Pensions and ISA ideas

ToneControl

Same story with Amazon

https://www.news1.news/en/2020/05/the-irresistible-rally-on-the-amazon-stock-exchange-worth-more-than-the-entire-frankfurt-dax30.html

With a stock market capitalization that in the last few days has exceeded 1.250 billion dollars, the queen of Nasdaq Amazon alone is worth more than all the big German companies in the Dax 30 index which together have a value of 1.130 billion dollars. The historic stock market overtaking of the last few days is only one of the effects that Coronavirus has determined, affecting traditional and those based on the digital economy in an “asymmetrical” way.

Who thinks that Amazon is worth more than the whole DAX 30?

The total market capitalization of Volkswagen (67 billion), Daimler (34), and Bmw (34) is a total of 135 billion, or only 10.8% of that of Amazon, while the employees of the three large houses of the automotive are almost 1,100,000 worldwide.

So the investors are relying on Amazon being worth 10 times more than VW, Mercedes and BMW, even though the employ more people

Snap

My thoughts on investing have changed a bit over the years. Generally I like risk in all things. The key is managed risk and information. You can't manage the risk without information. The next important ingredient is time. You need to have the time to manage your risk. If you don't have any of these pieces, walk away from equities, individual company shares - you won't have the expertise needed to mitigate your risk, and chances are you'll not reap the rewards, or you may even lose. Thus speaks the voice of experience!

Funds are the way to go - let someone else do the leg work and apply their skill through their daily job. You just need to pick the best funds, and there is a shedload of information to help you on that. 

I've still got some equities, but most of it is in a mix of funds, all of which are performing very nicely. I've done really well out of Apple shares, but I held on to them for a few years, sat out their big dip, and now they are up about 90%. Equally I've lost a chunk when a well tipped share has tanked overnight. All the losers were tipped by well know sources as being great bets.

In a fund, you've got teams of people managing all this mixture - leave them to it is my view these days. 

I'd only visit a casino with a small amount of money in my pocket, and an amount I could tolerate losing as I play the game of chance. You need exactly the same mentality with share dealing IMO. Investing in funds however is a lot less risky. 

ToneControl

Snap said:

My thoughts on investing have changed a bit over the years. Generally I like risk in all things. The key is managed risk and information. You can't manage the risk without information. The next important ingredient is time. You need to have the time to manage your risk. If you don't have any of these pieces, walk away from equities, individual company shares - you won't have the expertise needed to mitigate your risk, and chances are you'll not reap the rewards, or you may even lose. Thus speaks the voice of experience!

Funds are the way to go - let someone else do the leg work and apply their skill through their daily job. You just need to pick the best funds, and there is a shedload of information to help you on that. 

I've still got some equities, but most of it is in a mix of funds, all of which are performing very nicely. I've done really well out of Apple shares, but I held on to them for a few years, sat out their big dip, and now they are up about 90%. Equally I've lost a chunk when a well tipped share has tanked overnight. All the losers were tipped by well know sources as being great bets.

In a fund, you've got teams of people managing all this mixture - leave them to it is my view these days. 

I'd only visit a casino with a small amount of money in my pocket, and an amount I could tolerate losing as I play the game of chance. You need exactly the same mentality with share dealing IMO. Investing in funds however is a lot less risky. 

My top-performing managed funds went down 50% in 2008/9

RandallFlagg

ToneControl said:

Snap said:

My thoughts on investing have changed a bit over the years. Generally I like risk in all things. The key is managed risk and information. You can't manage the risk without information. The next important ingredient is time. You need to have the time to manage your risk. If you don't have any of these pieces, walk away from equities, individual company shares - you won't have the expertise needed to mitigate your risk, and chances are you'll not reap the rewards, or you may even lose. Thus speaks the voice of experience!

Funds are the way to go - let someone else do the leg work and apply their skill through their daily job. You just need to pick the best funds, and there is a shedload of information to help you on that. 

I've still got some equities, but most of it is in a mix of funds, all of which are performing very nicely. I've done really well out of Apple shares, but I held on to them for a few years, sat out their big dip, and now they are up about 90%. Equally I've lost a chunk when a well tipped share has tanked overnight. All the losers were tipped by well know sources as being great bets.

