Time to invest in a FTSE 100 tracker?
Discussion
The way I interpret buffets quote might be different as I'm looking at it though a traders mindset.
By greedy I take it to mean the latter stages of a bull market or of the latter stages of a stock's cycle. I.e the point where there is irrational exuberance. I don't mean the gradual run up of a stock over a yr or the fact that it's overvalued I look at in terms of a blow off top, a parabolic rise in the stock or a market in very little time. For example take a look at Netflix's chart or even gold for that matter those near vertical moves is what I believe he means by greedy.
By fearful I'm taking it to mean extreme fear this current market isn't exhibiting that not to me anyway. Yes people may be worried but where's the panic selling, this is all orderly selling. When the Vix is off the charts or when for example like in August the Us markets drop 1000 points in 30 mins that's fear. When the market is opening down 4%-5% each day in a row I'd define that as real fear.
By greedy I take it to mean the latter stages of a bull market or of the latter stages of a stock's cycle. I.e the point where there is irrational exuberance. I don't mean the gradual run up of a stock over a yr or the fact that it's overvalued I look at in terms of a blow off top, a parabolic rise in the stock or a market in very little time. For example take a look at Netflix's chart or even gold for that matter those near vertical moves is what I believe he means by greedy.
By fearful I'm taking it to mean extreme fear this current market isn't exhibiting that not to me anyway. Yes people may be worried but where's the panic selling, this is all orderly selling. When the Vix is off the charts or when for example like in August the Us markets drop 1000 points in 30 mins that's fear. When the market is opening down 4%-5% each day in a row I'd define that as real fear.
I'm going to start bunging a few hundred a month into a S&S ISA pretty soon, probably kick-start it with a few grand and invest in a UK all-co tracker with a rock bottom charge (e.g. Blackrock). This course of action has less to do with what level shares happen to be at right now as it has to do with the fact I have the money spare and probably won't need to access it for a very long time. If you start thinking that you can consistently anticipate future economic events better than the market as a whole, and thus predict the future movement of various indices, you're either a genius who should be earning billions, or wrong. I'm happy to admit that I'm not a financial genius, I know what I don't know, but I see no reason why over the long term investing in the stock market won't give a decent return.
I note your (sort of correctly sloped) line is drawn across the BOTTOM of the troughs in the graph.
IMO it's a bit like saying, "I'm a serious buyer for an air-cooled Porsche 911 but will only actually do it if prices drop back to what they were 15 years ago".
And that projection down to the bottom right-hand corner of the page is likely to turn out as nonsense. I could just as easily draw a line to the top right-hand corner and explain away current market conditions as a minor blip.
As always, we won't know until afterwards and there are no prizes for 20:20 hindsight.
IMO it's a bit like saying, "I'm a serious buyer for an air-cooled Porsche 911 but will only actually do it if prices drop back to what they were 15 years ago".
And that projection down to the bottom right-hand corner of the page is likely to turn out as nonsense. I could just as easily draw a line to the top right-hand corner and explain away current market conditions as a minor blip.
As always, we won't know until afterwards and there are no prizes for 20:20 hindsight.
I should look at a ftse chart more often! That downward sloping trend line you have draw a line connecting the lows and you have a falling wedge pattern. If that breaks out of the top side of the wedge that's going to rip higher possibly back into what looks like 6200
Edited by twinturboz on Friday 12th February 01:15
You can make a chart show whatever you want pretty much, just by choosing the right timescales.
The two big crashes were caused by sudden catastrophes. I'm not convinced the current economic situation qualifies. This is more of a lull (lol). Without those two big drops you could call what's happening now a natural correction/part of the economic cycle of growth and consolidation
The two big crashes were caused by sudden catastrophes. I'm not convinced the current economic situation qualifies. This is more of a lull (lol). Without those two big drops you could call what's happening now a natural correction/part of the economic cycle of growth and consolidation
FarmyardPants said:
You can make a chart show whatever you want pretty much, just by choosing the right timescales.
Indeed, and in that particular chart, the latest drops look identical to the initial downward slopes of the 2 previous drops
This sort of chartology is a bit of a mug's game imo.Ozzie Osmond said:
I note your (sort of correctly sloped) line is drawn across the BOTTOM of the troughs in the graph.
IMO it's a bit like saying, "I'm a serious buyer for an air-cooled Porsche 911 but will only actually do it if prices drop back to what they were 15 years ago".
And that projection down to the bottom right-hand corner of the page is likely to turn out as nonsense. I could just as easily draw a line to the top right-hand corner and explain away current market conditions as a minor blip.
As always, we won't know until afterwards and there are no prizes for 20:20 hindsight.
I agree 100%, but there are three conspicuous tops and two conspicuous bottoms. I can't predict the future but I wouldn't feel comfortable sinking my savings into an index tracker right now, knowing how much lower it could go. If I see 3,900 in the latter half of 2017 I'll throw everything into it. Otherwise a chunk now and another chunk at each significant support level if it keeps going down.IMO it's a bit like saying, "I'm a serious buyer for an air-cooled Porsche 911 but will only actually do it if prices drop back to what they were 15 years ago".
And that projection down to the bottom right-hand corner of the page is likely to turn out as nonsense. I could just as easily draw a line to the top right-hand corner and explain away current market conditions as a minor blip.
As always, we won't know until afterwards and there are no prizes for 20:20 hindsight.
I see that they dug out the Greek story today. Obviously we all knew they were going to need more money and we also know that they'll keep getting it but it shows the banking collapse etc is back on the agenda. Yellen also didn't help this week.
