Shares dealing for the part time investor?

[steveatesh]

My son has decided that he wants to dabble on the shares side of things. So straight shares rather than funds.

He has suggested the Halifax share dealing service, and asked my view but i have no knowledge of this or any other share dealing service for the non professional.

Anybody got any experience of share dealing services that would suit his circumstances (i.e. buy buy/sell shares now and again and only in small amounts) that i can recommend to him?

I imagine charges may vary, anything else to look out for please?

[eltawater]

I've been using x-o as an online share dealing service quite happily for the past few months although some of my investments have recently taken a bit of a tanking with the general downturn in the market.

In it for the long haul though so we'll see where brexit leaves us.

[walm]

Tell him to spend the money on coke and hookers.
It's more fun and certainly more rewarding.

He will lose.
Maybe not immediately but sooner or later.
Any wins he has will be blind luck.

Retail investors are at a ridiculous disadvantage.

He should take Warren Buffett's advice and stick to low cost trackers.
http://www.marketwatch.com/story/warren-buffetts-i...

[Ozzie Osmond]

What age is this son?

It's very easy to set up and run a dummy portfolio on an Exel spreadsheet for a few months and see how things look before committing any hard cash to the project.

The vast majority of successful DIY private investors who I know buy funds (including the indexes mentioned by walm) rather than trading individual shares. There are professional investment managers working in the sanctified square mile who are paid vast salaries and have huge resources at their fingertips for dealing in individual shares. The direct investor must first conclude it's not worth paying them for their efforts...

[Hoofy]

Retitle this thread "Share dealing for the part-time gambler?" and have a think about whether it's worth his time and money.

[bad company]

I have been a part time share investor for some years and use Halifax share dealing, they are very good & not expensive.

I don't understand why people here are saying it's too risky, it isn't. Your son needs to do his research and accept that he will have winners & losers but overall he should make a profit. I would recommend a subscription to the Investors Chronicle.

[walm]

bad company said:

I have been a part time share investor for some years and use Halifax share dealing, they are very good & not expensive.

I don't understand why people here are saying it's too risky, it isn't. Your son needs to do his research and accept that he will have winners & losers but overall he should make a profit. I would recommend a subscription to the Investors Chronicle.

How did you do in 2008? And 2001?

As Ozzie says, you have to compete with people who have access to all the research, management, breaking news, live prices, they work 24/7 and STILL underperform the market on average.

The world's greatest investor suggests an index fund, but why listen to him...

Here the best study, which shows from 1975 to 2006 99.4% of professional fund managers "displayed no evidence of genuine stock picking skill".
http://www-stat.wharton.upenn.edu/~steele/Courses/...

Or on retail punters (you):
"Trading Is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors."
Of 66,465 households with accounts at a large discount broker during 1991 to 1996, those that traded most earned an annual return of 11.4 percent, while the market returned 17.9 percent.
http://faculty.haas.berkeley.edu/odean/papers%20cu...

[Simpo Two]

Ozzie Osmond said:

The vast majority of successful DIY private investors who I know buy funds (including the indexes mentioned by walm) rather than trading individual shares. There are professional investment managers working in the sanctified square mile who are paid vast salaries and have huge resources at their fingertips for dealing in individual shares. The direct investor must first conclude it's not worth paying them for their efforts...

walm said:

As Ozzie says, you have to compete with people who have access to all the research, management, breaking news, live prices, they work 24/7 and STILL underperform the market on average.

Here the best study, which shows from 1975 to 2006 99.4% of professional fund managers "displayed no evidence of genuine stock picking skill".

There seems to be a slight contradiction there... but the choice would appear to be (a) lose money yourself, or (b) pay an expert to lose it for you!

Essentially if the markets go up you will make money, if they go down you will lose. To get out of that roller coaster you need to be either very clever, brave or plain lucky. A chimpanzee can make money in a rising market.

[walm]

Simpo Two said:

There seems to be a slight contradiction there... but the choice would appear to be (a) lose money yourself, or (b) pay an expert to lose it for you!

Essentially if the markets go up you will make money, if they go down you will lose. To get out of that roller coaster you need to be either very clever, brave or plain lucky. A chimpanzee can make money in a rising market.

That's a fair point.
I didn't want to flat our disagree with Ozzie - I think you would make more money with a pro than doing it yourself.
But yet more still if you just track cheaply.

[bad company]

I do have a funds portfolio with Hargreaves Lansdown, showing a modest profit but I draw the dividend income from that so fair enough,

My Halifax portfolio is all shares & showing a profit of over 60% of capital. I'm not suggesting that a newbie should put all their money in but gradually build up with experience & help from as I said previously the IC and/or similar.

[Simpo Two]

walm said:

That's a fair point.
I didn't want to flat our disagree with Ozzie - I think you would make more money with a pro than doing it yourself.
But yet more still if you just track cheaply.

I've been invested in various things since about 1999, and watched various professionals make me money and then lose it time and again. The IFA who boasted that he monitored the markets every day and would call me if anything needed to be done - did exactly nothing through the whole tech crash of 2000 - and then sent me a bill! The annoying thing is that I'm not any more competent than they are.

I think in good times a pro (by which I mean a fund manager) will make you money and cover his costs. But in bad times you'll get the loss AND his costs. And let's not even start talking about platforms. Add an IFA on top and that's at least four layers of costs coming out of whatever gain you might have made.

A low cost tracker will be great, but they track down as well as up...!