In a fund, you've got teams of people managing all this mixture - leave them to it is my view these days. 

I'd only visit a casino with a small amount of money in my pocket, and an amount I could tolerate losing as I play the game of chance. You need exactly the same mentality with share dealing IMO. Investing in funds however is a lot less risky. 

My top-performing managed funds went down 50% in 2008/9

What was the recovery time? and did you sit it out or realise the losses?

One of my funds went down 26% this year and is still 9% down but it will recover, if not by year end then next year.

As for Tech stocks, my exposure is managed, I've started tracking my portfolio allocation which currently looks like this:

RandallFlagg

Snap said:

My thoughts on investing have changed a bit over the years. Generally I like risk in all things. The key is managed risk and information. You can't manage the risk without information. The next important ingredient is time. You need to have the time to manage your risk. If you don't have any of these pieces, walk away from equities, individual company shares - you won't have the expertise needed to mitigate your risk, and chances are you'll not reap the rewards, or you may even lose. Thus speaks the voice of experience!

Funds are the way to go - let someone else do the leg work and apply their skill through their daily job. You just need to pick the best funds, and there is a shedload of information to help you on that. 

I've still got some equities, but most of it is in a mix of funds, all of which are performing very nicely. I've done really well out of Apple shares, but I held on to them for a few years, sat out their big dip, and now they are up about 90%. Equally I've lost a chunk when a well tipped share has tanked overnight. All the losers were tipped by well know sources as being great bets.

In a fund, you've got teams of people managing all this mixture - leave them to it is my view these days. 

I'd only visit a casino with a small amount of money in my pocket, and an amount I could tolerate losing as I play the game of chance. You need exactly the same mentality with share dealing IMO. Investing in funds however is a lot less risky. 

I agree with using managed funds, that's my preference. When I hear Ben Rogoff discuss how Polar Capital manage their Global Technology Fund I realise that I do not have the time or expertise to be able to manage a portfolio of stocks in this sector and am happy to pay the fund fees based on the returns they generate.

Snap

ToneControl said:

My top-performing managed funds went down 50% in 2008/9

funny that, what with it being a huge financial crisis. Every fund I had during that phase recovered more quickly and sustained that recovery compared to my equities. You'd expect that too, common sense, given what a well managed fund is. 
A fund has a far better chance of recovering a loss than an individual share. Its an obvious logic - a fund manager can change the components of the fund to compensate poor components (shares). Your opportunity for that is multiplied. Whereas with a share, you have two choices - wait to see if if recovers or sell and buy something that you believe will compensate with extraordinary growth. That requires skill time and knowledge. 

Its hard not to make money in a buoyant market. The measure of a good fund is how they mitigate loss during a downturn, and how quickly they pick up. You'd expect a loss less than the main index, and a quicker and bigger recovery. 

By saying you can do better with your own share portfolio, than a good managed fund, you are making the bold claim that as an amateur, you think you can do better than the professionals with their stack of analysts and data, working on this full time. Big claim that. May be true as well. However, for most of us, ain't the case.

My view, based on about 25 years of investment experience, some good, some poor, is that I prefer to trust my future prosperity and hard earned financial security to the professionals, and I am very comfortable with paying for it. I took about 3 years of research and meetings with various advisers to finally pick one I am happy with. I am totally confident that they can do a better job than me, and also that they know what they are doing in respect of tax planning.

Financial planning is a long game, and not one I think I can do justice to. Too much at stake

RandallFlagg

ToneControl said:

Same story with Amazon

https://www.news1.news/en/2020/05/the-irresistible-rally-on-the-amazon-stock-exchange-worth-more-than-the-entire-frankfurt-dax30.html

With a stock market capitalization that in the last few days has exceeded 1.250 billion dollars, the queen of Nasdaq Amazon alone is worth more than all the big German companies in the Dax 30 index which together have a value of 1.130 billion dollars. The historic stock market overtaking of the last few days is only one of the effects that Coronavirus has determined, affecting traditional and those based on the digital economy in an “asymmetrical” way.

Who thinks that Amazon is worth more than the whole DAX 30?

