Futures market - any indicators for FTSE or DOW?

[johnfm]

Noel W has mention looking at various futures prices to see what 'the market' is pricing in for housing etc.

I assume there is a futures market for the FTSE 100, DOW or other such indices?

I ask, as I figure it may be a good time to start getting into equity.

Not really got time to pore over company data - anyone recommend a good IFA?

Or should I stick it all on Red at the local casino?

[johnfm]

I guess this is the level of response we can expect now with 786 different fora in the Pie and Empty?



I'll turn off the lights on the way out.

[G_T]

I like red Ferrari's best and here's 3 reasons why;

• Ferrari's are show off cars even if they're in subtle colours.
• It's traditional.
• Red is the fastest colour.

HTH,

G

[Bing o]

johnfm said:

Noel W has mention looking at various futures prices to see what 'the market' is pricing in for housing etc.

I assume there is a futures market for the FTSE 100, DOW or other such indices?

I ask, as I figure it may be a good time to start getting into equity.

Not really got time to pore over company data - anyone recommend a good IFA?

Or should I stick it all on Red at the local casino?

Have a look at iShares - not futures, but they will track indices.

TBH, if you didn't know that you can trade FTSE indices, you probably should avoid them....

[JRM]

Bing o said:

johnfm said:

Noel W has mention looking at various futures prices to see what 'the market' is pricing in for housing etc.

I assume there is a futures market for the FTSE 100, DOW or other such indices?

I ask, as I figure it may be a good time to start getting into equity.

Not really got time to pore over company data - anyone recommend a good IFA?

Or should I stick it all on Red at the local casino?

Have a look at iShares - not futures, but they will track indices.

TBH, if you didn't know that you can trade FTSE indices, you probably should avoid them....

And an IFA will do sod all for you, you need a broker

[NoelWatson]

johnfm said:

Noel W has mention looking at various futures prices to see what 'the market' is pricing in for housing etc.

I assume there is a futures market for the FTSE 100, DOW or other such indices?

I ask, as I figure it may be a good time to start getting into equity.

Not really got time to pore over company data - anyone recommend a good IFA?

Or should I stick it all on Red at the local casino?

johnfm said:

I assume there is a futures market for the FTSE 100, DOW or other such indices?

The spot and future prices will be not too different in the above markets (very different to the housing indices/futures) - the difference being due to dividends and cost of borrowing (IIRC - not my market) - so in theory the future won't give an indication of what the spot is going to do (I would be surprised if there was an arbitrage between the two lasting for more than a few milliseconds).

I agree that the equity markets look good value (I am buying), but one must be wary of how value is being calculated - for example, the FTSE had a PE of 8 a month or so ago but that was based on previous year's earnings. It is now at around 14 (this sounds like to much of a jump - I debated with the chap on Bloomberg but he insisted that it was correct) - this isn't too far from its long term average. Furthermore, dividends are forecast to drop 40% over the next couple of years (according to dividend swap market) - I think yield is currently 6% based on trailing year payout. So, I guess you need to think about where we are in the economic cycle and how much pain you can bear if the market plummets.

It may be worth looking at a low cost FTSE 100 tracker - should be able to get a TER of ~0.25%

[eldar]

NoelWatson said:

johnfm said:

Noel W has mention looking at various futures prices to see what 'the market' is pricing in for housing etc.

I assume there is a futures market for the FTSE 100, DOW or other such indices?

I ask, as I figure it may be a good time to start getting into equity.

Not really got time to pore over company data - anyone recommend a good IFA?

Or should I stick it all on Red at the local casino?

johnfm said:

I assume there is a futures market for the FTSE 100, DOW or other such indices?

The spot and future prices will be not too different in the above markets (very different to the housing indices/futures) - the difference being due to dividends and cost of borrowing (IIRC - not my market) - so in theory the future won't give an indication of what the spot is going to do (I would be surprised if there was an arbitrage between the two lasting for more than a few milliseconds).

I agree that the equity markets look good value (I am buying), but one must be wary of how value is being calculated - for example, the FTSE had a PE of 8 a month or so ago but that was based on previous year's earnings. It is now at around 14 (this sounds like to much of a jump - I debated with the chap on Bloomberg but he insisted that it was correct) - this isn't too far from its long term average. Furthermore, dividends are forecast to drop 40% over the next couple of years (according to dividend swap market) - I think yield is currently 6% based on trailing year payout. So, I guess you need to think about where we are in the economic cycle and how much pain you can bear if the market plummets.

It may be worth looking at a low cost FTSE 100 tracker - should be able to get a TER of ~0.25%

FTSE trackers, what happens to dividends, and are they really as simple as they seem?