And so this week I've started to get a bit pro-active and put my money where my mouth is. The only thing is I didn't expect the markets to rise until after the referendum, so was a week late and may have missed a good chunk of the action. On the plus side, the long term aim is dividends so if I lose the quick buck it's not the end of the world.

Edited by Simpo Two on Thursday 23 June 18:20

[bad company]

walm said:

bad company said:

I have been a part time share investor for some years and use Halifax share dealing, they are very good & not expensive.

I don't understand why people here are saying it's too risky, it isn't. Your son needs to do his research and accept that he will have winners & losers but overall he should make a profit. I would recommend a subscription to the Investors Chronicle.

How did you do in 2008? And 2001?

Better than the fund managers (Lloyds Private Bank) I was using at the time.

[Ozzie Osmond]

Yes, that's fine - but what are the trackers actually tracking?

To my mind the nature of a market is such that it can only reflect the aggregated views of its participants, who are in this case active managers and investors. So if you track the market you're tracking that aggregated view. If there were no active managers there would be no market to track!

• A tracker can, by definition, never beat the market.
• A tracker can, by definition, never spot the "next big thing" before the market.
• An active manager can get out of something if it's going wrong whereas a tracker will track it all the way down.
• An active manager has the possibility of beating the market, however difficult/unlikely.

Now I know that tracking has been proven to be a decent - but I need a bit of "upside potential" to keep me interested.

At the moment I'm fully invested so the outcome of today's voting may become significant! On the other hand, being out of the market would be a massive bet in itself. When push comes to shove, once you've understood the risk roundabout you realise you can never truly get off - you can adjust the balance of your risks but you can never make them go away. Welcome to the Hotel California....

[bad company]

Some very good points Ozzie.

I would add that investing is fun, I really enjoy playing and hopefully beating the market even if walm thinks its impossible.

[BoRED S2upid]

As others have said charges will wipe out any profits fairly quickly when trading small amounts isn't it £3-£4 a trade for Halifax? Plus they only make your trade on a certain day of the month when you come to sell? Hardly the Buy / Sell urgency you may want, fine if your holding them for a long time.

Don't discourage him from trying though encourage him to research the companies in depth first and learn what to look out for it may do him some good in the future if he wants to study. Also encourage him to "invest" only as much as he can afford to loose.

[bad company]

BoRED S2upid said:

As others have said charges will wipe out any profits fairly quickly when trading small amounts isn't it £3-£4 a trade for Halifax? Plus they only make your trade on a certain day of the month when you come to sell? Hardly the Buy / Sell urgency you may want, fine if your holding them for a long time.

Halifax share dealing is instant otherwise I wouldn't use them.

[Simpo Two]

bad company said:

Halifax share dealing is instant otherwise I wouldn't use them.

Not 'T-2'? I don't think I can sell the shares I bought today until Monday. I also used First Direct, and they have a bizarre system of 'lending' you the money you need to buy the shares even if you have it sitting in your current account - then claiming it back a few days later. There must be a reason but it escapes me. Perhaps they like a few days to play banana futures. So anyway, when my FD credit limit was used up I moved to Computershare.

Quite why they need two days or more to process a share deal is beyond me - perhaps a cunning plan to keep the private investor one step behind the instititions?

[steveatesh]

Thanks everybody, I'll distill these points and discuss it with him. Appreciate all your time and advice

[walm]

Simpo Two said:

bad company said:

Halifax share dealing is instant otherwise I wouldn't use them.

Not 'T-2'? I don't think I can sell the shares I bought today until Monday. I also used First Direct, and they have a bizarre system of 'lending' you the money you need to buy the shares even if you have it sitting in your current account - then claiming it back a few days later. There must be a reason but it escapes me. Perhaps they like a few days to play banana futures. So anyway, when my FD credit limit was used up I moved to Computershare.

Quite why they need two days or more to process a share deal is beyond me - perhaps a cunning plan to keep the private investor one step behind the instititions?

OK you have a fundamental misunderstanding here.
(Not being rude - it's incredibly complex and very non-obvious!)
All SHARE dealing is instant (it's FUND dealing that typically happens just once a day, usually with a day lag).
MOST shares "settle" at T+2.
But that doesn't really matter. You get the price you are quoted in the instant, NOT the price two days later.

AND most importantly you SHOULD have the money available instantly to reinvest elsewhere.
Although your balance will be screwed up while it all settles.

The institutions are no better off than the punters on this one.

[bad company]

walm said:

Simpo Two said:

bad company said:

Halifax share dealing is instant otherwise I wouldn't use them.

Not 'T-2'? I don't think I can sell the shares I bought today until Monday. I also used First Direct, and they have a bizarre system of 'lending' you the money you need to buy the shares even if you have it sitting in your current account - then claiming it back a few days later. There must be a reason but it escapes me. Perhaps they like a few days to play banana futures. So anyway, when my FD credit limit was used up I moved to Computershare.

Quite why they need two days or more to process a share deal is beyond me - perhaps a cunning plan to keep the private investor one step behind the instititions?

OK you have a fundamental misunderstanding here.
(Not being rude - it's incredibly complex and very non-obvious!)
All SHARE dealing is instant (it's FUND dealing that typically happens just once a day, usually with a day lag).
MOST shares "settle" at T+2.
But that doesn't really matter. You get the price you are quoted in the instant, NOT the price two days later.

AND most importantly you SHOULD have the money available instantly to reinvest elsewhere.
Although your balance will be screwed up while it all settles.

The institutions are no better off than the punters on this one.

That summed it up rather well. When I trade funds in my Hargreaves Lansdown account their is a delay but the shares I trade thru Halifax are instant.