Bottled out - taken my gains
Discussion
rockin said:
DoubleSix said:
....going liquid is a risky strategy in itself.
This is a fundamental point. Yet few people appear to understand that running for safety can be the biggest investment risk of all.- When interest rates (after tax, where applicable) are lower than inflation then holding cash guarantees you will lose money (real value). Not nice.
- Once you're holding cash (and losing money) you eventually have to make a decision to invest again - from a standing start! Leaving the same very difficult questions of what to invest in, and when.
For many people it's safer to be an "investor" (steady, long term) than a "trader" (short term, speculative).
Don't cry the dips - buy the dips!
To answer a few questions...
Total invested for those gains was just under £1.65M. I have maxed out my ISA contributions for many years but obviously have far less than the above in the ISA wrapper, so my exposure to a correction is far greater in investments than the ISAs. Though I think I’ll sell the ISAs next week as well.
In order to fund our lifestyle we like to release cash from our investments yearly (we usually have far more invested but have released a chunk for a property acquisition) and usually the cash we release comes from gains. So there’s always CGT to pay each year on the cash we release.
We’e been through a few cycles (2008, 2013) where the valuation of our funds took a massive hit, and if I’d had had the courage of my convictions we’d have got out earlier and bought back in lower.
I generally stay in the markets but they are very volatile at the moment. Last week the markets rose on the pound weakening, but if we have a hard brexit then we won’t be able to sell our cheap goods abroad. Are we really at the peak of market optimism for future returns - I keep asking myself why the markets are so high?
Right now, to me, it looks like markets can’t go much higher but they could go a lot lower. I don’t get much income from our investments so it’s the capital valuation that is of interest to me. This feels like a relative peak so I’m happy to crystallise gains now in the hope that I’m selling high. Maybe markets will go higher and I’ll miss out, but I’m willing to take that chance to offset the risk of them going lower.
Remember that the people who advocate staying in the markets (fund managers and IFAs) have something to gain by you staying in! They are not independent and their crystal balls are no better than mine.
Generally speaking I believe in staying in the markets rather than trying to trade on the dips, but I could have avoided million pound losses in past corrections (if I’d acted on my instincts) and this time I’ve decided to protect my gains for now.
Total invested for those gains was just under £1.65M. I have maxed out my ISA contributions for many years but obviously have far less than the above in the ISA wrapper, so my exposure to a correction is far greater in investments than the ISAs. Though I think I’ll sell the ISAs next week as well.
In order to fund our lifestyle we like to release cash from our investments yearly (we usually have far more invested but have released a chunk for a property acquisition) and usually the cash we release comes from gains. So there’s always CGT to pay each year on the cash we release.
We’e been through a few cycles (2008, 2013) where the valuation of our funds took a massive hit, and if I’d had had the courage of my convictions we’d have got out earlier and bought back in lower.
I generally stay in the markets but they are very volatile at the moment. Last week the markets rose on the pound weakening, but if we have a hard brexit then we won’t be able to sell our cheap goods abroad. Are we really at the peak of market optimism for future returns - I keep asking myself why the markets are so high?
Right now, to me, it looks like markets can’t go much higher but they could go a lot lower. I don’t get much income from our investments so it’s the capital valuation that is of interest to me. This feels like a relative peak so I’m happy to crystallise gains now in the hope that I’m selling high. Maybe markets will go higher and I’ll miss out, but I’m willing to take that chance to offset the risk of them going lower.
Remember that the people who advocate staying in the markets (fund managers and IFAs) have something to gain by you staying in! They are not independent and their crystal balls are no better than mine.
Generally speaking I believe in staying in the markets rather than trying to trade on the dips, but I could have avoided million pound losses in past corrections (if I’d acted on my instincts) and this time I’ve decided to protect my gains for now.
I don't think there's any evidence that QE is really being phased out, they can (and I suspect will) turn the cheap money taps back on at the slightest sign of the SHTF.
Don't forget Hammond has already given Carney authority to print another £750bn+ without needing permission.
