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Investing.... (Read 8772 times)

slackline

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Investing....
January 16, 2013, 09:33:16 am
I've always thought there is no particular logic to investing in shares and getting a guaranteed return as markets are so volatile and economics seems to be something of a black art.

Seems I may be onto something as it turns out a cat beat The Observers experts last year

Cats > Fat Cats  :lol: :lol: :lol: :lol:

aLICErOBERTSfANkLUB

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#1 Re: Investing....
January 16, 2013, 11:07:28 am
I've always thought there is no particular logic to investing in shares and getting a guaranteed return as markets are so volatile and economics seems to be something of a black art.

Seems I may be onto something as it turns out a cat beat The Observers experts last year

Cats > Fat Cats  :lol: :lol: :lol: :lol:

Fantasy Monkey Investment Darts is the answer.

Start with £100,000

Randomly pick 5 numbers between 1 and 100, and "invest" £20,000 in whichever FTSE company that one matches.

See how much you make at the end of the year.

[Refinements could include "realizing" your investment at the end of each month, and "reinvesting" the capital divided into 5.

This of course, won't cover fees and the like]


Edit.

For example. On 2/1/2013 I "invested" my £100,000 in the following stocks -

ANGLO AMERICAN
ARM HLDGS.
KINGFISHER
NEXT
REED ELSEVIER

As of yesterday I had "made" £2,335.25 - works out at over £200 per working day.

[The likes of the directors of Sharpe Financial Services probably couldn't "give up the day job" for that, but most of the rest of us could!]
« Last Edit: January 16, 2013, 11:14:45 am by aLICErOBERTSfANkLUB »

slackline

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#2 Re: Investing....
January 16, 2013, 11:22:20 am
So is there something in the Random Walk Hypothesis then if it appears to return the same as so called "experts"?

Surely if there was any element of predictability/art/science to trading stocks and shares everyone would follow it because it guarantees a return? :shrug:

It will always be a gamble because there is a random element to it which can't be predicted, no? :shrug:

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#3 Re: Investing....
January 16, 2013, 12:02:18 pm
For me the fundamental thing that has prevented me from ever investing (aside from the above) is not having anything to risk in the first place (at least anything substantial, I think the odd £10 here other would be better invested gambling).

I'd rather save a couple of grand and go on a nice holiday than risk it on the market and I think a lot of other people probably think the same.  Only in the last few years have I had any excess really and thats only to the tune of a few grand which we used to reduce our mortgage (in turn reducing monthly repayments and freeing up more money each month for doing stuff or iterating).

Myopic, perhaps, but at least I have a nice holiday or three every year rather than being down at having lost money, which after all is there to be spent and enjoyed and not hoarded.

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#4 Re: Investing....
January 16, 2013, 12:05:01 pm
More interesting question: given that 10% is a pretty good return but not far off the long-run average for equity investment, did the newspaper advise its readers to be fully invested in stocks in 2012, or instead write hand-wringing stuff about how the euro zone would implode, china economy collapse, etc and therefore should be cautious and keep most if your money earning f-all in the bank. I don't know but I would strongly bet on the latter.

I don't read the business section in the Guar/Obs either.  Its a bit like Turkeys writing about Christmas.

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#5 Re: Investing....
January 16, 2013, 12:20:00 pm
Interesting topic. My view is that the markets are now so complex and intertwined globally that they're something like the weather - they're impossible to predict long-term, past performance is no guide to future, in the short-term the markets can look predictable but still surprise you.

This book http://en.wikipedia.org/wiki/The_Black_Swan_(Taleb_book) presents an interesting case that there are inherently unpredictable events that no market model could cater for. What I took from it was that a sensible way of investing would be to put the majority of your portfolio in 'safe' investments / guaranteed return, and then a small proportion in high risk investments. The idea was to minimise your exposure to bad unforeseeable events, but partake in the likelihood of benefitting from a good unforeseeable event - i.e. high risk tech venture becomes the next Google/Apple whatever.



