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Stocks
Nov 6, 2019 16:46:02 GMT
Post by propman on Nov 6, 2019 16:46:02 GMT
While it may seem sensible to sell everything when you call the top of the market, IMHO the sensible option is to adjust your asset allocation to take some of the profits. That would mean that there will have been a gradual reduction in equity allocation over the last few years, but more importantly, no shares will have been purchased at a perceived over value. In reality no-one can call the top of the market, if there is something that flips your opinion on valuations, the chance is that others are ahead of you or the signal is ambiguous. Both point to a more nuanced approach to avoid large costs for limited benefit. Why would it mean that, those assets that still go up, still go up? Timing is tough but selecting assets that always go up is relatively easy. That is what H Is doing with her index. I am not aware of anything with a decent return that will always go up. The Index has fallen in the past and some indexes may never fully recover on a time value of money basis (eg Japanese stocks from 80s). For most of us I would suggest that accurate timing is a mugs game as you are agreeing to pay brokerage fees with a good chance of losing anyway. Yes there are good ways to identify increasing risk of corrections and in many cases it will become clear that a correction is all but inevitable, the problem is that the timing of that correction is uncertain and sedlling into a falling market is often not a great idea so you are looking to identify the peak before the fall.
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Stocks
Nov 6, 2019 17:36:19 GMT
Post by Deleted on Nov 6, 2019 17:36:19 GMT
I agree that timing is impossible.
"Always goes up" (for a certain value of "always", mine is about 5 years), well it depends on two things, your timescales and your lack of fear due to a certain level of noise. At the moment I'm aware of a bunch of assets (in the range of 10 to 15) that have gone up pretty consistently for the past 5 years with a noise of roughly +-10%, since they are going up with a growth rate of 12% to 18% annually they fall very nicely into a definition of always goes up. If they give dividends then all the better, it covers the costs of the ones that fall off.
I suspect, but cannot prove that, for a large period of time in the last 50 years there have been such assets (but not these assets) and the great news is that generally things go up slow and they come down quickly. So lots of time to go up giving nice emotional support to the process and a clear eye out for going down.
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Stocks
Nov 7, 2019 10:03:42 GMT
Post by propman on Nov 7, 2019 10:03:42 GMT
I agree that timing is impossible.
"Always goes up" (for a certain value of "always", mine is about 5 years), well it depends on two things, your timescales and your lack of fear due to a certain level of noise. At the moment I'm aware of a bunch of assets (in the range of 10 to 15) that have gone up pretty consistently for the past 5 years with a noise of roughly +-10%, since they are going up with a growth rate of 12% to 18% annually they fall very nicely into a definition of always goes up. If they give dividends then all the better, it covers the costs of the ones that fall off.
I suspect, but cannot prove that, for a large period of time in the last 50 years there have been such assets (but not these assets) and the great news is that generally things go up slow and they come down quickly. So lots of time to go up giving nice emotional support to the process and a clear eye out for going down. The trouble is that the "5 years" required is the next 5 years NOT the last and that is harder to find given stocks are priced based on expected future results, they often decline even where they continue to deliver reasonable returns (ie they are over priced because the market expected them to deliver more). It is precisely the stocks that have continued to rise that are most highly valued.
As for 50 years, that would indeed be a good sign, but while growth may have continued for that long, the business will have changed in that time and the culture and market are unlikely to be even close, so little reliance can be placed on the earlier periods. I haven't checked the stock, but an example might well be Coca Cola. But there must be a risk that the health worries about sugar turn sweet drinks into the tobacco of the near future. I know that they have "diet" brands, but this could contaminate the whole brand that is the basis of their past success.
I am sure what you are saying may well produce a small number of assets that are still realistically priced, great prospects with a track record. But I suspect that would only be the case due to unfounded fears still priced in and so you would need to identify where the market has got it wrong. I think it was Keynes that pointed out (paraphrasing) that while under valued stocks do exist that the time required to return to value is often longer than investors are prepared to wait.
