% of my money....oh and I paid you for the privilege of losing it!! Every time I hear the name Woodford I just think PR and spin and some people in the industry getting very rich. I agree about the big name funds. In the main, pointless, counter-intuitive and unjustifiable. A private investor dabbling in instruments more complicated than that is likely to get his fingers burned.
Talk and analysis on zero hedge about another 'flash crash' yesterday.
Hmm, flash crash trader Navinder Singh Sarao bailed on 15 August, markets plummet a week or so later...
I am kidding of course. But this scapegoat really could have done with this happening while he was still in custody!
Hmm, flash crash trader Navinder Singh Sarao bailed on 15 August, markets plummet a week or so later...
I am kidding of course. But this scapegoat really could have done with this happening while he was still in custody!
walm said:
The point you made was that the recent drop entailed people having to change their spending habits.
It seemed like a real world comment - I thought. Talking about real people making life-changing decisions. Not a hypothetical. (I may have that wrong, in which case sorry.)
I replied that we had a big run-up ahead of this recent drop so for someone to have to materially change their spending plans NOW implies that they ramped them up during the "good times" of the preceding 18 months.
i.e. We are essentially back where we were 18 months ago - ish. Therefore whatever plan was in place THEN is surely still relevant NOW. So unless they ramped up (which they shouldn't) there is no need to change???
Of course if we had slow steady 5-6% growth and suddenly a 30% drop then YES you need to change but that isn't what happened here is it?!
Folk underestimate their longevity. I saw an actuarial report last night which showed that despite the shifting to the right, 50% of people will still live 1.5 years longer than their estimated page at death. You cannot avoid that, to subordinate people's contentment in old age to satisfy investing theory is wrong. It seemed like a real world comment - I thought. Talking about real people making life-changing decisions. Not a hypothetical. (I may have that wrong, in which case sorry.)
I replied that we had a big run-up ahead of this recent drop so for someone to have to materially change their spending plans NOW implies that they ramped them up during the "good times" of the preceding 18 months.
i.e. We are essentially back where we were 18 months ago - ish. Therefore whatever plan was in place THEN is surely still relevant NOW. So unless they ramped up (which they shouldn't) there is no need to change???
Of course if we had slow steady 5-6% growth and suddenly a 30% drop then YES you need to change but that isn't what happened here is it?!
If a new client came to me and told me that he had lost 22% in a geared tracker in the course of three days, then that WILL have an effect on his future plans and thinking. He may have to go back to work, rely on less to avoid further depletion. Theoretical maybe, but a fact nonetheless. 18 month snapshots aside, market turbulence can kill a fund's objectives.
This sort of blog is everywhere these days, but the maths is indisputable. Go to the end bit where the sequence of return is flipped on its head, the guy runs out (I think) four years early. In essence, if you lose 10% in a week, and it takes you a further three weeks to recover 10%, you are still much worse off. http://triblive.com/business/headlines/8974860-74/...
That is why some savers run out of time and/or money if they fail to heed sequential risk.
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