The total market capitalization of Volkswagen (67 billion), Daimler (34), and Bmw (34) is a total of 135 billion, or only 10.8% of that of Amazon, while the employees of the three large houses of the automotive are almost 1,100,000 worldwide.

So the investors are relying on Amazon being worth 10 times more than VW, Mercedes and BMW, even though the employ more people

What's employing people got to do with anything?

Employing less people and using automation is potentially more profitable. Robots have none of the of the baggage that humans bring, they don't need paid time off, pensions, sick pay, national insurance, lunch breaks and don't cause accidents etc. 

ThePrettyDamned

I have gone for a passive blackrock fund, to keep fees down while I'm only depositing smaller amounts of money. Very early days but I don't have the liquid money to invest more just yet.

I hope that, in time, I can increase my per month deposit and put a percentage of it to a different, active fund.

One thing I realised fairly early was that, within certain risk profiles, funds are generally going to go in one direction over a 3 - 10 year period. Time is the best friend in that game I think - the rest is a mix of luck and judgment, neither of which I have. If I can beat the 1 percent or so you get from a bank, I'll be happy! 

RandallFlagg

ThePrettyDamned said:

I have gone for a passive blackrock fund, to keep fees down while I'm only depositing smaller amounts of money. Very early days but I don't have the liquid money to invest more just yet.

I hope that, in time, I can increase my per month deposit and put a percentage of it to a different, active fund.

One thing I realised fairly early was that, within certain risk profiles, funds are generally going to go in one direction over a 3 - 10 year period. Time is the best friend in that game I think - the rest is a mix of luck and judgment, neither of which I have. If I can beat the 1 percent or so you get from a bank, I'll be happy! 

I agree. A penny drop moment for me in my retirement planning was not seeing a retirement date as an end date for investment. The traditional approach is to reduce equity exposure as you approach retirement date and then reduce it even further in retirement increasing the amount of bonds in your portfolio.

This makes no sense to me. bonds return less and can be just as volatile as stocks. I have no bonds/bond funds and have plans to hold any now, at retirement or into retirement. It'll be a mixture of cash and equity mutual funds for me all the way through.

If I really did make a lot of money and needed to find another home rather than cash I would look at property.

ToneControl

Snap said:

ToneControl said:

My top-performing managed funds went down 50% in 2008/9

funny that, what with it being a huge financial crisis. Every fund I had during that phase recovered more quickly and sustained that recovery compared to my equities. You'd expect that too, common sense, given what a well managed fund is. 
A fund has a far better chance of recovering a loss than an individual share. Its an obvious logic - a fund manager can change the components of the fund to compensate poor components (shares). Your opportunity for that is multiplied. Whereas with a share, you have two choices - wait to see if if recovers or sell and buy something that you believe will compensate with extraordinary growth. That requires skill time and knowledge. 

Its hard not to make money in a buoyant market. The measure of a good fund is how they mitigate loss during a downturn, and how quickly they pick up. You'd expect a loss less than the main index, and a quicker and bigger recovery. 

By saying you can do better with your own share portfolio, than a good managed fund, you are making the bold claim that as an amateur, you think you can do better than the professionals with their stack of analysts and data, working on this full time. Big claim that. May be true as well. However, for most of us, ain't the case.

My view, based on about 25 years of investment experience, some good, some poor, is that I prefer to trust my future prosperity and hard earned financial security to the professionals, and I am very comfortable with paying for it. I took about 3 years of research and meetings with various advisers to finally pick one I am happy with. I am totally confident that they can do a better job than me, and also that they know what they are doing in respect of tax planning.

Financial planning is a long game, and not one I think I can do justice to. Too much at stake

Don't agree fully about "expert" investors, the stats contradict your expectations:

 https://www.morningstar.com/insights/2019/02/12/active-passive-funds

Just 38% of active U.S. stock funds survived and outperformed their average passive peer in 2018, down from 46% in 2017. Active value funds saw the biggest decline in success, with only 26% of such funds beating the average passive fund in their categories.

https://www.cnbc.com/2019/03/15/active-fund-managers-trail-the-sp-500-for-the-ninth-year-in-a-row-in-triumph-for-indexing.html

