The FTSE

[SWP's back]

Only 15% of actively managed funds beat averages, but Warren Buffet has never had to pay out on a $2M bet of a BASKET of actively managed funds beating the S&P Index over a 10 year period, so do with that what you will!

As above, it’s most certainly not only about returns for the vast vast majority.

 

[hampshireblue]

As above, it’s most certainly not only about returns for the vast vast majority.

Ok, I'm confused. If it isn't about returns for the vast,vast majority, what is it about?

I'm invested for one reason and that is to provide me with an income, hopefully without taking too much risk or having to eat too much into the capital amount . The returns I get are crucial to achieving this.

Am I unusual in this approach?

 

[SWP's back]

Ok, I'm confused. If it isn't about returns for the vast,vast majority, what is it about?

I'm invested for one reason and that is to provide me with an income, hopefully without taking too much risk or having to eat too much into the capital amount . The returns I get are crucial to achieving this.

Am I unusual in this approach?

No but what rate it growth do you need to provide the above? And what amount of volatility are you willing to expose yourself to? Are you fucked, mentally and/or financially if your assets drop to 40% of their current value for an unknown period of time?

Returns are returns, some people are happy to beat inflation, some people want double digits. Trackers (such as the S&P
500) will have made you near the latter since the end of 2009 but still had a couple of years of double digit losses during that time.

The best investment, especially with regards to retirement planning, isn’t the asset that makes one the most money. It’s the one that provides the best return per unit of risk the investor is willing to take.

If my clients had promised not to look at their investment for 15-20 years after they signed the paperwork, I’d have been able to guarantee a much better return. But people do look at their value and if you’re 72 and have just seen your £500k reduce to £290k in six months, you’re not overly happy (even if you are only paying 0.1% for the ETF in comparison to 0.75% on a diversified multi asset balanced fund).

TL;DR - no, it’s not “all about returns” for the vast vast majority. It’s finding everybody’s sweets spot on the risk/return graph. If you’re 35 you can have 100% of your funds in equities, if you’re 65, unless you’re a very experienced/sophisticated investor, that would be a terrible idea and the FCA would find against your adviser should you complain, no matter how much paper work they’d made you sign absolving them of liability.

 

[MCFC_ Phil]

I'll state the obvious but with those figures I wouldn't be retiring in 3 years.

I would be looking to pay all I could in the pension or AVCs to avoid tax if I had to retire in 3 years, even if it meant taking a small loan to cover living costs, and take home minumum wage for the 3 years (which is the restriction on mine).

My bad here. Totally wrong info, doh. I aim to retire in 6 years actually. Figures were correct though. Also wife has NHS pension to kick in at same time. So if I have spare cash per month, increase the contributions?

 

[M18CTID]

My bad here. Totally wrong info, doh. I aim to retire in 6 years actually. Figures were correct though. Also wife has NHS pension to kick in at same time. So if I have spare cash per month, increase the contributions?

I’m no expert but I would definitely chuck more in if you can afford to. One of the very few positives of this pandemic is that by not going out on the lash watching City all over the country and beyond, I’ve been able to launch a 3-pronged financial assault - clear some unsecured debt, save some money towards home improvements, and hugely increase my monthly SIPP contributions. I’ve now got £825 a month going in (once tax relief is added).

 

[crublue1]

No but what rate it growth do you need to provide the above? And what amount of volatility are you willing to expose yourself to? Are you fucked, mentally and/or financially if your assets drop to 40% of their current value for an unknown period of time?

Returns are returns, some people are happy to beat inflation, some people want double digits. Trackers (such as the S&P
500) will have made you near the latter since the end of 2009 but still had a couple of years of double digit losses during that time.

The best investment, especially with regards to retirement planning, isn’t the asset that makes one the most money. It’s the one that provides the best return per unit of risk the investor is willing to take.

If my clients had promised not to look at their investment for 15-20 years after they signed the paperwork, I’d have been able to guarantee a much better return. But people do look at their value and if you’re 72 and have just seen your £500k reduce to £290k in six months, you’re not overly happy (even if you are only paying 0.1% for the ETF in comparison to 0.75% on a diversified multi asset balanced fund).

TL;DR - no, it’s not “all about returns” for the vast vast majority. It’s finding everybody’s sweets spot on the risk/return graph. If you’re 35 you can have 100% of your funds in equities, if you’re 65, unless you’re a very experienced/sophisticated investor, that would be a terrible idea and the FCA would find against your adviser should you complain, no matter how much paper work they’d made you sign absolving them of liability.