I expect Carney is running around clutching his winkie, giddy with excitement, desperately waiting for the slightest excuse to do just that.
Don't forget Hammond has already given Carney authority to print another £750bn+ without needing permission.
I expect Carney is running around clutching his winkie, giddy with excitement, desperately waiting for the slightest excuse to do just that.
It’s all very well making statements like professionals want you to stay invested (not true btw; clients panicing and selling against advice is always lucrative - they’ll inevitably be back).
But in reality if you’re going to call the market you need to do so with some metrics. I’ve heard nothing beyond ‘gut feel’ in the comments so far. Citing the fact that the FTSE is at highs is a terrible basis for calling a sell.
For example:
CAPE ratio for FTSE 100 hit 32 during the dot bubble and plunged to 8 during the banking crisis.
It now sits around it’s long term average of 16 indicating the index is somewhere around fair value.
This is just one metric and i and other professionals use many to make judgements (I gave another on the previous page).
Listening to the press whip up fear over brexit, trump or whatever the couilles du jour may be is likely to lead to errors where investment is concerned.
But in reality if you’re going to call the market you need to do so with some metrics. I’ve heard nothing beyond ‘gut feel’ in the comments so far. Citing the fact that the FTSE is at highs is a terrible basis for calling a sell.
For example:
CAPE ratio for FTSE 100 hit 32 during the dot bubble and plunged to 8 during the banking crisis.
It now sits around it’s long term average of 16 indicating the index is somewhere around fair value.
This is just one metric and i and other professionals use many to make judgements (I gave another on the previous page).
Listening to the press whip up fear over brexit, trump or whatever the couilles du jour may be is likely to lead to errors where investment is concerned.
b
hstewie said:
hstewie said: Naive question but hasn't the FTSE (or any index) always been at some kind of high at many many points in the past?
I tried to find it last night but someone posted a great graph showing all the peaks in the last 50 years and at each peak someone had put "this is the top" "this is the peak" etc etc.DoubleSix said:
Indeed. The value alone tells you relatively little.
It's interesting for me as a relative newcomer.I put a reasonable amount of my savings across some funds in February during the dip we had (that was luck).
The intention is they're there for the long term so assuming I hold my nerve I intend to do absolutely nothing as I believe historically over the long term dead people and those who forget they have investments have the best returns as they don't panic.
I lurk on various investment forums and you often see people saying they're getting out as things have peaked and they have a "feeling" something bad is ahead.
Maybe if I were lucky enough to be into 7 figures potential loss in one year I'd see it differently, I guess it also depends at the point in your life you're at over time left until you need to access your holdings?
Do people ever cancel their pension because they think things have peaked? Genuine question.
bhstewie said:
hstewie said: It's interesting for me as a relative newcomer.
I put a reasonable amount of my savings across some funds in February during the dip we had (that was luck).
The intention is they're there for the long term so assuming I hold my nerve I intend to do absolutely nothing as I believe historically over the long term dead people and those who forget they have investments have the best returns as they don't panic.
I lurk on various investment forums and you often see people saying they're getting out as things have peaked and they have a "feeling" something bad is ahead.
Maybe if I were lucky enough to be into 7 figures potential loss in one year I'd see it differently, I guess it also depends at the point in your life you're at over time left until you need to access your holdings?
Do people ever cancel their pension because they think things have peaked? Genuine question.
Traditionally people have taken what’s known as a ‘lifestyling’ approach to pension funds. I put a reasonable amount of my savings across some funds in February during the dip we had (that was luck).
The intention is they're there for the long term so assuming I hold my nerve I intend to do absolutely nothing as I believe historically over the long term dead people and those who forget they have investments have the best returns as they don't panic.
I lurk on various investment forums and you often see people saying they're getting out as things have peaked and they have a "feeling" something bad is ahead.
Maybe if I were lucky enough to be into 7 figures potential loss in one year I'd see it differently, I guess it also depends at the point in your life you're at over time left until you need to access your holdings?
Do people ever cancel their pension because they think things have peaked? Genuine question.