Active fund managers trail the S&P 500 for the ninth year in a row in triumph for indexing

between March and May, I made 50% on my ISA in UK stocks. Never invested in shares before in my life. It's not that hard.
the best fund for UK caps I know (Randall's favourite) made far less than that

ToneControl

RandallFlagg said:

ToneControl said:

Same story with Amazon

https://www.news1.news/en/2020/05/the-irresistible-rally-on-the-amazon-stock-exchange-worth-more-than-the-entire-frankfurt-dax30.html

With a stock market capitalization that in the last few days has exceeded 1.250 billion dollars, the queen of Nasdaq Amazon alone is worth more than all the big German companies in the Dax 30 index which together have a value of 1.130 billion dollars. The historic stock market overtaking of the last few days is only one of the effects that Coronavirus has determined, affecting traditional and those based on the digital economy in an “asymmetrical” way.

Who thinks that Amazon is worth more than the whole DAX 30?

The total market capitalization of Volkswagen (67 billion), Daimler (34), and Bmw (34) is a total of 135 billion, or only 10.8% of that of Amazon, while the employees of the three large houses of the automotive are almost 1,100,000 worldwide.

So the investors are relying on Amazon being worth 10 times more than VW, Mercedes and BMW, even though the employ more people

What's employing people got to do with anything?

Employing less people and using automation is potentially more profitable. Robots have none of the of the baggage that humans bring, they don't need paid time off, pensions, sick pay, national insurance, lunch breaks and don't cause accidents etc. 

What's employing people got to do with anything?

It's a measure of scale of the companies
Do you think those car companies have less automation than Amazon?

Anyway, it's irrelevant to the question of how can Amazon be worth 10 times the total worth of VW, BMW and Mercedes? It makes zero sense as an investment to pay this much for Amazon. How much is the PE? How much is their dividend?

RandallFlagg

ToneControl said:

between March and May, I made 50% on my ISA in UK stocks. Never invested in shares before in my life. It's not that hard.
the best fund for UK caps I know (Randall's favourite) made far less than that

3 months is a very short investment window, I don't expect a managed fund to perform to it's potential in such a short space of time, a 5 year window minimum is needed

DiscoStu

I've just transferred my cash ISA money over to my Cavendish/Fidelity account. I haven't invested it in any funds yet but going to look in to them over the weekend. What are people's gut feelings about the market right now? Is it going to dip again? Maybe not as low as March levels, but maybe lower than now? It could be worth me hanging fire for a bit and investing the money later.

Lebarque

Interesting that everyone is fund fans. Lots of people recommend trackers due to the lower fees and similar performance. Thoughts?

ToneControl

RandallFlagg said:

ToneControl said:

between March and May, I made 50% on my ISA in UK stocks. Never invested in shares before in my life. It's not that hard.
the best fund for UK caps I know (Randall's favourite) made far less than that

3 months is a very short investment window, I don't expect a managed fund to perform to it's potential in such a short space of time, a 5 year window minimum is needed

you just told me what your managed fund achieved since March, why can't I tell you what I accomplished?

ToneControl

DiscoStu said:

I've just transferred my cash ISA money over to my Cavendish/Fidelity account. I haven't invested it in any funds yet but going to look in to them over the weekend. What are people's gut feelings about the market right now? Is it going to dip again? Maybe not as low as March levels, but maybe lower than now? It could be worth me hanging fire for a bit and investing the money later.

I'm buying loads of solvent-looking small-cap shares that are 75% or more down since last year

ToneControl

Lebarque said:

Interesting that everyone is fund fans. Lots of people recommend trackers due to the lower fees and similar performance. Thoughts?

Randall's favourite funds have been exceptional, most are dire
How can we tell if his funds will continue to perform?

Trackers are a great idea, but after looking at most of the FTSE100 in depth over the last few months, I can tell you that many should be avoided, so what should one do?

which index should you go for?
USA ones are a bubble, financed by greed, share buy backs and government loans, Chinese ones are at huge risk of damage from a trade war

personally I'm sticking with the UK shares at the minute 

RandallFlagg

ToneControl said:

Lebarque said:

Interesting that everyone is fund fans. Lots of people recommend trackers due to the lower fees and similar performance. Thoughts?