I imagine the 12-18% you quote has been partially achieved due to a change (eg innovation) that will only be repeated again with items currently at best unproven (otherwise they will be fully priced in) or unknown entirely. It may well also be the benefit of the fall in sterling, while this has occurred during a boom, so how cyclic will they be in the inevitable downturn?
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Post by Deleted on Nov 7, 2019 11:05:44 GMT
I imagine the 12-18% you quote has been partially achieved due to a change (eg innovation) that will only be repeated again with items currently at best unproven (otherwise they will be fully priced in) or unknown entirely. It may well also be the benefit of the fall in sterling, while this has occurred during a boom, so how cyclic will they be in the inevitable downturn?
Your imaginations are only partially correct as the fall in sterling continues (since 1945) to be the back ground of all assets invested in by sterling owners for 75 years now. It is, after all, governmental policy of both parties to have a weak sterling and has been since WW2.
Despite changing my share holding strategies slightly over the last 40 years the one key expert I think is worth reading (and Keynes was an economist not a share trader) is Warren Buffett. One of his (and I forget the details) is "buy assets that an idiot could run well because, one day, they might", so while I do invest a very small amount of money in innovation shares I generally don't do well and certainly I would not recommend anyone to do so.
That the next 5 years will be like the last 5 years is one of those ideas that amazes me. I suspect the next 5 years will be almost exactly like the last 5 years. Small children will be born of women, people will drink alcohol, they will party at Christmas and they will have family arguements, people will die. There will be wars, there will be famines, South America and Africa will continue to be basket cases. I wish it were not so but I doubt it. I saw a couple of nice quotes that might help here
1) We trained hard ... but it seemed that every time we were beginning to form up into teams we would be reorganized. I was to learn later in life that we tend to meet any new situation by reorganizing; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency, and demoralization. First stated in the 50s I predict that the NHS will be reorganised in the nect 5 years (again)
2) “The children now love luxury; they have bad manners, contempt for authority; they show disrespect for elders and love chatter in place of exercise. Children are now tyrants, not the servants of their households. They no longer rise when elders enter the room. They contradict their parents, chatter before company, gobble up dainties at the table, cross their legs, and tyrannize their teachers.” Now tell me a teacher who would not agree with Socrates here.
I'll not go into the whole, repeating history quote thing, but a very sensible woman pointed something out to me once, "much as we might like planning for the future, the only thing we really have to go on is the past".
"fully priced in" wonderful, the emotions of the stock market are just that, emotions
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Stocks
Nov 7, 2019 11:56:24 GMT
Post by propman on Nov 7, 2019 11:56:24 GMT
I imagine the 12-18% you quote has been partially achieved due to a change (eg innovation) that will only be repeated again with items currently at best unproven (otherwise they will be fully priced in) or unknown entirely. It may well also be the benefit of the fall in sterling, while this has occurred during a boom, so how cyclic will they be in the inevitable downturn?
Your imaginations are only partially correct as the fall in sterling continues (since 1945) to be the back ground of all assets invested in by sterling owners for 75 years now. It is, after all, governmental policy of both parties to have a weak sterling and has been since WW2.
Despite changing my share holding strategies slightly over the last 40 years the one key expert I think is worth reading (and Keynes was an economist not a share trader) is Warren Buffett. One of his (and I forget the details) is "buy assets that an idiot could run well because, one day, they might", so while I do invest a very small amount of money in innovation shares I generally don't do well and certainly I would not recommend anyone to do so.
