[petejh]

This is an interesting thread guys. Quick question I'm hoping someone could help with. Hopefully this isn't too off topic.
In the past I've had investments in a couple of index trackers - FTSE 100, FTSE small caps. Both did ok but I cashed them out to reduce the size of the new mortgage when we moved house. I'm now ready to invest again.

Part of me wants to get properly involved with a greater range of investments but being honest with myself I really don't have the time to do proper research, so I'm more inclined to just buy in to some index trackers or some very well diversified funds than any specific stocks, to mitigate the risk of making a bad choice. I've got a decent amount to invest and a long time horizon. The problem is, I would like to avoid investing in specific sectors. Is there a way to do this? Eg, a FTSE tracker that excludes aerospace and defence, or an international tracker that excludes oil and gas? I'm aware of the various "sustainable" investments but looking for something more specific. I'm not sure if something like this exists?
Thanks

I don't know much about ETFs and even less about trackers. But just to say that your long time horizon could be key as it seems we're at or near the end of this current bull market, so any investment now is more likely to underperform over the next 6-24 months than your previous investment during the last 10 years of bullish sentiment. It might be better to drip feed in monthly amounts as the market is falling, to average out your cost.

This makes me think of Sequencing Risk and withdrawals during a bull or bear market, which is the reverse of what you're looking at.

The idea is basically a badly-timed withdrawal from a pension fund, during a downturn in the markets, ends up compounding the gains missed - the longer the timescale the larger the compounded unrealised gain.

It's a similar effect in reverse for the financial consequences of investing the main portion of your savings into a fund over either the course of a bear or a bull market. Long term it averages out - in a way sort of opposite to how, long term, the pension fund does worse and worse comparatively. But over a 5 or 10 year timescale the difference in returns from your initial investment could be significant.
You could probably calculate the difference in returns between if you invested the whole of your savings into 'fund x' on one day when the market is high and then falls for, say, 18 months; versus dripping in cash over 12 or more of the months when the market is falling.

Of course no-one can say when the market will start falling significantly.

There's a really good site that shows the effects of Sequencing Risk for withdrawals during a bull or bear market from a pension fund, here for anyone interested. https://www.firecalc.com/

And an intro to Sequence Risk here: https://www.investopedia.com/terms/s/sequence-risk.asp

[seankenny]

And an intro to Sequence Risk here: https://www.investopedia.com/terms/s/sequence-risk.asp

So the rules of Finance Club are:

- links to finance theory - acceptable.

- discussing validity of finance theory - unacceptable.

Feels a bit like the Catholic Church in the 14th century.

[teestub]

The is the "investor's" thread, and Bitcoin is not an investment, it's a gamble.

But but but Pete has a graph, so I can see exactly where he has told me to remortgage and sink everything into buying Bitcoin!

[sdm]

Part of me wants to get properly involved with a greater range of investments but being honest with myself I really don't have the time to do proper research, so I'm more inclined to just buy in to some index trackers or some very well diversified funds than any specific stocks, to mitigate the risk of making a bad choice. I've got a decent amount to invest and a long time horizon. The problem is, I would like to avoid investing in specific sectors. Is there a way to do this? Eg, a FTSE tracker that excludes aerospace and defence, or an international tracker that excludes oil and gas? I'm aware of the various "sustainable" investments but looking for something more specific. I'm not sure if something like this exists?
Thanks

Would ETFs be appropriate, there seems to be some for every possible sector?

Near the bottom of the page under 'ETFs by theme' there's a 'socially responsible' option which might have what you're looking for.

https://www.justetf.com/uk/etf-lists.html

And there's this link https://www.justetf.com/uk/how-to/invest-in-social-responsibility-europe.html for a quick overview of which sectors some of the popular 'socially responsible' indexes include/exclude. You may be surprised by some of them.

[petejh]

And an intro to Sequence Risk here: https://www.investopedia.com/terms/s/sequence-risk.asp

So the rules of Finance Club are:

- links to finance theory - acceptable.

- discussing validity of finance theory - unacceptable.

Feels a bit like the Catholic Church in the 14th century.

I was trying to offer something helpful - It isn't 'finance theory' in the sense of a philosophy or technique that's up for debate.. sequence risk is just compounding of gains (for investing) and compounding of unrealised gains (for withdrawals) in the context of either a rising or a falling market. There's no debate, it's just maths.


If you want to debate theory why don't you do it on the many other economic threads on ukb - it's a broad church.. or should be.

[Sidehaas]

I don't know much about ETFs and even less about trackers. But just to say that your long time horizon could be key as it seems we're at or near the end of this current bull market, so any investment now is more likely to underperform over the next 6-24 months than your previous investment during the last 10 years of bullish sentiment. It might be better to drip feed in monthly amounts as the market is falling, to average out your cost.

Thanks Pete, and Chris and SDM for the links, which are really useful. On your comments about the end of the bull market - are you talking globally here? To a novice it doesn't really feel like UK or EU shares are at the end of a bull run as they still haven't recovered to early 2020 levels in most cases. I suppose if US stocks crashed they would/could take everything with them..?

[Yossarian]

Diversify, diversify, diversify!!

