Just how far can Covid 19 drive down the markets?
Discussion
It's an opinion pice but David Buik is someone I listen to most days as he's on LBC and he has a blog.
https://davidbuik.wordpress.com/2020/04/09/investo...
https://davidbuik.wordpress.com/2020/04/09/investo...
Jon39 said:
If your decision now is the result of what has just occurred, are you perhaps new to investing since the previous recession(s) ?
You're right though I haven't been invested through anything like this before though and it's been an eye opener around appetite for volatility etc.
I suspect I'm not alone there and unfortunately some people might have had a harder more uncomfortable lesson.
b
hstewie said:
hstewie said:Phooey said:
Well It just shows how little i know then. I genuinely thought the chart was interesting as it showed how the "industry's best selling funds" have performed between 19th Feb and 3rd April. As per the comments at the end of the article it's a shame Fundsmith and LT are missing, but still it makes for interesting comparisons (IMO).
As you were then
eta - yeah I noticed it's a week out of date - would of been good to of included this weeks bounce.
Remember than on almost any forum any IFA will have a theme in their replies which is often along the lines of you're making a mistake and doing something they wouldn't do but with very little clue as to what the mistake is or what they would do.As you were then
eta - yeah I noticed it's a week out of date - would of been good to of included this weeks bounce.
But if you pay them they'll help protect you from yourself.
I give benefit of the doubt that it's because they're regulated and have to be careful but you'd almost think it's designed to instil doubt in potential clients.
https://www.pistonheads.com/gassing/topic.asp?h=0&...
janesmith1950 said:
Like lawyers and accountants, you pay for an IFAs time and knowledge. These things are no longer valuable if you give them away for free.
No comment on the fact that you can qualify as an IFA in weeks yet it takes years to become a lawyer or accountant, of course.
Nonsense. No comment on the fact that you can qualify as an IFA in weeks yet it takes years to become a lawyer or accountant, of course.
Derek apologies if it came across as unduly harsh as I think you post some really useful stuff that can help people to learn if they have the time and inclination.
But I'm afraid I do think there's a theme where IFAs seem to invoke fear and uncertainty to which their industry is the solution.
I'd understand it if someone was asking whether it's a good idea to dump all their savings into EasyJet right now.
LifeStrategy a bit less so.
But I'm afraid I do think there's a theme where IFAs seem to invoke fear and uncertainty to which their industry is the solution.
I'd understand it if someone was asking whether it's a good idea to dump all their savings into EasyJet right now.
LifeStrategy a bit less so.
Derek Chevalier said:
janesmith1950 said:
Like lawyers and accountants, you pay for an IFAs time and knowledge. These things are no longer valuable if you give them away for free.
No comment on the fact that you can qualify as an IFA in weeks yet it takes years to become a lawyer or accountant, of course.
Nonsense. No comment on the fact that you can qualify as an IFA in weeks yet it takes years to become a lawyer or accountant, of course.
6 months academy then out and about for another 6-12 months with SJP from scratch, or 12 week course with Quilter.
My wife looked at the SJP academy (she hasn't worked since 2011 and never been in financial services). Was accepted into the academy and needed to pass the R01 before it commenced. She went to an SJP open evening mid January and had passed the R01 before end of Feb.
She would have been client facing by September.
My wife looked at the SJP academy (she hasn't worked since 2011 and never been in financial services). Was accepted into the academy and needed to pass the R01 before it commenced. She went to an SJP open evening mid January and had passed the R01 before end of Feb.
She would have been client facing by September.
bhstewie said:
hstewie said:Jon39 said:
If your decision now is the result of what has just occurred, are you perhaps new to investing since the previous recession(s) ?
You're right though I haven't been invested through anything like this before though and it's been an eye opener around appetite for volatility etc.
I suspect I'm not alone there and unfortunately some people might have had a harder more uncomfortable lesson.
Yes, for any investor experiencing their first recession, it is quite a worry. Some sell up and never want to get involved again, but previously markets have always recovered and the buy bargains are later revealed.
If your performance records are like mine, I bet the top 5 companies in your league table are the traditional non-cyclical businesses.
Of course, those selling 'essential' goods and services, have a better chance of being the best performers during bad times. They might also be the companies who continue paying dividends. So many dividends are being cancelled now.
Jon39 said:
Yes, for any investor experiencing their first recession, it is quite a worry. Some sell up and never want to get involved again, but previously markets have always recovered and the buy bargains are later revealed.
If your performance records are like mine, I bet the top 5 companies in your league table are the traditional non-cyclical businesses.
Of course, those selling 'essential' goods and services, have a better chance of being the best performers during bad times. They might also be the companies who continue paying dividends. So many dividends are being cancelled now.
The dividend thing is very interesting.
