What's the view on this. Are we likely to see a correction soon or ar we at the beginning of a world wide recession. No idea myself but there seems to be an element of panic creeping into the stock markets world wide that doesn't bode well.
www.bbc.co.uk/news/world-us-canada-34045226
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I've had some of my ISA money in cash for a few months. I redeployed half of it to equities this morning so hedging my bets.
I'm not expecting to have picked the bottom, but I'm in a better position than I would have been had it all been invested from April when the FTSE was at 7000.
Anybody who says they know which way it's going from here is a liar. Timing the market is a mug's game. You can do all the value analysis you like but if the panic spreads it will go down, and it could be a long way. I can sit it out for a reasonable period.
Trouble is the Chinese are inscrutable :)
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Wot Manatee said, plus if I knew what I was talking about I'd be richer....
But I'm guessing that there is going to be a fair amount of moving around within the economies, but not much lowering of the economy overall.
We are look at the impact from traders doing what they do. People who buy or sell depending on what they think will happen next, and to them it is immaterial whether it is a growth or a shrinkage.
They are driven by the need for greater demonstrable capital growth. If the overall economy will grow at x%, they need to show >x% growth in their fund. That means selling ahead of a drop (owned or not) and buying ahead of a rise (again, owned shares or not) and typically staying a few days ahead of a the trend. It also therefore means that someone is probably showing
Right now they're recognizing previous growth and/or predictions/bets by cashing in because probabilities and uncertainties are changing, but they are not sure where to put the money instead - and its got to go somewhere. It can only remain outside the market for a very short period.
In my opinion this manifestation of crisis will pass, largely without visible impact. But that is hiding the adjustment that will be required as China recognises and admits not only its current position, but also its prospects for the next 25 years.
We need the rich to stop getting richer for a bit while the gap narrows.
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Stocks go down. Why is anyone surprised? its not the first time, wont be the last time.
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That's true of course but it' s why they are going down so rapidly that is the interesting thing. Shares are of course a measure of confidence in the economic future and it would seem that there is a lot of nervousness as to where China's economy, on which we have all become dependent is going to end up. As the various articles show actually discovering what is really happening to the Chinese economy is difficult to ascertain.
A world wide slow down is going to affect us all.
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The markets aren't much of a measure of economic health when this sort of thing gets hold, it's just fear and greed. When markets have been rising for years and everybody agrees stocks are overvalued, prices continue to rise because enough people think they can make money and get out before the crash.
Similarly after the 2008/9 crash people stayed out of the market despite it being attractively priced for fear of further losses.
As it happened I had a lot (for me) of money to put into pension in March 2009 so I took a deep breath and filled my boots, mainly with index funds - no stock picking skill required. I didn't see it as much of a risk, given I was investing for 10+years. This March, I took 25% of my SIPP out in cash to lock in some profit and held off reinvesting (hence the cash in the ISAs).
My little sally yesterday morning is showing a small profit I see; but actually it would have made little difference to the way I felt had it gone the other way (as it probably will in the short term). In fact if it had dropped another 10% or more I would probably have invested my remaining cash already.
To Z's comment about people forgetting that markets go down - actually I think they forget at times like this that the long term direction is up.
I have savings but no spare income these days; but if I was a long term regular saver right now I'd be very happy now to be dropping my monthly savings into trackers. And short term I'd be happy with drops as I'd just get more for my money.
Are you reading this Pezzer? (That's not advice by the way, I'm neither qualified nor regulated!)
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Yes Sir I'm here and was paying attention :-)
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>> That's true of course but it' s why they are going down so rapidly that
>> is the interesting thing.
Not really. Every downward movement of the market is always accompanied by terms like "Crash", "Plunge" and given names to describe the sudden nature of them. 'Black Monday" for example.
Shares will always fall rapidly in sharp steps, its the nature of the business - There is this belief it wont happen, signs are ignored, and when someone finally wakes up and jumps out everyone instantly follows suit. Specially as stock trading is now driven by computers.
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">> That's true of course but it' s why they are going down so rapidly that
>> is the interesting thing.
Not really. "
Well what you say is true but the reasons for the underling fears behind the fall are still interesting and a slow down in the world's economy is likely to affect us all. Worth being a little curious about it would have thought but you obviously don't find it so.
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>> ">> That's true of course but it' s why they are going down so rapidly
>> that
>> >> is the interesting thing.
>>
>> Not really. "
>>
>> Well what you say is true but the reasons for the underling fears behind the
>> fall are still interesting and a slow down in the world's economy is likely to
>> affect us all. Worth being a little curious about it would have thought but you
>> obviously don't find it so.
This one? underlying fears? caused by China sure. Why? previously overheating artificially manipulated economy suddenly being corrected Not seen that before have we. Opps oh yes we have, repeatedly in fact ever since the south sea bubble.
Is this likely to affect us all? who knows but why not throw a little panic in the mix after all that always happens every time there is a "crash"
So in answer, no not curious, the reasons are always the same with slight variations, its always overhyped by the pundits, and it will always bounce back again.
Effect us? really? I have just survived quite nicely through one of the worse world financial crashes since the 30s, I have lived through a single day (black wednesday was it?) where my mortgage went from a painful 8% to a life changing and utterly unaffordable 15% and back.
In short, its froth.
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>> In short, its froth.
More or less. But China is now the world's second biggest economy, and it is far from transparent.
Apart from sentiment of course, markets work on data and the data from China are not reliable. Also the Chinese try to manipulate the market.
But then, every time, some will say "this time it's different". Usually it isn't - it's short term fluctuations, but there is still a long term trend, and that could be a long siege.