Falling Down

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#6 Re: Investing....
January 16, 2013, 12:52:15 pm
That's generally what our pension portfolio managers do.

shark

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#7 Re: Investing....
January 16, 2013, 12:59:35 pm
I've had a bit of a schooling over the last 6 years seeing my shares halve then nearly double leaving me just below break even when I sold the majority to help buy our house since when they have gone up a further 20%  :slap:

I find it a fascinating game. If you aren't prepared to immerse yourself then a tracker in an ISA like Toby says is probably the best approach investing money you can afford to lose ideally in a tax protected wrapper like an ISA. 
 
If you want to be more actively involved then it seems to me that it can take a while (and potentially be costly) before finding an investment style or strategy that suits your personality which can give you a consistent edge over the market. Many don't get there. Some think they have then got burnt - I know a couple of people who have lost horrendous sums.

aLICErOBERTSfANkLUB

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#8 Re: Investing....
January 16, 2013, 01:14:07 pm
I've had a bit of a schooling over the last 6 years seeing my shares halve then nearly double leaving me just below break even when I sold the majority to help buy our house since when they have gone up a further 20%  :slap:

I find it a fascinating game. If you aren't prepared to immerse yourself then a tracker in an ISA like Toby says is probably the best approach investing money you can afford to lose ideally in a tax protected wrapper like an ISA. 
 
If you want to be more actively involved then it seems to me that it can take a while (and potentially be costly) before finding an investment style or strategy that suits your personality which can give you a consistent edge over the market. Many don't get there. Some think they have then got burnt - I know a couple of people who have lost horrendous sums.

Like Arthur Dent and Ford Prefect - "What do you get when you mutiply six by nine?"?

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#9 Re: Investing....
January 16, 2013, 01:20:24 pm
I've been experimenting with a number of different financial spreadbetting strategies over the last six months. Being a leveraged product, there exists a HUGE potential for your losses to exceed your initial deposit but through trialing a demo account (mirror of a live account and up to the second data), I managed to make £9000 within two weeks on the commodity markets. I was given an initial fictional £10,000 to play with but a couple of tests deliberately betting the wrong way proved enlightening as to the repercussions of a bad call.

I'm quite sure I'll place a large deposit in future years and accept the high risk nature of it since betting on market volatility is both far more interesting and potentially lucrative in current climes. Has anybody much experience of financial spread betting here?

shark

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#10 Re: Investing....
January 16, 2013, 01:38:13 pm
I know a couple of people who have lost horrendous sums.

Like Arthur Dent and Ford Prefect - "What do you get when you mutiply six by nine?"?

42. That's not horrendous.

aLICErOBERTSfANkLUB

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#11 Re: Investing....
January 16, 2013, 01:42:51 pm
I know a couple of people who have lost horrendous sums.

Like Arthur Dent and Ford Prefect - "What do you get when you mutiply six by nine?"?

42. That's not horrendous.

I always knew there was something fundementally wrong with capitalism…

IanP

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#12 Re: Investing....
January 16, 2013, 02:55:36 pm
More interesting question: given that 10% is a pretty good return but not far off the long-run average for equity investment, did the newspaper advise its readers to be fully invested in stocks in 2012, or instead write hand-wringing stuff about how the euro zone would implode, china economy collapse, etc and therefore should be cautious and keep most if your money earning f-all in the bank. I don't know but I would strongly bet on the latter.

Equally interestingly if they had advised the former why should anyone have believed this any more that the cautious hand-wring option.  The FTSE over the last 12-15 years is pretty much a rollercoster without showing any significant real growth overall. 

These days with my defined contributions pension I'm starting to build up quite an amount of investment in equities but I do sometimes worry about the possibility of 'equities always perform better in the long term' being trumped by 'past performance is no guaratee of future performance'.