We'd need quite an event to drive it down to the 4000 mark and this sell off is all quite calm and based on information that we all already knew so what it looks more like is a sentiment change rather than an actual economic shock etc.
My guess is that starting to buy now as part of a long term strategy isn't going to go that far wrong and gold can always be used as a hedge etc.
We'd need quite an event to drive it down to the 4000 mark and this sell off is all quite calm and based on information that we all already knew so what it looks more like is a sentiment change rather than an actual economic shock etc.
My guess is that starting to buy now as part of a long term strategy isn't going to go that far wrong and gold can always be used as a hedge etc.
FTSE 100 is now a very odd and narrow index with a few large stocks* and a few sectors dominating. I'm too amateur and small fry (as, I suggest are 99.999% of us) to stock pick or to time the market and have been burned on some individual stocks over the last 20 years so now I take a very boring approach and go for a majority of my investments in low cost trackers, preferably bought within an ISA, income reinvested, with the ISA allowance and any income dripped in relatively regularly over the year rather than trying to time it. Over the last year or two I've been buying SWDA. It tracks the world's biggest 1600 companies, has a 0.2% annual charge and is an accumulation fund (can be useful for stuff outside an ISA, depending on your circumstances).
Ironically *(having referred to the few large stocks in the FTSE 100) even the global 1600 has 10% of its equity in 10 giant companies!
So, in answer to the OP - time to invest? - I've given up that; just invest regularly...
Ironically *(having referred to the few large stocks in the FTSE 100) even the global 1600 has 10% of its equity in 10 giant companies!
So, in answer to the OP - time to invest? - I've given up that; just invest regularly...
To be honest, it's always been that in modern memory. The whole of the U.K. Listed market has been defined by less than 10 stocks for over 20 years. When you buy any ftse index you are buying a basket of around 7 stocks and a load of pointless chaff.
I think the difference today is that there is no growth technology representation in that top group and this makes it stand out.
I think the difference today is that there is no growth technology representation in that top group and this makes it stand out.
contango said:
Also consider many people think they are buying a Uk index with the Ftse.
You really need to to look at the constituents to realize what you are actually buying.
The majors have been far more globalised in recent times.
Very true. I think people got a window into that aspect with the BP oil spill. You really need to to look at the constituents to realize what you are actually buying.
The majors have been far more globalised in recent times.
DonkeyApple said:
To be honest, it's always been that in modern memory. The whole of the U.K. Listed market has been defined by less than 10 stocks for over 20 years. When you buy any ftse index you are buying a basket of around 7 stocks and a load of pointless chaff.
I think the difference today is that there is no growth technology representation in that top group and this makes it stand out.
Wow, that few!I think the difference today is that there is no growth technology representation in that top group and this makes it stand out.
Is Astrazeneca the big pharma?
010101 said:
DonkeyApple said:
To be honest, it's always been that in modern memory. The whole of the U.K. Listed market has been defined by less than 10 stocks for over 20 years. When you buy any ftse index you are buying a basket of around 7 stocks and a load of pointless chaff.
I think the difference today is that there is no growth technology representation in that top group and this makes it stand out.
Wow, that few!I think the difference today is that there is no growth technology representation in that top group and this makes it stand out.
Is Astrazeneca the big pharma?
As mentioned with reference to the FTSE 100 and even the Global 1600, 10 stocks account for 10% of the latter, though a very different sector weighting - i.e. tech-heavy - though the financial sector still is the biggest in that index. Whether that's a good thing is another question of course.
Global 1600 top ten: Apple, Microsoft, Exxon, Johnson & Johnson, General Electric, Wells Fargo, Facebook, Nestle, Amazon, Alphabet.
http://www.morningstar.co.uk/uk/etf/snapshot/snaps...
Global 1600 top ten: Apple, Microsoft, Exxon, Johnson & Johnson, General Electric, Wells Fargo, Facebook, Nestle, Amazon, Alphabet.
http://www.morningstar.co.uk/uk/etf/snapshot/snaps...
GT03ROB said:
Ozzie Osmond said:
Warren Buffett, “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”.
Which as investment guidance goes is about as useful as "buy low / sell high".!! 
See also,
- "leave some for the next man", and/or
- "never sell in a rising market"
One useful investment strategy is to be a regular buyer so that, on average, you are buying at the mid-point of the market's fluctuations. Then try to avoid buying too much when the graph appears to show "high" and buy a bit more when the graph appears to show "low". Like many things in investment it's the simple and rather dull stuff which can pay off nicely over the years.
For me it's worked quite well to buy when others appear to be "fearful". As mentioned above, unless and until capitalism comes to an end the stock markets ought to keep going.
Ozzie Osmond said:
I'm inclined to agree.
See also,
One useful investment strategy is to be a regular buyer so that, on average, you are buying at the mid-point of the market's fluctuations. Then try to avoid buying too much when the graph appears to show "high" and buy a bit more when the graph appears to show "low". Like many things in investment it's the simple and rather dull stuff which can pay off nicely over the years.
Generally you never sell in a rising market but it is wise to leave something for the next man. See also,
- "leave some for the next man", and/or
- "never sell in a rising market"
One useful investment strategy is to be a regular buyer so that, on average, you are buying at the mid-point of the market's fluctuations. Then try to avoid buying too much when the graph appears to show "high" and buy a bit more when the graph appears to show "low". Like many things in investment it's the simple and rather dull stuff which can pay off nicely over the years.
Done. A good IFA can blend any old b
ksy catch phrases together to give the air of knowing something about the markets while covering their arses. Gassing Station | Finance | Top of Page | What's New | My Stuff