The FTSE

  • Thread starter Thread starter worsleyweb
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flyer said:
This is from the lad who looks after our investments which has enabled me to retire at 58 on full earnings, so I think he knows what he's talking about.It's a bit of a read but give it a go. GFC is the great financial crisis of the 2008


The recovery in markets so far has been based on 2 of the 3 requirements that we need to see a full recovery. Impressed as I am with the speed of the start of this recovery without the 3rd element the rally could fall back, and lows again could be tested.

Monetary stimulus was the first request that I wanted to see and unlike the GFC, this came with ridiculous speed. Possibly this was down to Central banks realising the errors that they created when confronted with the GFC just over 11 years ago. The US cut Interest rates to zero and announced QE infinity, as much Quantitative Easing that is required plus large amounts of liquidity to ensure this doesn’t move from a Viral Crisis to a financial one. The Bank of England cuts interest rates to 0.1% and announced QE of its own. Even the ECB under Christine Lagarde finally announced QE, they didn’t feel like cutting interest rates further as they’re already negative.

Fiscal Stimulus was the second requirement needed. We’ve all seen Rishi Sunak the new Chancellor announce what he will offer Large business, Small business, employees and the self-employed. Large infrastructure spends were announced in the recent budget. The US passed a $2trillion fiscal package of their own yesterday. This takes the fiscal spend globally to deal with the coronavirus crisis to $4.5trillion, an eye watering amount of money. Europe can and should do more but the phrase “will do whatever it takes” is reassuring to hear and has been uttered by Sunak, Mnuchin, Macron and even Olaf Scholz!

The third and final element that we need to see is the core of the problem and is some good news on the medical side of things. This will ensure we see a recovery and if this does present itself the recovery will be sharp and sustainable. I’ve just listened to the CeO of Novartis echoing the optimism of Trump of the hope for hydroxychloroquine (this is a well known name and people are very hopeful of its approval, so much so that I spelt that without even checking) as an antiviral cure. Remdesivir and Regeneron are names that are also been mentioned possibly just to be used in conjunction. Some tests are saying it does prove useful and some don’t. I have faith in the medical industry and I’m sure if it does work this will be the real game changer. If it doesn’t and we have to wait for a new cure to be developed, then we could see the selling return unfortunately.

As I read it, 3 actions will halp us through this financial crisis. The first two have already happened and the markets now are poised on the medical side of things. We need a test and a cure that we can rely on. When that happens, the health of the world will become stable and the finacial markets will recover from the huge losses of the last few weeks.

That;s important to me and mrs flyer as 60 year olds relying on income from investments but above all please stay safe
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Of the three points highlighted it is the third element the medical situation which the destiny of these markets will pivot around.Forget points 1 and 2 they are just in its basic form cash flow crisis management strategies for government/banking system and in turn fiscal strategy for your man on the street. They had to be administered especially the fiscal phase just to stop society descending into anarchy - big questions about how long governments can run these job bailouts.

Antiviral combination testing is the next logical step due to time lines on a vaccine but caution in terms of testing time lines on this have to be considered, don’t underestimate the logistics and time needed in trying various antiviral cocktails in a live situation with a new virus.

Your adviser concluded on the medical point - When that happens, the health of the world will become stable and the finacial markets will recover from the huge losses of the last few weeks.

I personally think that’s a massive over simplification of the situation going forward (Almost kids bedtime reading ending) which takes no consideration for many factors even on a good case scenario conclusion to this with the actions global governments have committed to already just at this stage ( early stage of pandemic).

I’m not dissing the guy at all but the situation is far more nuanced than this and the weighting to the conclusion is on point 3; point 1 and 2 is just the necessary action to administer to a patient having a heart attack just to give you a chance to tackle point 3 in the future - we are literally buying time here.

Good on him and you if he’s managed to get you to where you want to be with his investment advice, it’s a very precarious industry/job :-)
 
SWP's back said:
Hiya bud, I’ve mentioned before that I’m snowed under with work and many are DB transfers. It’s not actually a bad time to transfer out as transfer values on DB’s are the highest they’re ever likely to go due to the way they are calculated (based on 15 gilt dividend which is through the floor).

If you’re worried about entering a volatile market then make use of pound cost averaging and hold the majority in cash and then drip your funds into the market over the next 6-18 months to reduce risk.