This describes the gradual move to cash assets over time, in line with age, with the eventual aim of buying an annuity.
Low interest rates/poor annuity rates have led to this strategy largely being thought of as out-moded.
I nearly cashed out a month ago as my investments were down 5%+ from previous highs only the month before that on average. I lived through the .com boom and bust and wished I’d put stop losses on my stock and while a 5% drop in a month is not pretty, it’s better than a 20% drop over 6 months. Anyway, I didn’t, and they’re now recovered and at further highs.
I am thinking of shrinking my holding in European/non uk trusts which are Stirling high due to currency as well as any underlying growth but I’ll be switching it somewhere rather than holding cash. I’ve already property and due to the sale of a different asset I’ll be buying more. At the end of the day, some diversity, and balancing how much effort you want to put in to get potential incremental gains, while not over thinking it, is a personal choice. But it’s easy to over think or get cold feet at the wrong time.
I am thinking of shrinking my holding in European/non uk trusts which are Stirling high due to currency as well as any underlying growth but I’ll be switching it somewhere rather than holding cash. I’ve already property and due to the sale of a different asset I’ll be buying more. At the end of the day, some diversity, and balancing how much effort you want to put in to get potential incremental gains, while not over thinking it, is a personal choice. But it’s easy to over think or get cold feet at the wrong time.
DoubleSix said:
Traditionally people have taken what’s known as a ‘lifestyling’ approach to pension funds.
This describes the gradual move to cash assets over time, in line with age, with the eventual aim of buying an annuity.
Low interest rates/poor annuity rates have led to this strategy largely being thought of as out-moded.
Not really, lifestyling is about moving into bond assets as retirement approach, to match the price of annuities (and maybe an allocation to cash, to match the tax free cash that most people take).This describes the gradual move to cash assets over time, in line with age, with the eventual aim of buying an annuity.
Low interest rates/poor annuity rates have led to this strategy largely being thought of as out-moded.
This is less popular now as fewer people are choosing an annuity at retirement.
The priority should be to move at least a proportion of your fund into less volatile assets before retirement, to avoid adverse implications when you start drawing on those assets.
Edited by sidicks on Sunday 22 July 10:58
sidicks said:
DoubleSix said:
Traditionally people have taken what’s known as a ‘lifestyling’ approach to pension funds.
This describes the gradual move to cash assets over time, in line with age, with the eventual aim of buying an annuity.
Low interest rates/poor annuity rates have led to this strategy largely being thought of as out-moded.
Not really, lifestyling is about moving into bond assets as retirement approach (and maybe an allocation to cash, to match the tax free cash that most people take).This describes the gradual move to cash assets over time, in line with age, with the eventual aim of buying an annuity.
Low interest rates/poor annuity rates have led to this strategy largely being thought of as out-moded.
The priority at least is to move a proportion of your fund into less volatile assets before retirement, to avoid adverse implications when you start drawing on those assets.
This is less popular now as fewer people are choosing an annuity at retirement.
In the context of the question, and the common application, fixed interest and cash assets are interchangeable.
The point is it’s a lowering of risk as you age.
DoubleSix said:
Ha ha ok sidicks! Can always rely on PH to split a hair or two.
In the context of the question, and the common application, fixed interest and cash assets are interchangeable.
The point is it’s a lowering of risk as you age.
When it comes to interest rate sensitivity and purchasing annuities, cash and fixed income are anything but interchangeable.In the context of the question, and the common application, fixed interest and cash assets are interchangeable.
The point is it’s a lowering of risk as you age.
Moving into cash when you want to buy an annuity increases interest rate mismatch and hence risk. This is fundamental and nothing to do with 'splitting hairs'
Have a word and stop quibbling!
Look any of the available lifestyling products from providers like LGEN or Scot Wids and theres a range from full cash to full fixed interest. Indeed, even the PAS refer to cash and fixed interest in their definition:
“As you get closer to your retirement date, typically 5 to 10 years before, switching from these riskier assets into less risky ones, such as cash or fixed interest, that aren’t as likely to be affected if the investment markets were to fall sharply, helps to keep the investment growth, during the period up to your retirement.”