I know that dividend v total return always seems to provoke a bit of a debate but I'd assume whichever side of it you're on that now isn't a great time to be someone who depends almost exclusively on dividend income to live
In answer to the above (which I composed in my head on my daily cycle - part of which was spent behind a lovely sounding C63 
).
There are two distinct types of offering in the marketplace:
90-00s era product selling industry taking on all potential clients where the focus is very much on the product and you are paying them for the secret sauce of market beating performance that you just couldn't access yourself. As I've said before this is part of the reason I left the city to do this after being pitched on Woodford vs the FTSE back in 200x and all for the princely sum of >2% per year. I couldn't work out what Woodford's secret sauce was at the time but it annoyed me so much that I devoted far too much time in the intervening period working out why (clue: there wasn't any secret sauce).
2020s era: A financial planning service serving a niche of clients (e.g. people at retirement, typically 50-150 clients per adviser) where the value add really is in the planning. I immerse myself in this profession so fully accept that my experiences don't fit with what people may typically experience. Almost all the financial planners I know are on a continuous learning journey, and we see ourselves on a par with lawyers and accountants. I've put in a few hundred hours of CPD over the last 12 months, so while as Jane points out you can become an IFA after a few months, this really is the entry point with planners going on to enhance their skills in a vast amount of ways, be it:
Formal qualifications (chartered or certified)
Getting better at using financial planning software
Getting better at conducting meetings
Understanding what the best planners (lots from the states) are up to (Podcasts) and implementing what they do
Building up a vast amount of knowledge on how markets operate and understand how to decompose secret sauce offerings (I see LOADS of these), which is why...….
Planners see investment management as being commoditised, something pretty boring and not something the client actually cares about if you really understand what it is they want to achieve.
To Jane's point about giving something away for free, I refer back to my point about investment management, how can you charge for something that is commoditised?
I make this very clear on my website, and hence why I'm happy to talk (in generic terms) at length on the topic here. It's something I'm passionate about as I remember what it was like when I was a private investor without access to the information, tools and knowledge I have now.
PH is very much focused on the investment management side which is understandable as typical offerings are still very much "traditional" and very few will have been through a genuine financial planning process, but this will hopefully change over time.
There are loads of financial planners (Pete Matthew being very well respected) that give an enormous amount of content away for free.
You can't really give individual financial planning away for free as it's very specific to an individual, and given the amount of effort that goes into offering a decent financial planning service and building a financial plan with someone you should expect to pay, much as you would a lawyer or an accountant.
If anyone wants to slate IFAs, please either say "traditional" or "most" and therefore save me having to rant
).There are two distinct types of offering in the marketplace:
90-00s era product selling industry taking on all potential clients where the focus is very much on the product and you are paying them for the secret sauce of market beating performance that you just couldn't access yourself. As I've said before this is part of the reason I left the city to do this after being pitched on Woodford vs the FTSE back in 200x and all for the princely sum of >2% per year. I couldn't work out what Woodford's secret sauce was at the time but it annoyed me so much that I devoted far too much time in the intervening period working out why (clue: there wasn't any secret sauce).
2020s era: A financial planning service serving a niche of clients (e.g. people at retirement, typically 50-150 clients per adviser) where the value add really is in the planning. I immerse myself in this profession so fully accept that my experiences don't fit with what people may typically experience. Almost all the financial planners I know are on a continuous learning journey, and we see ourselves on a par with lawyers and accountants. I've put in a few hundred hours of CPD over the last 12 months, so while as Jane points out you can become an IFA after a few months, this really is the entry point with planners going on to enhance their skills in a vast amount of ways, be it:
Formal qualifications (chartered or certified)
Getting better at using financial planning software
Getting better at conducting meetings
Understanding what the best planners (lots from the states) are up to (Podcasts) and implementing what they do
Building up a vast amount of knowledge on how markets operate and understand how to decompose secret sauce offerings (I see LOADS of these), which is why...….
Planners see investment management as being commoditised, something pretty boring and not something the client actually cares about if you really understand what it is they want to achieve.
To Jane's point about giving something away for free, I refer back to my point about investment management, how can you charge for something that is commoditised?
I make this very clear on my website, and hence why I'm happy to talk (in generic terms) at length on the topic here. It's something I'm passionate about as I remember what it was like when I was a private investor without access to the information, tools and knowledge I have now.
PH is very much focused on the investment management side which is understandable as typical offerings are still very much "traditional" and very few will have been through a genuine financial planning process, but this will hopefully change over time.
There are loads of financial planners (Pete Matthew being very well respected) that give an enormous amount of content away for free.
You can't really give individual financial planning away for free as it's very specific to an individual, and given the amount of effort that goes into offering a decent financial planning service and building a financial plan with someone you should expect to pay, much as you would a lawyer or an accountant.