As an example, I’ve just transferred one scheme for £1.4m and he started with all but £200k staying in cash and he’s dripping that cash in at £50k every two weeks for the next year or so. That way if the markets are volatile he’s buying more units as it drops. His timescale is 5-10 years before he draws down on income.
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Thanks very much for that. Much appreciated.
 
The UK shares I hold are still deep in negative territory, my funds are at least back in profit but nowhere near where they were at the start of this. Got a reasonably wide exposure but again UK funds are dragging them back
 
Wafty Cranker said:
If it was RD Shell, that's not a bad punt in my opinion. Massive dividend yield, a strong balance sheet, and I noticed one of the non-exec Directors topped up his holding by 10,000 shares on Monday. Only small change for him I know but I'm taking it a positive sign.
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Yeah, wish I had the money/timing to have nipped in when they were under £9 a few weeks ago. Rio Tinto fell back a lot too......precious metal miners have to be a good place to be ATM for the right price (you'd think). Bloody easy with hindsight, this shares caper.
 
dickie davies said:
So you IFA's, what are your predictions regarding pension and investment recovery times!
Will the recovery be great for personal pensions or will they only recover very slowly what they've lost?
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I'm not an IFA, but I don't think recovery time will be as bad as some previous crashes. It's more dramatic because the economy has stopped still. But it will pick up where it's left off. There's aren't as many big-name companies going bust when compared to the 08 crash. Small business is fine under the furlough scheme. Although the numbers are horrific, they're mainly affecting people who aren't of working age.

You might see some changes to companies based in the tourism and leisure industries, but they will be countered by massive gains in the tech industries with online solutions and the increase in people working from home.
 
I personally think the recovery will be fairly strong but only when normality resumes so that could add quite a period to this.

UK Equity Income, Small and Mid cap funds have been hammered and are down heavily even allowing for the recent rebound. The pound falling hasn’t helped those. Some Equity income funds are down 35% in last 12 months mainly as Shell and BP are often their two biggest holdings.

Best investments in last 12 months in the funds universe.

Gold - One fund up 65% in 12 months. Many above 50%

Long Dated Fixed Interest - 20-30% up

Biotech - funds up around 20-30% in last year

Technology - 15-20% up
 
flook said:
thanks, hopefully.......
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The key on any investment into a volatile fund, like playing roulette in a casino, is to set your limits on either side. If you’re happy with a 40% RoI then cash out and walk away mate. And when you have done so, just be happy with your profit rather than looking at the price afterwards.

I shorted oil at 50x leverage down from $60 to $25 and walked away and tried not too be too upset it went down to zero. I’m now staying well away from it as I’m positive it will burn my fingers if I go back in.
 
SWP's back said:
The key on any investment into a volatile fund, like playing roulette in a casino, is to set your limits on either side. If you’re happy with a 40% RoI then cash out and walk away mate. And when you have done so, just be happy with your profit rather than looking at the price afterwards.

I shorted oil at 50x leverage down from $60 to $25 and walked away and tried not too be too upset it went down to zero. I’m now staying well away from it as I’m positive it will burn my fingers if I go back in.
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I have no idea what you said there

I'll leave a small amount in that fund to track it, I'm happy with the 40%, how can I not be, but the plan is to watch it and when (if) the price drops significantly, buy back in. I'm far (far far far) from being knowledgeable about investments, funds etc, but what can possibly go wrong :D
 
journolud said:
Made me laugh and I know exactly what you mean. I’ve been reading up on investments, shares, bonds etc for a while and still can’t get my head round the language of yields, shorts, etc
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I try, I really do, but after a few seconds I just get a random TV theme tune playing in my head
 
flook said:
I have no idea what you said there

I'll leave a small amount in that fund to track it, I'm happy with the 40%, how can I not be, but the plan is to watch it and when (if) the price drops significantly, buy back in. I'm far (far far far) from being knowledgeable about investments, funds etc, but what can possibly go wrong :D
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Shorted just means that rather than buying an asset (like gold) and hoping it goes up, I bought oil and hoped it would go down in value. The 50x leverage means that I pay a small amount per day to "borrow" 50x my invested amount. This means (when shorting) that a 2% price increase would make me lose all my money, or a 2% decrease would double my money.

I only use a bit of play money for this sort of day trading (I don't go anywhere near managing my proper investments) as it may as well be gambling.
 
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