And it’s exactly that broad context I felt was appropriate for the readers here.
Not sure what you hope to add to the thread by quibbling with another professional but so far it’s nothing but a distraction from the topic.
Look any of the available lifestyling products from providers like LGEN or Scot Wids and theres a range from full cash to full fixed interest. Indeed, even the PAS refer to cash and fixed interest in their definition:
“As you get closer to your retirement date, typically 5 to 10 years before, switching from these riskier assets into less risky ones, such as cash or fixed interest, that aren’t as likely to be affected if the investment markets were to fall sharply, helps to keep the investment growth, during the period up to your retirement.”
And it’s exactly that broad context I felt was appropriate for the readers here.
Not sure what you hope to add to the thread by quibbling with another professional but so far it’s nothing but a distraction from the topic.
DoubleSix said:
Have a word and stop quibbling!
Look any of the available lifestyling products from providers like LGEN or Scot Wids and theres a range from full cash to full fixed interest. Indeed, even the PAS refer to cash and fixed interest in their definition:
“As you get closer to your retirement date, typically 5 to 10 years before, switching from these riskier assets into less risky ones, such as cash or fixed interest, that aren’t as likely to be affected if the investment markets were to fall sharply, helps to keep the investment growth, during the period up to your retirement.”
And it’s exactly that broad context I felt was appropriate for the readers here.
Not sure what you hope to add to the thread by quibbling with another professional but so far it’s nothing but a distraction from the topic.
People planning to buy annuities, should be moving into longer-dated fixed income assets, not into cash, if they are trying to reduce risk. That really shouldn't be up for debate.Look any of the available lifestyling products from providers like LGEN or Scot Wids and theres a range from full cash to full fixed interest. Indeed, even the PAS refer to cash and fixed interest in their definition:
“As you get closer to your retirement date, typically 5 to 10 years before, switching from these riskier assets into less risky ones, such as cash or fixed interest, that aren’t as likely to be affected if the investment markets were to fall sharply, helps to keep the investment growth, during the period up to your retirement.”
And it’s exactly that broad context I felt was appropriate for the readers here.
Not sure what you hope to add to the thread by quibbling with another professional but so far it’s nothing but a distraction from the topic.
Not sure what you hope to add to the thread by claiming I'm 'splitting hairs' rather than acknowledging that your previous post was somewhat misleading?
Had you simply said that people approaching retirement should be moving into cash type assets (to reduce volatility) then I wouldn't have quibbled.
Edited by sidicks on Sunday 22 July 13:32
DoubleSix said:
It’s all very well making statements like professionals want you to stay invested (not true btw; clients panicing and selling against advice is always lucrative - they’ll inevitably be back).
But in reality if you’re going to call the market you need to do so with some metrics. I’ve heard nothing beyond ‘gut feel’ in the comments so far. Citing the fact that the FTSE is at highs is a terrible basis for calling a sell.
For example:
CAPE ratio for FTSE 100 hit 32 during the dot bubble and plunged to 8 during the banking crisis.
It now sits around it’s long term average of 16 indicating the index is somewhere around fair value.
This is just one metric and i and other professionals use many to make judgements (I gave another on the previous page).
Listening to the press whip up fear over brexit, trump or whatever the couilles du jour may be is likely to lead to errors where investment is concerned.
What did CAPE tell you just before the banking crisis in 2008 and Greek debt problem in 2013?But in reality if you’re going to call the market you need to do so with some metrics. I’ve heard nothing beyond ‘gut feel’ in the comments so far. Citing the fact that the FTSE is at highs is a terrible basis for calling a sell.
For example:
CAPE ratio for FTSE 100 hit 32 during the dot bubble and plunged to 8 during the banking crisis.
It now sits around it’s long term average of 16 indicating the index is somewhere around fair value.
This is just one metric and i and other professionals use many to make judgements (I gave another on the previous page).
Listening to the press whip up fear over brexit, trump or whatever the couilles du jour may be is likely to lead to errors where investment is concerned.
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