Randall's favourite funds have been exceptional, most are dire
How can we tell if his funds will continue to perform?

Trackers are a great idea, but after looking at most of the FTSE100 in depth over the last few months, I can tell you that many should be avoided, so what should one do?

which index should you go for?
USA ones are a bubble, financed by greed, share buy backs and government loans, Chinese ones are at huge risk of damage from a trade war

personally I'm sticking with the UK shares at the minute 

The 2 funds I have the most money in are the HSBC Islamic Global Equity Index and ASI UK Smaller Companies, about £100K in each.

So far this year, HSBC Islamic Global Equity Index Fund is up 13% and UK Smaller Companies down about 9%. Last year ASI UK Smaller Companies made 45% and the HSBC fund 28%. 

Over 5-10 years they average 14-16% annually

i'm happy to keep invested in these funds and see no reason to change, I have a real fondness for the ASI UK Smaller Companies fund and was in it 100% for some time but have diversified this year. Investing in smaller companies can be quite volatile, when they are up they do exceptionally well but when things are down they can drop more than other stocks.

I have smaller amounts in very high performing funds that are US Tech heavy Polar Capital Global Technology and Baillie Gifford American B. As @ToneControl says US Tech stocks are in a bit of a bubble at the moment and these 2 funds are showing almost unbelievable and exceptional gains so far this this year of 35% and 75% year to date. This bubble will burst at some point and returns average out but I still plan to steadily increase the amount I have in these 2 funds over the next few years regardless of short term performance as I believe they are solid funds for the long term with 16-18% annualised average returns over 5-10 years. Polar Capital have soft closed the Global Tech fund and are not accepting any new customers at present as the fund is getting too popular and growing too big for them to maintain their investment strategy.

I like the fund managers of all 4 of these funds and see no reason to change direction for my own long term investment goals, but what I will continue to work on is allocation, the percentage of money allocated to each fund, that is something I'm not completely sure I have right at present.

My wife's pension is all in the Legal & General Ethical Global Equity Index which is a very similar portfolio to the HSBC Islamic fund. She has very little choice of funds via her pension but we picked this one and will review it when she is 55 to see if we want to leave it preserved or put it somewhere else as it will only be about £55K when she is 55 and she will have stopped working by then.

RandallFlagg

ToneControl said:

RandallFlagg said:

ToneControl said:

between March and May, I made 50% on my ISA in UK stocks. Never invested in shares before in my life. It's not that hard.
the best fund for UK caps I know (Randall's favourite) made far less than that

3 months is a very short investment window, I don't expect a managed fund to perform to it's potential in such a short space of time, a 5 year window minimum is needed

you just told me what your managed fund achieved since March, why can't I tell you what I accomplished?

Fair enough mate.

The problem I have with reviewing a managed fund's performance is looking to often and getting swept up in short term gains or losses. It's easy to get euphoric about a 90% gain since March in one fund and fed up with a lingering 10% loss in another. I need to keep focussed on longer term 3-5 year performance and not be swayed by the short term volatility whether it be up or down.

I need to get the allocation mix sorted between the funds I am in, I'm not sure it's right at present.

ToneControl

RandallFlagg said:

ToneControl said:

RandallFlagg said:

ToneControl said:

between March and May, I made 50% on my ISA in UK stocks. Never invested in shares before in my life. It's not that hard.
the best fund for UK caps I know (Randall's favourite) made far less than that

3 months is a very short investment window, I don't expect a managed fund to perform to it's potential in such a short space of time, a 5 year window minimum is needed

you just told me what your managed fund achieved since March, why can't I tell you what I accomplished?

Fair enough mate.

The problem I have with reviewing a managed fund's performance is looking to often and getting swept up in short term gains or losses. It's easy to get euphoric about a 90% gain since March in one fund and fed up with a lingering 10% loss in another. I need to keep focussed on longer term 3-5 year performance and not be swayed by the short term volatility whether it be up or down.

I need to get the allocation mix sorted between the funds I am in, I'm not sure it's right at present.

you've done very well out of the US bubble, I was too chicken for that over the last few years
if you are going to persist with those funds, I think you should "buy some insurance" by buying options in case the market drops massively