Proactive investing in a stock market?
Discussion
Is there an instrument that would enable me to proactively invest in a stock market. For example, something offering a 'pot' in which my money is kept safe. If I decide that I think the FTSE100 is going to rise I can move my money into the FTSE100. When I think it's risen as far as it's likely to and may fall back I can move my money back to the pot. After it has fallen back I can move my money back into the FTSE100 to catch the next rise, etc.
I know about spread betting, but I don't want something that's leveraged as I could end up losing everything on a relatively small move in the underlying market. Index trackers don't appear to offer the flexibility to move all your money in and out proactively.
All I want to be able to do is put, for example, £1k into the FTSE100 if I think it's going to rise and then move it out again when I think it's going to fall, preferably all within the confines of some kind of online account with a safe 'pot' to keep my funds in.
I know about spread betting, but I don't want something that's leveraged as I could end up losing everything on a relatively small move in the underlying market. Index trackers don't appear to offer the flexibility to move all your money in and out proactively.
All I want to be able to do is put, for example, £1k into the FTSE100 if I think it's going to rise and then move it out again when I think it's going to fall, preferably all within the confines of some kind of online account with a safe 'pot' to keep my funds in.
There are various instruments available but most are not suitable for an exposure of £1k.
Bear in mind that transaction costs will be significant at this level. For example, you could use a FTSE tracker in your ISA and you might correctly time a 1% rise in the FTSE making a profit of £10, but it could cost £10 to open the position & £10 to close it!
Bear in mind that transaction costs will be significant at this level. For example, you could use a FTSE tracker in your ISA and you might correctly time a 1% rise in the FTSE making a profit of £10, but it could cost £10 to open the position & £10 to close it!
The simplest way would be spread betting. You don't have to use the leveraged element- if you have £1000 in the account then don't allow your exposure to be more than £1000.
Other than that, ETFs. Depending on the real amount of money that you are planning to use, transaction costs may be prohibitive though.
Other than that, ETFs. Depending on the real amount of money that you are planning to use, transaction costs may be prohibitive though.
The OP is seeking to proactively (actively?) invest in a passive manner.
I'm not sure how they can expect to accurately predict the next BP oil spill or Verizon type deal in order to time the index effectively, if they can do that they might be better off buying the shares of the constituent companies. With the skewed weightings applicable to the FTSE100 day-to-day trading issues of the top 5 stocks will arguably have more impact on value than the other 95.
I'm not sure how they can expect to accurately predict the next BP oil spill or Verizon type deal in order to time the index effectively, if they can do that they might be better off buying the shares of the constituent companies. With the skewed weightings applicable to the FTSE100 day-to-day trading issues of the top 5 stocks will arguably have more impact on value than the other 95.
pacoryan said:
The OP is seeking to proactively (actively?) invest in a passive manner.
I'm not sure how they can expect to accurately predict the next BP oil spill or Verizon type deal in order to time the index effectively, if they can do that they might be better off buying the shares of the constituent companies. With the skewed weightings applicable to the FTSE100 day-to-day trading issues of the top 5 stocks will arguably have more impact on value than the other 95.
My take is that he isn't trying to predict things like that but he is just trying to time the whole market.I'm not sure how they can expect to accurately predict the next BP oil spill or Verizon type deal in order to time the index effectively, if they can do that they might be better off buying the shares of the constituent companies. With the skewed weightings applicable to the FTSE100 day-to-day trading issues of the top 5 stocks will arguably have more impact on value than the other 95.
So say the FTSE is on a 20x PE - he would say to himself - that's pricey, I'll get out for now.
Then buy back in at 10x PE.
Rinse and repeat.
Suggesting he invest in individual stocks with a £1k pot will see any returns he generates rapidly diluted through transaction costs. Hence one ETF trade every 3-6 months or so would seem the ideal solution!
K12beano said:
Hoofy said:
Isn't all investing "proactive"?
On the basis that most/many private investors (sheep) seem to buy after something has risen and then sell (and cry about it) after a crash, you may have redefined that horrible word there!I can't beleive no one has mentioned ETFs.
These are traded on the market just like shares and investmnet trusts, so can be traded in 'real time' during market hours. Most brokers will allow you to open account and deposit cash, then you can place your trading instruction when you're ready to go. Then, when you want to sell, you can leave the cash in the account until you're ready to invest again.
All that said, timing the marekt is very difficult. Most professionlas can't get it right. Best thing to do is invest in a few companies with good long term prospects and hang on to them.
These are traded on the market just like shares and investmnet trusts, so can be traded in 'real time' during market hours. Most brokers will allow you to open account and deposit cash, then you can place your trading instruction when you're ready to go. Then, when you want to sell, you can leave the cash in the account until you're ready to invest again.
All that said, timing the marekt is very difficult. Most professionlas can't get it right. Best thing to do is invest in a few companies with good long term prospects and hang on to them.
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