[Somewhatfoolish]

eldar said:

NoelWatson said:

johnfm said:

Noel W has mention looking at various futures prices to see what 'the market' is pricing in for housing etc.

I assume there is a futures market for the FTSE 100, DOW or other such indices?

I ask, as I figure it may be a good time to start getting into equity.

Not really got time to pore over company data - anyone recommend a good IFA?

Or should I stick it all on Red at the local casino?

johnfm said:

I assume there is a futures market for the FTSE 100, DOW or other such indices?

The spot and future prices will be not too different in the above markets (very different to the housing indices/futures) - the difference being due to dividends and cost of borrowing (IIRC - not my market) - so in theory the future won't give an indication of what the spot is going to do (I would be surprised if there was an arbitrage between the two lasting for more than a few milliseconds).

I agree that the equity markets look good value (I am buying), but one must be wary of how value is being calculated - for example, the FTSE had a PE of 8 a month or so ago but that was based on previous year's earnings. It is now at around 14 (this sounds like to much of a jump - I debated with the chap on Bloomberg but he insisted that it was correct) - this isn't too far from its long term average. Furthermore, dividends are forecast to drop 40% over the next couple of years (according to dividend swap market) - I think yield is currently 6% based on trailing year payout. So, I guess you need to think about where we are in the economic cycle and how much pain you can bear if the market plummets.

It may be worth looking at a low cost FTSE 100 tracker - should be able to get a TER of ~0.25%

FTSE trackers, what happens to dividends, and are they really as simple as they seem?

Passed on to investors, otherwise they'd be a fecking stupid investment!

With respect to the original question asked by the poster, as Noel says the cash and futures markets are precisely related due to arbitrageurs. You could use the volatility surface of the options though...

Edited by Somewhatfoolish on Saturday 11th April 12:32

[NoelWatson]

Related to discussion on whether the markets are showing good value

http://www.ft.com/cms/s/2/c6f869f2-25c5-11de-be57-...

[NoelWatson]

Somewhatfoolish said:

eldar said:

NoelWatson said:

johnfm said:

Noel W has mention looking at various futures prices to see what 'the market' is pricing in for housing etc.

I assume there is a futures market for the FTSE 100, DOW or other such indices?

I ask, as I figure it may be a good time to start getting into equity.

Not really got time to pore over company data - anyone recommend a good IFA?

Or should I stick it all on Red at the local casino?

johnfm said:

I assume there is a futures market for the FTSE 100, DOW or other such indices?

The spot and future prices will be not too different in the above markets (very different to the housing indices/futures) - the difference being due to dividends and cost of borrowing (IIRC - not my market) - so in theory the future won't give an indication of what the spot is going to do (I would be surprised if there was an arbitrage between the two lasting for more than a few milliseconds).

I agree that the equity markets look good value (I am buying), but one must be wary of how value is being calculated - for example, the FTSE had a PE of 8 a month or so ago but that was based on previous year's earnings. It is now at around 14 (this sounds like to much of a jump - I debated with the chap on Bloomberg but he insisted that it was correct) - this isn't too far from its long term average. Furthermore, dividends are forecast to drop 40% over the next couple of years (according to dividend swap market) - I think yield is currently 6% based on trailing year payout. So, I guess you need to think about where we are in the economic cycle and how much pain you can bear if the market plummets.

It may be worth looking at a low cost FTSE 100 tracker - should be able to get a TER of ~0.25%

FTSE trackers, what happens to dividends, and are they really as simple as they seem?

Passed on to investors, otherwise they'd be a fecking stupid investment!

With respect to the original question asked by the poster, as Noel says the cash and futures markets are precisely related due to arbitrageurs. You could use the volatility surface of the options though...

Edited by Somewhatfoolish on Saturday 11th April 12:32

What does your data provider show FTSE PE to be?

[Somewhatfoolish]

NoelWatson said:

Somewhatfoolish said:

eldar said:

NoelWatson said:

johnfm said:

Noel W has mention looking at various futures prices to see what 'the market' is pricing in for housing etc.

I assume there is a futures market for the FTSE 100, DOW or other such indices?

I ask, as I figure it may be a good time to start getting into equity.

Not really got time to pore over company data - anyone recommend a good IFA?

Or should I stick it all on Red at the local casino?

johnfm said:

I assume there is a futures market for the FTSE 100, DOW or other such indices?

The spot and future prices will be not too different in the above markets (very different to the housing indices/futures) - the difference being due to dividends and cost of borrowing (IIRC - not my market) - so in theory the future won't give an indication of what the spot is going to do (I would be surprised if there was an arbitrage between the two lasting for more than a few milliseconds).

