Markets are irrational; positive sentiment reflects the feeling that the global recovery is taking hold, and investors would be forgiven in thinking that against this backdrop markets would continue to deliver positive returns.
We are advocates of investment portfolio strategies......We are not trying to guess what regions will do well next year, because the ‘so called’ experts get this wrong and we are consistent in selling winners to buy losers; a strategy which over time is proven to win.
If we believe the marketing spin, a once in a life time opportunity has occurred in the world of fund management. Neil Woodford is a fund manager who divides many; a marmite character. In recent years, interviews with the manager have been rare; refusing to comment on his style instead allowing consistency and outstanding performance do the talking.
I have recently finished a book by Jeroem Bos, a deep value investment fund manager. In it he details a number of case studies of investments where prices were significantly below the value of assets; in value investor speak "net nets”.
Recent research by NEST (National Employment Savings Trust) indicated that most people considered an income of £15,000 p.a. to be comfortable enough for them to enjoy retirement. The revised state pension is expected to be worth approx £7,500 p.a. meaning that individuals only need to fund the other £7,500 p.a. to achieve this target.
Ben Graham is arguably the most important investment thinker of modern times. Not because he personally produced the best investment results but because he wrote THE book, the seminal guide to successful long term wealth accumulation through investment in stocks.
Investing is a rollercoaster ride. The most enjoyable part of the journey is the bit up (when everything is going well). In these periods when it appears easy to make money, investors can become complacent believing what that has happened in the past will continue to be so for the future.
The UK Pension system has suffered decades of tinkering with successive governments failing to make any radical changes; instead chipping away with small changes which have made the system complex and untenable.
Many years ago I studied Neuro-Linguistic Programming (NLP). Humans have hard wired personality tendencies which if understood allow for more effective learning, communication and control of emotions.
Taken from the Guardian this headline highlights a growing dilemma for individuals trying to get on the property ladder. Not only have we seen house prices rise to unaffordable levels, but the new mortgage tests mean that those who previously might have been considered may find it very difficult to get lending now.
The standard advice is: 1. That a prudent investor should hold a diversified basket of assets which react differently in different economic environments (uncorrelated) 2. That this strategy provides for less volatility and smoother growth
As with most things the prerequisite to getting the right answers is to first ask the right questions. Before a portfolio can be constructed or a specific investment made, foundation questions must be addressed.
History is littered with periods of exceptional performance. These often follow periods of market decline. The best time to invest is during the periods of decline because when the market corrects those investors will gain the greater benefit.
Investors use ratios to identify potential investment opportunities. The most common is the P/E ratio, ‘price to earnings’. This is printed in the financial press daily as part of each individual shares information along with dividend yield and high/low prices in the last 12 months.
The recent Budget outlined in principle, an historic shift in how people can take their pension fund at retirement. Before we look at the implications and (beyond the headlines) it's interesting to review the recent history of pensions in retirement.
Sir John Templeton, a ‘Hall of Fame Investor’ was asked to name the most dangerous belief an investor can have. He replied “this time is different.”
Malcolm Gladwell in his book "Blink" explains the role of intuition in human decision making. Humans have the ability to process information almost instantaneously and gain a read on a situation that’s often extremely accurate.
At the start of January investors could have been mistaken for thinking that 2014 was going to be a bumper year.
In my second blog on the budget announcement I want to explore further the perceived demise of annuities…..
According to most financial papers, the answer is yes……This means that companies like Just Retirement and Partnership Assurance are finished because this is the majority of their business. But perhaps the journalists and markets are overreacting.