Discussion
https://moneyweek.com/investments/stockmarkets/uk-...
“If the index can replicate its performance between 2016 and 2019 (note, there’s no reason why it will) it could keep pace with double-digit inflation. If it does not, the index currently offers an average dividend yield of 3.65%. That won't beat inflation, but it’s far more than savers will get from their bank accounts.
And while they’ve been somewhat out of fashion due to the general preference for growth stocks in recent years, it’s worth remembering that dividends are a vital component of returns in the long-run.
As the most recent annual Barclays Equity Gilt Study shows, £100 invested in UK equities at the end of 1899 would have been worth just £167 (after adjusting for inflation) in 2020 without dividends reinvested. With income reinvested, the real return would have been £32,025.
As well as its income qualities, the UK market also looks cheap. The market is trading at a forward p/e of 11, around 13% below the 15-year median average.
“If the index can replicate its performance between 2016 and 2019 (note, there’s no reason why it will) it could keep pace with double-digit inflation. If it does not, the index currently offers an average dividend yield of 3.65%. That won't beat inflation, but it’s far more than savers will get from their bank accounts.
And while they’ve been somewhat out of fashion due to the general preference for growth stocks in recent years, it’s worth remembering that dividends are a vital component of returns in the long-run.
As the most recent annual Barclays Equity Gilt Study shows, £100 invested in UK equities at the end of 1899 would have been worth just £167 (after adjusting for inflation) in 2020 without dividends reinvested. With income reinvested, the real return would have been £32,025.
As well as its income qualities, the UK market also looks cheap. The market is trading at a forward p/e of 11, around 13% below the 15-year median average.
[quote=Phooey]https://moneyweek.com/investments/stockmarkets/uk-stockmarkets/604832/looking-for-a-hedge-against-inflation-the-ftse-100
“If the index can replicate its performance between 2016 and 2019 (note, there’s no reason why it will) it could keep pace with double-digit inflation.
This is a nice, almost blithe view but objectively what are the drivers for this especially in the short term. At 7250 and 10% inflation, if you buy the market, it means 8000 by this time next year. It seems optimistic
“If the index can replicate its performance between 2016 and 2019 (note, there’s no reason why it will) it could keep pace with double-digit inflation.
This is a nice, almost blithe view but objectively what are the drivers for this especially in the short term. At 7250 and 10% inflation, if you buy the market, it means 8000 by this time next year. It seems optimistic
steve-V8s said:
Simpo Two said:
dmahon said:
Open a newspaper!
Rising interest rates
Unwinding QE
Ongoing war in Ukraine
US and Tech stocks s
tting the bed
But that was all happening a month ago.Rising interest rates
Unwinding QE
Ongoing war in Ukraine
US and Tech stocks s
tting the bed
Phooey said:
I'd like to buy 'IF' please.DaveA8 said:
“If the index can replicate its performance between 2016 and 2019 (note, there’s no reason why it will) it could keep pace with double-digit inflation".
This is a nice, almost blithe view but objectively what are the drivers for this especially in the short term.
At 7250 and 10% inflation, if you buy the market, it means 8000 by this time next year. It seems optimistic
This is a nice, almost blithe view but objectively what are the drivers for this especially in the short term.
At 7250 and 10% inflation, if you buy the market, it means 8000 by this time next year. It seems optimistic
The Index is of course only an average of the 100 constituent businesses.
Some companies will possess the ability, to pass on inflationary price increases to their customers (mostly those with essential products and services).
It is the others, which could be a drag on the index.
steve-V8s said:
Simpo Two said:
dmahon said:
Open a newspaper!
Rising interest rates
Unwinding QE
Ongoing war in Ukraine
US and Tech stocks stting the bed
But that was all happening a month ago.Rising interest rates
Unwinding QE
Ongoing war in Ukraine
US and Tech stocks s
tting the bedhttps://www.youtube.com/watch?v=SWksEJQEYVU
I keep seeing people say “markets priced it in”
But markets are made by supply and demand of participants.
Supply needs sellers, and demand needs buyers.