I agree that the equity markets look good value (I am buying), but one must be wary of how value is being calculated - for example, the FTSE had a PE of 8 a month or so ago but that was based on previous year's earnings. It is now at around 14 (this sounds like to much of a jump - I debated with the chap on Bloomberg but he insisted that it was correct) - this isn't too far from its long term average. Furthermore, dividends are forecast to drop 40% over the next couple of years (according to dividend swap market) - I think yield is currently 6% based on trailing year payout. So, I guess you need to think about where we are in the economic cycle and how much pain you can bear if the market plummets.

It may be worth looking at a low cost FTSE 100 tracker - should be able to get a TER of ~0.25%

FTSE trackers, what happens to dividends, and are they really as simple as they seem?

Passed on to investors, otherwise they'd be a fecking stupid investment!

With respect to the original question asked by the poster, as Noel says the cash and futures markets are precisely related due to arbitrageurs. You could use the volatility surface of the options though...

Edited by Somewhatfoolish on Saturday 11th April 12:32

What does your data provider show FTSE PE to be?

You overestimate how well I know how to use it for things like that - logged in now, fiddled for a couple of minutes, gave up

[the_smalls]

Somewhatfoolish said:

eldar said:

NoelWatson said:

johnfm said:

Noel W has mention looking at various futures prices to see what 'the market' is pricing in for housing etc.

I assume there is a futures market for the FTSE 100, DOW or other such indices?

I ask, as I figure it may be a good time to start getting into equity.

Not really got time to pore over company data - anyone recommend a good IFA?

Or should I stick it all on Red at the local casino?

johnfm said:

I assume there is a futures market for the FTSE 100, DOW or other such indices?

The spot and future prices will be not too different in the above markets (very different to the housing indices/futures) - the difference being due to dividends and cost of borrowing (IIRC - not my market) - so in theory the future won't give an indication of what the spot is going to do (I would be surprised if there was an arbitrage between the two lasting for more than a few milliseconds).

I agree that the equity markets look good value (I am buying), but one must be wary of how value is being calculated - for example, the FTSE had a PE of 8 a month or so ago but that was based on previous year's earnings. It is now at around 14 (this sounds like to much of a jump - I debated with the chap on Bloomberg but he insisted that it was correct) - this isn't too far from its long term average. Furthermore, dividends are forecast to drop 40% over the next couple of years (according to dividend swap market) - I think yield is currently 6% based on trailing year payout. So, I guess you need to think about where we are in the economic cycle and how much pain you can bear if the market plummets.

It may be worth looking at a low cost FTSE 100 tracker - should be able to get a TER of ~0.25%

FTSE trackers, what happens to dividends, and are they really as simple as they seem?

Passed on to investors, otherwise they'd be a fecking stupid investment!

With respect to the original question asked by the poster, as Noel says the cash and futures markets are precisely related due to arbitrageurs. You could use the volatility surface of the options though...

Edited by Somewhatfoolish on Saturday 11th April 12:32

Sorry, you could use the vol surface for what exactly? All that tells you is the future expected volatility. The FTSE futures market (indeed all equity index futures markets) are calculated by arbitrage arguments - if the price deviates much from this fair value, arbitrageurs can (and do) make instantaneous profits. The same arguments are not valid for house prices. Options (and their associated implied vol surface) are a different kettle of fish though.

[johnfm]

Thanks for the responses guys. I have a lump sum of circa £50k coming my way in June. I don't want to gamble it nor just stick it in the bank.

I think it would be too risky to just put it in a small basket of blue chips (not sure if even big, established names like Coke, BP, AMEX are safe) but as tempting as banks stock prices may be, their price probably reflects their risk - not sure any of them are out of the woods yet, especially for the small stock holder.

Might split it into a couple of smaller baskets - it is a 2 year maturity investment anyway. All pointers gratefully accepted.

[NoelWatson]

johnfm said:

Thanks for the responses guys. I have a lump sum of circa £50k coming my way in June. I don't want to gamble it nor just stick it in the bank.

I think it would be too risky to just put it in a small basket of blue chips (not sure if even big, established names like Coke, BP, AMEX are safe) but as tempting as banks stock prices may be, their price probably reflects their risk - not sure any of them are out of the woods yet, especially for the small stock holder.

Might split it into a couple of smaller baskets - it is a 2 year maturity investment anyway. All pointers gratefully accepted.

50k would be enough to buy a diversified basket of blue chip stocks, or just whack it in a tracker. I stick to the UK market as a lot of companies are global (IIRC BP pay in dollars)