What a good post, thanks for taking the time + trouble. That goes for all the other contributions from financial bods on here.

 

[MCFC_ Phil]

I’m no expert but I would definitely chuck more in if you can afford to. One of the very few positives of this pandemic is that by not going out on the lash watching City all over the country and beyond, I’ve been able to launch a 3-pronged financial assault - clear some unsecured debt, save some money towards home improvements, and hugely increase my monthly SIPP contributions. I’ve now got £825 a month going in (once tax relief is added).

I was think along those lines. Got some spare cash from exactly what you were saying. Only problem the missus is spending the 5k we've saved on having the garden transformed. Going to divert some of the monthly savings into the pension from now on, she'll appreciate it in the long run!

 

[Corky]

My bad here. Totally wrong info, doh. I aim to retire in 6 years actually. Figures were correct though. Also wife has NHS pension to kick in at same time. So if I have spare cash per month, increase the contributions?

You will probably get around £6k a year on your private pension, even if that is enough for your with state and your wifes pension, paying in more now will save you tax, especially in your last few years as you won't have to wait long to get it back as a lump sum if that's what you decide to do with part of it.

 

[CBD]

Looks like silver could be next, apparently most shorted market in the world! If you want a fund look art Merian Gold And Silver. 50;50 gold/silver and miners geared into the price.

 

[hampshireblue]

No but what rate it growth do you need to provide the above? And what amount of volatility are you willing to expose yourself to? Are you fucked, mentally and/or financially if your assets drop to 40% of their current value for an unknown period of time?

Returns are returns, some people are happy to beat inflation, some people want double digits. Trackers (such as the S&P
500) will have made you near the latter since the end of 2009 but still had a couple of years of double digit losses during that time.

The best investment, especially with regards to retirement planning, isn’t the asset that makes one the most money. It’s the one that provides the best return per unit of risk the investor is willing to take.

If my clients had promised not to look at their investment for 15-20 years after they signed the paperwork, I’d have been able to guarantee a much better return. But people do look at their value and if you’re 72 and have just seen your £500k reduce to £290k in six months, you’re not overly happy (even if you are only paying 0.1% for the ETF in comparison to 0.75% on a diversified multi asset balanced fund).

TL;DR - no, it’s not “all about returns” for the vast vast majority. It’s finding everybody’s sweets spot on the risk/return graph. If you’re 35 you can have 100% of your funds in equities, if you’re 65, unless you’re a very experienced/sophisticated investor, that would be a terrible idea and the FCA would find against your adviser should you complain, no matter how much paper work they’d made you sign absolving them of liability.

Ok thanks for the context. I thought I'd clarified the bit about not taking too much risk that you replied to.

 

[SWP's back]

Ok thanks for the context. I thought I'd clarified the bit about not taking too much risk that you replied to.

Absolutely but your post was in reply to mine about EFTs not providing diversification and thus being considered 5 on a scale of 1-5 where 1 is defensive and 5 is aggressive/specialist.

If I randomly put a client into an equity ETF only portfolio and didn’t have chapter and verse on their capacity and appetite for risk, other assets held and previous investment experience, I’d lose my license or would have. No one thinks they’re taking on too much risk when the line goes up.

 

[MCFCinUSA]

just saw this thread - the likes of which I don't recall having seen on BM before (but I've not been that active in recent years) and I'm curious, because I don't follow the FTSE anymore as I'm normally based overseas, but was at a member firm in Manchester during the '87 Crash (so I have some form) where do people in this thread think the FTSE is going to be around the end of the 3QTR 2021?

 

[Bigga]

I thought I'd have a peek to see what all the fuss was about and saw some interesting commentary about it.

You might get a laugh out of it...

 

[MCFCinUSA]

I thought I'd have a peek to see what all the fuss was about and saw some interesting commentary about it.

You might get a laugh out of it...

these two have absolutely no idea what they're talking about, and are hopelessly wrong on the assumptions they're making and the conclusions they're drawing, not to mention a total lack of understanding of what's actually been going on here and the market mechanisms involved - which are what's most important and central to this whole issue.