If anyone wants to slate IFAs, please either say "traditional" or "most" and therefore save me having to rant
I was being a touch facetious to make a point...
I was a CF1 of an independent firm and have worked with hundreds of advice firms of all different flavours, from the b biggest to the smallest.
As pointed out above, there is a world of variance within the advice market (and the needs of the consumer).
The needs of an investor with material and varied assets in accumulation with 25 years to work are vastly different from someone with a £50k pot and little else who just wants to access their fund into retirement. The latter used to more or less buy a non advised annuity and off they popped.
I'm simplifying here, however pension freedoms came along and those annuity buyers have moved away from insurance products and into invested ones, much of which sold and facilitated via Advice by financial advisors.
Unsophisticated buyers of these products don't understand what a financial advisor really is or does; they just want a transactional relationship. Unfortunately drawdown isn't a simple transactional product like an annuity.
I wonder how many people in drawdown are now sitting nervously looking at their reduced pension pots, wondering if trading the low rates of annuities for the flexibility and promise of returns from drawdown?
Of course, the value of a financial advisory business is almost entirely predicated on the ongoing revenue stream from the funds under management. Advisors hate selling annuities because you then don't have any funds under management and so it doesn't really add anything to the bottom line.
Apologies, I'm rambling...
A good financial planner, perhaps chartered, who works with clients holistically over time to carefully build a lifetime of financial security and prosperity, is a world away from someone flogging drawdown plans to all and sundry in a quasi pre-RDR commission by another name fest. Yet they are both labelled the same thing and the average Joe public has little chance to distinguish between the two.
The markets are of course cyclical over time, coronavirus will be looked at in the future as another trough in the graph, however I do fear for those who've reached retirement and taken drawdown or left DBs for invested don't find their retirement ruined through a badly thought out and regulated market place.
I was a CF1 of an independent firm and have worked with hundreds of advice firms of all different flavours, from the b biggest to the smallest.
As pointed out above, there is a world of variance within the advice market (and the needs of the consumer).
The needs of an investor with material and varied assets in accumulation with 25 years to work are vastly different from someone with a £50k pot and little else who just wants to access their fund into retirement. The latter used to more or less buy a non advised annuity and off they popped.
I'm simplifying here, however pension freedoms came along and those annuity buyers have moved away from insurance products and into invested ones, much of which sold and facilitated via Advice by financial advisors.
Unsophisticated buyers of these products don't understand what a financial advisor really is or does; they just want a transactional relationship. Unfortunately drawdown isn't a simple transactional product like an annuity.
I wonder how many people in drawdown are now sitting nervously looking at their reduced pension pots, wondering if trading the low rates of annuities for the flexibility and promise of returns from drawdown?
Of course, the value of a financial advisory business is almost entirely predicated on the ongoing revenue stream from the funds under management. Advisors hate selling annuities because you then don't have any funds under management and so it doesn't really add anything to the bottom line.
Apologies, I'm rambling...
A good financial planner, perhaps chartered, who works with clients holistically over time to carefully build a lifetime of financial security and prosperity, is a world away from someone flogging drawdown plans to all and sundry in a quasi pre-RDR commission by another name fest. Yet they are both labelled the same thing and the average Joe public has little chance to distinguish between the two.
The markets are of course cyclical over time, coronavirus will be looked at in the future as another trough in the graph, however I do fear for those who've reached retirement and taken drawdown or left DBs for invested don't find their retirement ruined through a badly thought out and regulated market place.
bhstewie said:
hstewie said: I don't trust myself to pick companies so I just go with trusts.
The dividend thing is very interesting.
I know that dividend v total return always seems to provoke a bit of a debate but I'd assume whichever side of it you're on that now isn't a great time to be someone who depends almost exclusively on dividend income to live
The dividend thing is very interesting.
I know that dividend v total return always seems to provoke a bit of a debate but I'd assume whichever side of it you're on that now isn't a great time to be someone who depends almost exclusively on dividend income to live
Yes, over the long-term, total dividends can form a significant portion of overall return.
Eg. For 2019 I had a 21.60% return, but nearly a quarter of that was dividends received.
If anybody does rely exclusively on dividends for their income, it would be 'eggs in one basket' once again.
Investors do like dividends, but it is slightly odd in a way, because that money comes out of a company, which is already owned by those same investors. You are being paid with what is already your own money. Not the most tax efficient way either. Share buy-backs for cancellation, work better for tax purposes.
Jon39 said:
Investors do like dividends, but it is slightly odd in a way, because that money comes out of a company, which is already owned by those same investors. You are being paid with what is already your own money. Not the most tax efficient way either. Share buy-backs for cancellation, work better for tax purposes.