That the next 5 years will be like the last 5 years is one of those ideas that amazes me. I suspect the next 5 years will be almost exactly like the last 5 years. Small children will be born of women, people will drink alcohol, they will party at Christmas and they will have family arguements, people will die. There will be wars, there will be famines, South America and Africa will continue to be basket cases. I wish it were not so but I doubt it. I saw a couple of nice quotes that might help here
1) We trained hard ... but it seemed that every time we were beginning to form up into teams we would be reorganized. I was to learn later in life that we tend to meet any new situation by reorganizing; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency, and demoralization. First stated in the 50s I predict that the NHS will be reorganised in the nect 5 years (again)
2) “The children now love luxury; they have bad manners, contempt for authority; they show disrespect for elders and love chatter in place of exercise. Children are now tyrants, not the servants of their households. They no longer rise when elders enter the room. They contradict their parents, chatter before company, gobble up dainties at the table, cross their legs, and tyrannize their teachers.” Now tell me a teacher who would not agree with Socrates here.
I'll not go into the whole, repeating history quote thing, but a very sensible woman pointed something out to me once, "much as we might like planning for the future, the only thing we really have to go on is the past".
"fully priced in" wonderful, the emotions of the stock market are just that, emotions
Thanks for your full response.
Firstly, while Keynes was an economist he was a lifetime trader who ran the portfolio for, amongst others, his wealthy College for many years. many of his insights were grounded in this experience.
I agree with you that the problems and daily lives will continue to change slowly. However the information revolution and automation have fundamentally changed a large section of business and will do so for most of the other large businesses in the mid-term. Companies that fail to adapt to this will become less effective/competitive while many will waste management time and funds without making the necessary changes. While many businesses could be run simply, continuing to allow the old ways of doing things to continue is IMO only going to be successful in the short term. So i don't think Buffett's approach would identify many listed targets today. Yes it would be nice, but it is no longer realistic. So today, while I agree with the approach of not investing in anything where you do not understand the industry, this is not going as far as to say that effective management of these industries is simple. As a result, I believe that today you need always to be confident in the leadership before investing in a company.
Today despite being easier to get rid of people in UK to much of Europe, it is still difficult, particularly for poor performance. I believe many reorganisations are deliberate attempts to get around this by providing an opportunity to get rid of unwanted staff and promote people above the incumbents. Unfortunately this needs to be part of a wider initiative to resist any challenge.
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Stocks
Nov 7, 2019 12:26:24 GMT
Post by Deleted on Nov 7, 2019 12:26:24 GMT
I agree, I had an expression I used when I "worked" for a living, "never let a good crisis go to waste", sad to say a fair few bloody minded staff found that a hiccup meant their department was re-organised out of existance
step-change, in my life time I've seen 10 or so step changes in the environment of business practice that would radically alter the future, I see AI, ClimateChange, the rise of China to be but three more of these. If you expect radical change as the norm then it is business as normal. Developing your own road map on how to handle asset purchase and sale is the boring technical thing you have to do and so you might as well do it well, once you have that tool then choose assets that make best use of asset controlling engine.
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keitha
Member of DD Central
2024, hopefully the year I get out of P2P
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Stocks
Nov 9, 2019 16:10:31 GMT
Post by keitha on Nov 9, 2019 16:10:31 GMT
Throw in my twopennorth ( rather gives my age away ).
BlackBird ( Bird ) is IMHO undervalued as is Avast ( although not as much as when I got in 10 months ago )
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r00lish67
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Post by r00lish67 on Dec 24, 2019 10:15:04 GMT
Anyone else feeling a slight twinge of regret at not piling into equities one year ago exactly? Or perhaps a glowing sense of victory? Bog standard world tracker Vanguard World (VWRL) up 24.7% since Christmas Eve 2018, plus a few dividends on top too. Insane. edit: Yes, yes, I know - time in the market not timing the market. Picking my dates for drama etc etc. Still!