 

[Bigga]

these two have absolutely no idea what they're talking about, and are hopelessly wrong on the assumptions they're making and the conclusions they're drawing, not to mention a total lack of understanding of what's actually been going on here and the market mechanisms involved - which are what's most important and central to this whole issue.

Okay, so let me ask you; do you think these billionaire hedge fund companies should be bailed out if they go under?

 

[SWP's back]

Okay, so let me ask you; do you think these billionaire hedge fund companies should be bailed out if they go under?

By whom? If another hedge fund wants to lend them some cash or buy them out, fair enough. Public money from Govt? Fuck no.

I’ve not watched the video as I’ve yet to see anyone in the main stream media that understands what’s actually happening/happened and it annoys me.

 

[Bigga]

By whom? If another hedge fund wants to lend them some cash or buy them out, fair enough. Public money from Govt? Fuck no.

I’ve not watched the video as I’ve yet to see anyone in the main stream media that understands what’s actually happening/happened and it annoys me.

Biden's gov is already 'keeping an eye on things'. Many politicians have big ties to Wall St, so they have a vested interest in what's happening as they are, in turn, funded by a fair few of them.

Public money was used before in 2008, so what's the difference with this bubble where big companies may actually tumble from their own immoral actions turned back on them?

 

[SWP's back]

Biden's gov is already 'keeping an eye on things'. Many politicians have big ties to Wall St, so they have a vested interest in what's happening as they are, in turn, funded by a fair few of them.

Public money was used before in 2008, so what's the difference with this bubble where big companies may actually tumble from their own immoral actions turned back on them?

Public money was used in the US, to shore up retail banking so that people’s life savings weren’t wiped out by their bank going broke. No public money was used to bail out investment houses (see Lehman Brothers etc).

In the US, U.K. and Europe, the rules were changed to separate the retail banking and investment banking arms of banks so that a future 2008 would mean that investment banks could go to the wall and it wouldn’t affect people with savings accounts which was a good and much needed change.

Melvin Capital et al are not retail banks. If it goes into bankruptcy then only people with money held by Melvin Capital lose out (they would generally be high net worth, experienced investors anyway as you don’t put your retirement funds into a hedge fund if you’re risk averse).

What I can see the US Govt and SEC doing in the non too distant is putting a limit on the percentage of float that can be shorted. GME being shorted to 140% of available stock was absolutely fucking moronic and they’re paying the price. They won’t get a cent of tax dollars.

FWIW, there isn’t a ‘bubble’ here so to speak. It’s a Short Squeeze on those that shorted one stock and it is, as yet, no where near as big as the one on VW in the 2000’s that cost some hedge funds billions. Again, none were bailed out.

 

[Bigga]

Public money was used in the US, to shore up retail banking so that people’s life savings weren’t wiped out by their bank going broke. No public money was used to bail out investment houses (see Lehman Brothers etc).

In the US, U.K. and Europe, the rules were changed to separate the retail banking and investment banking arms of banks so that a future 2008 would mean that investment banks could go to the wall and it wouldn’t affect people with savings accounts which was a good and much needed change.

Melvin Capital et al are not retail banks. If it goes into bankruptcy then only people with money held by Melvin Capital lose out (they would generally be high net worth, experienced investors anyway as you don’t put your retirement funds into a hedge fund if you’re risk averse).

What I can see the US Govt and SEC doing in the non too distant is putting a limit on the percentage of float that can be shorted. GME being shorted to 140% of available stock was absolutely fucking moronic and they’re paying the price. They won’t get a cent of tax dollars.

FWIW, there isn’t a ‘bubble’ here so to speak. It’s a Short Squeeze on those that shorted one stock and it is, as yet, no where near as big as the one on VW in the 2000’s that cost some hedge funds billions. Again, none were bailed out.

Fair enough and thanks for finer details of info. I can still see hedge fund companies trying to ask for help, so let's see what Biden does about it.

To the layman's eye, a change of rules for limitation means a restriction of the US coveted 'free market economy/ capitalism', which means massive law suits await.

An investor is an investor, private or public, so changes leave Wall St open to all kinds of problems.

 

[SWP's back]

To the layman's eye, a change of rules for limitation means a restriction of the US coveted 'free market economy/ capitalism', which means massive law suits await.

No, it’s basically like saying you can’t mortgage your house for more than it’s worth. It’s just a regulation that can be put in and there are thousands of them in financial services.

As I say, I promise Melvin Capital will not receive a penny from the public purse.