You're being paid with the return on capital from your initial investment. Whether that money would be better being reinvested by the company to continue adding value, or whether it should be returned to shareholders is not an easy question. Wrongly (IMO) the current chief exec's are mostly measured on share prices and dividends helps with that. Some companies, like Amazon, have reinvested every Pound of profit back into the company without ever paying a dividend, although too many companies are taking money out the business to pay dividends only to borrow capital for investment. Replacing cash with debt in order to bolster returns for shareholders.
The most extreme example of that recently has been Boeing. Under their previous (now sacked) chief exec, spending was cut, money flowed back to shareholders, and the stock price went up 4 fold. Longer term, those decisions to cut costs have resulted in the MAX debacle which has cost the company billions, and they are heavily in debt and looking to the US government for a bailout.
Derek Chevalier said:
Said lots! You can read it above so there is no need for me to quote it all again here!
I think we need to be very careful of words and terminology here when it comes to 'financial advice' and 'financial planing' (or a 'financial adviser' and a 'financial planner').- Financial planning is a non-regulated activity which does not include a personal recommendation at any part of the process. As the term suggests it is about providing financial planning (including tax planning) and never includes a personal recommendation (product sale).
- Financial advice is a regulated activity whereby one may hope to receive financial planning (though as you point out this is very rare indeed!) but also includes a personal recomendation that you buy or sell something. It is the product sales part that typically pays the financial adviser.
You are a financial adviser. I won't assume that you do the usual thing and charge your clients a percentage of their initial and ongoing wealth for providing your services, but you may like to take the opportunity to clarify this here.
On your website you do say about having fixed fees, but you don't say what they are. Would you be kind enough to share?
BTW, you don't state on your website that the company authorising you is authorised and regulated by the FCA. This is in breach of their rules, so you may want to add this ASAP!
One other thing, you constantly refer to investment management as being commoditised. This is simply not true.
And you can't give qualified and experienced individual financial planning for free, I do.
Just to add, I have been authorised and regulated since the 90's (initially under the PIA, which is so old it has fallen off the FCA's register), whereas you appear to have been registered for 2 years now. This is not a dig, it is just to highlight that experience gives a different insight and perspective.
JulianPH said:
Derek Chevalier said:
Said lots! You can read it above so there is no need for me to quote it all again here!
I think we need to be very careful of words and terminology here when it comes to 'financial advice' and 'financial planing' (or a 'financial adviser' and a 'financial planner').- Financial planning is a non-regulated activity which does not include a personal recommendation at any part of the process. As the term suggests it is about providing financial planning (including tax planning) and never includes a personal recommendation (product sale).
- Financial advice is a regulated activity whereby one may hope to receive financial planning (though as you point out this is very rare indeed!) but also includes a personal recomendation that you buy or sell something. It is the product sales part that typically pays the financial adviser.
You are a financial adviser. I won't assume that you do the usual thing and charge your clients a percentage of their initial and ongoing wealth for providing your services, but you may like to take the opportunity to clarify this here.
On your website you do say about having fixed fees, but you don't say what they are. Would you be kind enough to share?
BTW, you don't state on your website that the company authorising you is authorised and regulated by the FCA. This is in breach of their rules, so you may want to add this ASAP!
One other thing, you constantly refer to investment management as being commoditised. This is simply not true.
And you can give qualified and experienced individual financial planning for free, I do.
Just to add, I have been authorised and regulated since the 90's (initially under the PIA, which is so old it has fallen off the FCA's register), whereas you appear to have been registered for 2 years now. This is not a dig, it is just to highlight that experience gives a different insight and perspective.
We'll agree to disagree on our interpretation of what a financial planning process entails and also the commoditisation of investment management. Regarding the latter it's pretty much accepted throughout the financial planning community that this is the case, but of course everyone can have their opinion.
https://www.betafolio.co.uk/investment-philosophy/
"Investment management is a commodity whose market price has dropped close to zero, whereas the advice and judgment of a good financial planner can do wonders for your net worth."
"Beta appeals to the intellect, alpha is emotional. Everybody has the ability to find beta; nearly no one has the ability to find alpha. Beta is a humble approach to markets, a more honest recognition of the limits of your talent and personality type. Alpha ignores the probabilities, assuming they will beat those odds to obtain the holy grail."
Derek Chevalier said:
"Beta appeals to the intellect, alpha is emotional. Everybody has the ability to find beta; nearly no one has the ability to find alpha. Beta is a humble approach to markets, a more honest recognition of the limits of your talent and personality type. Alpha ignores the probabilities, assuming they will beat those odds to obtain the holy grail."
Your options theory class was considerably different to mine... Gassing Station | Finance | Top of Page | What's New | My Stuff