60% in one fund is a lot, in my personal view. 15-20 funds as a maximum with no more than 30% in any one is a more typical example of a well diversified portfolio.

Since dumping Wynnstay WYN yesterday (mentioned earlier in the thread) I have probably 60% in one illiquid AIM listed company 

Was there a particular reason for this? I thought they were your longterm / stable earner?

I have enjoyed (most) of this thread so far, and am also quite enjoying The Long and Short of It.

When wife and I sell our house and go our separate ways I'll almost certainly be renting for a year or 2-3, so am quite keen to put the money to work. Pete's various links early on have made interesting reading.

There was a passage early on in one of Michael Lewis's books (I think it was Liar's Poker) in which he, as a bond trader, casually dismissed the entire practice of share trading as unknowable gambling, rather like the dismissal of crypto above. Personally, I'm more interested in all of this as a means to an end, and so I would quite like crypto to carry on as part of the discussion (as I assume some others would too)...

[Bradders]

Personally, I'm more interested in all of this as a means to an end, and so I would quite like crypto to carry on as part of the discussion (as I assume some others would too)...

I was only trying to annoy Pete. Bantz init 

[Johnny Brown]

There was a passage early on in one of Michael Lewis's books (I think it was Liar's Poker) in which he, as a bond trader, casually dismissed the entire practice of share trading as unknowable gambling,

I came across some piece recently, forget where, where they'd modelled markets based on rationality of buying and selling decisions. Turned out a functioning market still emerged even when all decisions were entirely random.

[Yossarian]

Yes. And re technical analysis - if a large number of traders are basing their decisions on momentum indicators like RSI, you obviously have an insight on what they're all going to do before they do it. Much might be unknowable, but perhaps the point is that, if lots of people are behaving as if it is and / or basing their behaviour on historical information, then it becomes more knowable.

[petejh]

Thanks Pete, and Chris and SDM for the links, which are really useful. On your comments about the end of the bull market - are you talking globally here? To a novice it doesn't really feel like UK or EU shares are at the end of a bull run as they still haven't recovered to early 2020 levels in most cases. I suppose if US stocks crashed they would/could take everything with them..?

Yes I'm talking more about the US market than the UK/Euro markets, many of the commodities companies I invest in are listed on the US, Canadian or Australian markets. In the US valuations, for tech companies especially, currently are sky-high and unsustainable - see the tanking of Tesla for the most obvious recent example of a mythical valuation hitting the wall of reality. The problem being once a few big cards tumble and the fear goes beyond a certain point - predicted to be when the S&P 500 reaches approx 3750 - the way institutional investment works there'll be an automatic and accelerating liquidation of equities into safer waters, which reinforces the momentum downwards. Safer waters starting to look like long-term treasury yields, shorting the market, and possibly commodities. But obviously everything is interlinked - UK pension and investment funds will be liquidating stocks too, and good companies as well as bad will drop (which is where value investing really pays off when you can see good companies drop below fair value). The UK market's not as overvalued but still very likely to turn bearish upon any significant correction in the US. The unknown is how long the US gov and Fed etc. can keep kicking the can down the road by suppressing inflation and injecting ever more money-tree cash into the system.

See Alex Harfouche's feed for some quality evidence-based doom predictions: https://twitter.com/alexharfouche1


As far as TA goes, it's just a tool to be used in combination with other knowledge. Foolish to act only on it alone. But it's useful to add to the arsenal, in the context of researching to identify fundamental value, spotting trends, planning entry and exit points, understanding investor psychology. Perhaps its greatest virtue is it gives you a plan to trade to rather than trading by using emotion and instinct. The market works by tricking your emotions - fear and greed. TA just provides a framework for dispassionate decision making. A (poor) analogy is 'training'. Training just provides a somewhat evidence-based framework for getting better results, if used intelligently, than 'not training'. But many people are shit at training and get poor results despite training, yet still they train. Some people use training very well to get good results. Some people think training is bullshit. It doesn't mean 'training' itself is bunkum.

[Jerry Morefat]

There was a passage early on in one of Michael Lewis's books (I think it was Liar's Poker) in which he, as a bond trader, casually dismissed the entire practice of share trading as unknowable gambling,

I came across some piece recently, forget where, where they'd modelled markets based on rationality of buying and selling decisions. Turned out a functioning market still emerged even when all decisions were entirely random.

Sounds fascinating. If you are able to dig out a link that would be great.

[petejh]

AMTE Power are looking to begin listing on AIM next month. They are one of the few commercial battery manufacturers in the UK at the moment. There's been various reports linking them to Britishvolt (the company behind the proposed UK 'gigaplant' that has kept popping up in the news in various locations), but nothing concrete. They currently have there own relatively small scale (by global standards) plant in Thurso. Something to at least keep an eye on.