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#13 Re: Investing....
January 16, 2013, 03:06:23 pm
Made and lost £40k on an uninformed punt on a fiber-optics infrastructure co during the tech bubble in the 90's. Currently invested in rare earths and gold in the US and Canada. I think there's a level of research, above which, making a profit is more probable than letting a domestic cat choose your investments. Below that level of research yeah let the cat do it or throw a dart.  Read Nate Silver's 'the signal and the noise' - can't argue with his conclusions about wall street traders.

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#14 Re: Investing....
January 16, 2013, 03:10:54 pm
Made and lost £40k on an uninformed punt on a fiber-optics infrastructure co during the tech bubble in the 90's. Currently invested in rare earths and gold in the US and Canada. I think there's a level of research, above which, making a profit is more probable than letting a domestic cat choose your investments. Below that level of research yeah let the cat do it or throw a dart.  Read Nate Silver's 'the signal and the noise' - can't argue with his conclusions about wall street traders.


Maybe I should buy shares in companies that produce graphene then? :-\

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#15 Re: Investing....
January 16, 2013, 03:34:21 pm
Warren Buffet's mantra is also worth abiding by 'Never invest in anything you don't understand'.

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#16 Re: Investing....
January 16, 2013, 03:54:38 pm
Made and lost £40k on an uninformed punt on a fiber-optics infrastructure co during the tech bubble in the 90's. Currently invested in rare earths and gold in the US and Canada. I think there's a level of research, above which, making a profit is more probable than letting a domestic cat choose your investments. Below that level of research yeah let the cat do it or throw a dart.  Read Nate Silver's 'the signal and the noise' - can't argue with his conclusions about wall street traders.


Maybe I should buy shares in companies that produce graphene then? :-\

What does your cat think?

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#17 Re: Investing....
January 16, 2013, 03:58:45 pm
What does your cat think?

One says yes, one says no, and the other isn't sure (probably 'cause he's deaf and blind and didn't understand the question). :clown:

petejh

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#18 Re: Investing....
January 16, 2013, 04:08:29 pm
One says yes, one says no, and the other isn't sure (probably 'cause he's deaf and blind and didn't understand the question). :clown:
What does your cat think?

I think it's possible to listen to too many analysts, perhaps go with the analyst cat with the best track record.

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#19 Re: Investing....
January 16, 2013, 04:17:48 pm
I think you can ask too many analysts. I'd go with the analyst cat with the best track record.

When things were really really bad in 2008 (I think) Sonia and I were contemplating whether to sell out to preserve what little capital was left or stick with it.

Tom came into the room who was then about 7. Sonia asked him to "stick or twist" (as in pontoon). He said stick. We asked him why. He said he liked sticks. So we stuck. It was the right decision. 

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#20 Re: Investing....
January 16, 2013, 04:29:33 pm
 :lol: Classic.
''Tom, aged 13,  is now a senior analyst at JP Morgan Chase''.

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#21 Re: Investing....
January 16, 2013, 05:01:29 pm
Its a bit like Turkeys writing about Christmas.

Or Tory leaders having a social conscience ;)

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#22 Re: Investing....
January 16, 2013, 05:09:57 pm
My tuppence...

A friend of MrsTT's inherited 30K in the mid 90's (so 18-20 years ago), gave it to a stockbroker firm the family knew, and left it with them. At last count the investment was worth £850k....

In c.2000-2002 I played with trading (when online brokers first appeared and were simple) with a few hundred quid. I made a bit, lost a bit and in the end gave up. It started to dominate my day - wake up, read some financial websites, every spare moment of the day was watching share indices, company news etc.. and then relax when the markets closed at the end of the day.. too much stress for me. Maybe I'm crap at detaching myself from stuff like that, but for me I need to keep some distance from being involved - or I would get too involved.

Markets are driven by factors (results, changes in market conditions etc...) but there is a fair deal of emotion and judgement calls involved too... Like gambling this is where you can make money - go with the logic rather than the heart...

(PS - Nokia's having a good bounce at the moment....;) )

 

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