Despite best efforts and intentions, that process isn’t 100% (or probably even 50%) efficient in finding the future supply and demand levels.
Is there a fixed and known level of ‘war’ that we can subtract from a share price or index value?
0.7 war today, so divide by 12 and that’s the weighting on the FTSE100 for loss
And then you throw in variables like ‘buy global tracker’ which means huge swathes of participants have been buying any old stock at any old price, it means a whole boat load of individual stocks could have been over-bought.
Then institutional investors who move glacially.
Then all the retail investors who may not have a clue and just use fomo and btfd to determine purchasing.
I’m increasingly thinking the terminology “market priced it in” is bks.
Never mind the idea that markets aren’t distorted by MMT, which makes finding any right price near impossible.
In previous Nasdaq dips of this scale the Fed had jumped in and ‘corrected’ it.
This time they’re not.
Things are worth what people are willing to pay. That is the base of pricing.
People clearly aren’t willing to pay as much now.
The sentiment-o-meter has tipped from greed to fear now they realise the Fed isn’t in dipst mode.
But markets are made by supply and demand of participants.
Supply needs sellers, and demand needs buyers.
Despite best efforts and intentions, that process isn’t 100% (or probably even 50%) efficient in finding the future supply and demand levels.
Is there a fixed and known level of ‘war’ that we can subtract from a share price or index value?
0.7 war today, so divide by 12 and that’s the weighting on the FTSE100 for loss
And then you throw in variables like ‘buy global tracker’ which means huge swathes of participants have been buying any old stock at any old price, it means a whole boat load of individual stocks could have been over-bought.
Then institutional investors who move glacially.
Then all the retail investors who may not have a clue and just use fomo and btfd to determine purchasing.
I’m increasingly thinking the terminology “market priced it in” is b
ks.Never mind the idea that markets aren’t distorted by MMT, which makes finding any right price near impossible.
In previous Nasdaq dips of this scale the Fed had jumped in and ‘corrected’ it.
This time they’re not.
Things are worth what people are willing to pay. That is the base of pricing.
People clearly aren’t willing to pay as much now.
The sentiment-o-meter has tipped from greed to fear now they realise the Fed isn’t in dips
t mode.steve-V8s said:
Exactly, so what happened to cause the sudden drop ?
It was random timed after COVID too. There was news stories about China shutting down completely. Satellite pictures of pollution completely gone. Then at some arbitrary point, boom. I've given up trading completely. I just have a percentage of my assets that I wish to be invested in stock equities, and every couple of months I check the figure and invest or sell accordingly.
I guess the percentage is an active decision in itself, but it's currently 25%.
lizardbrain said:
I've given up trading completely.
It's a tough game to play.https://www.evidenceinvestor.com/trading-stocks-is...
"The global financial markets are extremely efficient. There are millions of trades every minute; and every one of them provides us with the latest best-guess estimate of what a particular asset is worth. The chances that you, as an individual investor, have valuable insight or information that no one else does are extremely slim."
lizardbrain said:
steve-V8s said:
Exactly, so what happened to cause the sudden drop ?
It was random timed after COVID too. There was news stories about China shutting down completely. Satellite pictures of pollution completely gone. Then at some arbitrary point, boom. I've given up trading completely. I just have a percentage of my assets that I wish to be invested in stock equities, and every couple of months I check the figure and invest or sell accordingly.
I guess the percentage is an active decision in itself, but it's currently 25%.
lizardbrain said:
I've given up trading completely. I just have a percentage of my assets that I wish to be invested in stock equities, and every couple of months I check the figure and invest or sell accordingly.
I guess the percentage is an active decision in itself, but it's currently 25%.
I guess the percentage is an active decision in itself, but it's currently 25%.
If you want my view, forget percentages, but just use the money which you know you will never need.
Then you will not be forced to sell, possibly with the risk of coinciding with a market crash.
You say stopped trading, but still refer to invest and sell.
Warren Buffett calls that, "Dancing in and out of the market". Attempting to time share price movements, ie. akin to trading.
Good luck with your investing.
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