Will be keeping my eye on this company.  Have read rumours that they'll be supplying the batteries for Jaguar Landrover's new fleet of EVs, but haven't seen any details. Definitely a hot market to be in. Trackwise Designs and Ilika the other two in this market - TWD for lightweight printed wiring harness technology used in aerospace and EVs, Ilika for solid state batteries. Check out QuantumScape in the US for crazy valuation, they've managed to produce a solid state cell which they think they can commercialise by 2023, VW reportedly interested.

https://www.autocar.co.uk/car-news/industry-news/jaguar-become-all-electric-brand-2025

https://www.morningstar.co.uk/uk/news/AN_1612779825575936700/lithium-battery-maker-amte-power-plans-march-ipo-on-londons-aim.aspx

[remus]

I'll be interested to see if the solid state batteries bear fruit. I only have a passing interest, but it feels like one of those technologies that's perpetually 2-3 years from a commercial reality. When I was working at Dyson around 2014-15 they spent some big bucks buying a promising looking solid state battery firm which (as far as Im aware) has yet to produce anything useful.

[teestub]

Solid state batteries charged by nuclear fusion, coming to you any decade now 😄

[petejh]

Buy the dipole...

[AndyR]

I'll be interested to see if the solid state batteries bear fruit. I only have a passing interest, but it feels like one of those technologies that's perpetually 2-3 years from a commercial reality. When I was working at Dyson around 2014-15 they spent some big bucks buying a promising looking solid state battery firm which (as far as Im aware) has yet to produce anything useful.

Quantumscape are one of the only companies to put out real data (which, of the data I've seen is very impressive), and it certainly seems as though they have a very usable electrolyte material - I went and purchased a bunch today at their current price.

[remus]

I'll be interested to see if the solid state batteries bear fruit. I only have a passing interest, but it feels like one of those technologies that's perpetually 2-3 years from a commercial reality. When I was working at Dyson around 2014-15 they spent some big bucks buying a promising looking solid state battery firm which (as far as Im aware) has yet to produce anything useful.

Quantumscape are one of the only companies to put out real data (which, of the data I've seen is very impressive), and it certainly seems as though they have a very usable electrolyte material - I went and purchased a bunch today at their current price.

Very interesting, sounds like you are more in the loop than I am, will have a closer look at Quantumscape.

[petejh]

Problem with Quantumscape is their valuation, typically huge as per the US tech bubble - at a market cap of $21.7 billion for a start up with no revenue this doesn't leave a lot of space for share price growth. That said the hype around solid state batteries and the EV sector in general guarantees a wild ride on any positive news for QS -  plenty of investor sentiment froth to profit off. Ilika in comparison is at a market cap of £300 million. They don't need the scale of success that Quantumscape do to achieve a huge increase in share price value. Also, they have a product about to become commercially viable with their miniature medical-implant solid state battery going into mass production this year - the Stereax. Set to revolutionise implants and also internet of things, that rely on remote sensors with long life power source.  Check out the technology here:  https://www.ilika.com/battery-technology/downloads/stereax-p180

[petejh]

In fact right on time, Ilika just released a manufacturing update this morning..
Sterax on track for 70 x production capacity increase by end of 2021. Sales expected in 1st half of 2022.

https://www.voxmarkets.co.uk/rns/announcement/3260a02e-ddd1-4c86-858e-85b400681c06/

[sxrxg]

I see the GME games are starting all over again for anyone that hasn't lost interest already.

[petejh]

Good story going on with Chromadex, manufacturers of Tru Niagen (nicotinimide riboside), a patented form of B3. I've taken NR since 2014, initially to aid recovery of a damaged sciatic nerve following back surgery. I posted at various times last year on the covid thread about the supposed benefits of B3 for mitochondrial health and recovery from covid. Various pilot, phase 1 and phase 2 studies were carried out last year.

I'm a long term investor in Chromadex, they've always promised much but never quite delivered until this week.

Today the results of the phase 3 study dropped. See covid thread. Chromadex up 85% on the day, up hundreds of % in the last 5-10 days. I sold a bit too early on this one! Good to see them doing well as it's been a long road. NR is an interesting vitamin with a lot of potential. Share price here could go totally parabolic but likely to drop like a stone again just as quickly. But a good one for those interested in biotech, when it settles back down.
https://finance.yahoo.com/news/phase-3-clinical-study-finds-113000203.html

[Adam Lincoln]

Slightly off topic.

So i am working away at the moment and on a Euro day rate. This has lost £25 a day since the job started. When i get paid i put money in a Euro Business account.  The plan is to transfer into my £ Current account when exchange rate is better.

Anyone follow currencies and think my situation will get better anytime soon or do i just take the hit.

[Fultonius]

Was just looking at this myself. My reading was that the recent gains the £ has made are overblown and not based on any fundamental, therefore likely to correct. Did correct a fair bit today.

More than happy to be corrected by those who know a bit more about what they're talking about!

[Adam Lincoln]

Was just looking at this myself. My reading was that the recent gains the £ has made are overblown and not based on any fundamental, therefore likely to correct. Did correct a fair bit today.

More than happy to be corrected by those who know a bit more about what they're talking about!

Its gained a few quid today but not much. Hoping for more like £20/25... £25 a day over 3 months is a bit of a hit for me. £2250 over 3 months. Could do with the money in my pocket instead.

You in a similar situation? Ive just opened a Starling Euro Business account, and will be in Europe most of my time for next 18 months.