Inflation is of far more interest to me than the FTSE's wanderings. Unlike the FTSE, it doesn't "correct"; once it's gone up, it's almost certainly devalued your savings forever, like a ratchet.
We survived the 1970s/80s very well because we had mortgages, not savings.
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Yes it's almost impossible to protect your savings at the moment with minimal interest on savings and what looks like a a reversal in the growth the stock market has shown in recent years. Property may be OK for the long term but lacks liquidity. Inflation is slowly nudging up ( the real rate and not the official government measure).
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>> Stocks go down. Why is anyone surprised? its not the first time, wont be the
>> last time.
Quite right. Just look at FTSE performance over the last 50 years.
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The index doesn't show the benefit of income (or the effect of charges for that matter)
I use this site occasionally ... it collects total return for a couple of FTSE indexes and there's also an RPI history so you can compile the real return if you want (then knock a bit off off for charges).
swanlowpark.co.uk/ftseannual.jsp
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I'm very much in the "who gives a toss" category here.
The money doesn't really exist; stock markets are a wonky measurement of a global pyramid scheme played by computers and frankly I think the traders looking distraught in the papers should find more important things to worry about.
ANYONE could see that China's blind and utterly backwards approach to economic policy was bound to backfire at some point - it's simply a case of when.
Last edited by: Fursty Ferret on Tue 25 Aug 15 at 15:27
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>> The money doesn't really exist; stock markets are a wonky measurement of a global pyramid
>> scheme played by computers and frankly I think the traders looking distraught in the papers
>> should find more important things to worry about.
I don't know about the traders but short term movements like this affect real people.
When her grandchildren were very small my Mother put some money in a trust for them. Money is invested through St James Place - in London not China. Grandkids get the income and/or capital at age (I think) 26 but trustees have discretion to release earlier.
Eldest grandchild, nearly 23, and her chap are buying a house and trustees agree she can have her share now. In the time it's taken us to resolve to release the money and pass the paperwork around she's lost quite a few hundred pounds,
Last edited by: Bromptonaut on Tue 25 Aug 15 at 15:36
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>> When her grandchildren were very small my Mother put some money in a trust for them.
>> Money is invested through St James Place - in London not China.
Someone we know has money invested via St James Place. So we had someone come to speak to us from their Liverpool office. I say their office, because these 'advisors' are self employed. We were not convinced we wanted to invest money via them to be honest. Didn't particularly like the chap who came to be honest either.
Told a good story but not for us. We actually thought before he arrived the friend had an independent financial advisor and that we were going to see them for advice. But he was simply selling investing via St James Place.
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>> Someone we know has money invested via St James Place. So we had someone come
>> to speak to us from their Liverpool office. I say their office, because these 'advisors'
>> are self employed.
Mum's adviser is similarly employed. She's been on scene for years, probably since before my father died in 1996 and my sister uses her too. Not sure she's my cup of tea but certainly straight as a die.
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SJP are noted for being very expensive.
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>> SJP are noted for being very expensive.
Well the 'advisor' that visited us was driving a fairly new BMW 640d 4 door Grande Coupe. His clients are paying him well I guess.
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>> I'm very much in the "who gives a toss" category here.
Presumably you don't give a toss about your pension then. Because that's where it's invested. Unless you mean that short term fluctuations are irrelevant mos of the time.
Funny thing is, everybody seems to think that a company should worry about its share price. Sometimes they do, but generally it makes no difference to them at all. It doesn't affect the P&L or balance sheet.
It's the shareholders who are affected. That is actually most of us, one way or another. The time to pay most attention of course is when you want to buy or sell the investments.
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>> Presumably you don't give a toss about your pension then. Because that's where it's invested.
>> Unless you mean that short term fluctuations are irrelevant mos of the time.
>>
Correct on second point.
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>> >> Presumably you don't give a toss about your pension then. Because that's where it's
>> invested.
>> >> Unless you mean that short term fluctuations are irrelevant mos of the time.
>> >>
>>
>> Correct on second point.
Investments should always be looked at long term. If you are looking short term you are speculating and deserve to get your wallet lifted.
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Have I read it correctly that the losses from yesterday have now been made back plus a few percentage points on top?
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>> Have I read it correctly that the losses from yesterday have now been made back
>> plus a few percentage points on top?
No you haven't read it right. The FTSE closed 3% up for the day, but todays closing price is still lower than yesterdays opening price, and the market is still down over a year ago
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It's heading north again...
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Listening to all the hysteria on BBC Business News, I thought the Chinese market was in meltdown.
Yes, it has suffered a short term crash.
However, looking at the chart for the one year performance of the Shanghai Index
www.google.co.uk/finance?q=SHA:000001
shows that it is UP 37.67% from 28 August 2014 to 27 August 2015.
Last edited by: BrianByPass on Thu 27 Aug 15 at 10:29
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It's common to use ETFs now to track indexes or categories of shares. Some are physical, some synthetic using derivatives. The other day when the market dipped I bought some IUKD (tracks the top 50 dividend payers in the 350), which is physical in that it actually holds the equities. If I wanted to invest in gold (which I don't), I'd buy a physical gold ETF - because I can't get any sense, on an intuitive level, of the real risk in the synthetic ones.
One aspect of the synthetic ones is that there is often more money invested in them than the total value of the assets they are tracking. So to my simple way of thinking, they are just bets, that you hope the bookie (and who-knows-how-many counterparties) will be able to pay out on if something happens that caused everybody to want to liquidate at the same time.
You'd expect a normal tracker to stay within a fraction of a percent of it's benchmark, but because ETFs are exchange traded in real time the price can go anywhere, regardless of what they are tracking, especially when automatic trading is triggered.
woodfordfunds.com/tail-wagging-dog/
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Stock Markets continue to plunge - No FM2R