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jonno
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nil satis nisi optimum
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Post by jonno on Dec 24, 2019 11:19:48 GMT
Anyone else feeling a slight twinge of regret at not piling into equities one year ago exactly? Or perhaps a glowing sense of victory? Bog standard world tracker Vanguard World (VWRL) up 24.7% since Christmas Eve 2018, plus a few dividends on top too. Insane. edit: Yes, yes, I know - time in the market not timing the market. Picking my dates for drama etc etc. Still! I didn't pile in, but I did hold my nerve and stayed in, which doesn't sound so brave now, but at the time............. I've returned around 20% in capital plus around 6% in dividends, so not bad.
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IFISAcava
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Post by IFISAcava on Dec 24, 2019 11:24:21 GMT
Anyone else feeling a slight twinge of regret at not piling into equities one year ago exactly? Or perhaps a glowing sense of victory? Bog standard world tracker Vanguard World (VWRL) up 24.7% since Christmas Eve 2018, plus a few dividends on top too. Insane. edit: Yes, yes, I know - time in the market not timing the market. Picking my dates for drama etc etc. Still! I didn't pile in, but I did hold my nerve and stayed in, which doesn't sound so brave now, but at the time............. I've returned around 20% in capital plus around 6% in dividends, so not bad. I made a decision 2 years ago to increase overall stock market exposure by drip feeding decent amounts over 5 years+ rather than piling in as and when funds were available, as valuations seemed high and economic outlook uncertain. At the moment I am down on that decision, but it's a long term plan - ask me this time next year (and annually thereafter!) how it looks!
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keitha
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2024, hopefully the year I get out of P2P
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Stocks
Dec 25, 2019 23:15:40 GMT
Post by keitha on Dec 25, 2019 23:15:40 GMT
Personally
Given the US Government is now using the software ( which may lead to others following ) and sports channels getting into it's software, Blackbird(bird) seems grossly undervalued I can see the share price doubling or more in the next year, and if more companies start using the software ...
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corto
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one-syllabistic
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Post by corto on Dec 26, 2019 14:25:22 GMT
Personally Given the US Government is now using the software ( which may lead to others following ) and sports channels getting into it's software, Blackbird(bird) seems grossly undervalued I can see the share price doubling or more in the next year, and if more companies start using the software ... Thanks for your personal opinion, but NO. "bird" is an AIM penny share. If you want to pump&dump this, why not go to the usual places?
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sd2
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Stocks
Dec 27, 2019 11:45:35 GMT
Post by sd2 on Dec 27, 2019 11:45:35 GMT
Personally Given the US Government is now using the software ( which may lead to others following ) and sports channels getting into it's software, Blackbird(bird) seems grossly undervalued I can see the share price doubling or more in the next year, and if more companies start using the software ... Your basic methodology is sensible BUT if the market crashes you would be foolish not to put the remainder of your cash in. Of course the bottom is impossible to predict but 20% drop is in my mind a very big push. As I say often investment trusts fall further than there underlying assets. In some case with no logic attached. I bought Henderson smaller companies investment Trust at a 8% discount it is now trading at par. So I have the Boris bounce and 8%. Sweeeeet
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zlb
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Stocks
Dec 27, 2019 12:43:34 GMT
Post by zlb on Dec 27, 2019 12:43:34 GMT
Anyone own Consort Medical? they are being bought out, after a crash in value. I'm being offered a buy out value by the purchaser that is less than what I could get if I sold (yesterday). It seems like a hold to me... but would the price be artificially inflated by the buy-out?
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keitha
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2024, hopefully the year I get out of P2P
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Stocks
Dec 27, 2019 12:48:31 GMT
Post by keitha on Dec 27, 2019 12:48:31 GMT
Personally Given the US Government is now using the software ( which may lead to others following ) and sports channels getting into it's software, Blackbird(bird) seems grossly undervalued I can see the share price doubling or more in the next year, and if more companies start using the software ... Thanks for your personal opinion, but NO. "bird" is an AIM penny share. If you want to pump&dump this, why not go to the usual places? HMM if I was pumping and dumping I'd have more than £2K of shares in it Think it has more chance of success than say Sirius minerals Cheap shares can grow and join the bigger indices
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