Shouldn't The Stock Market Go Down?

[cock-eyed octopus]

Because savers would put their money in banks which offered the best interest rates... which would be significantly more than 4.75%.

<{POST_SNAPBACK}>

Isn't interest related to economic growth? What's the current rate of economic growth?

[Guest Charlie The Tramp]

At the time of the 87 crash UK IRs were as follows:

Thu, 03 Dec 1987 8.38

Wed, 04 Nov 1987 8.88

Mon, 26 Oct 1987 9.38

Thu, 06 Aug 1987 9.88

Fri, 08 May 1987 8.88

Tue, 28 Apr 1987 9.38

Wed, 18 Mar 1987 9.88

Mon, 09 Mar 1987 10.38

At the time I was very happy with the return I was getting. Take historical rates over the past thirty years and the cash investor was on a non risk good investment.

[Phaedrus]

Gold and gold shares are running now...

who needs to invest in over-valued general equities?

<{POST_SNAPBACK}>

Sorry Bubb, I respect your opinion from the posts on here, I guesss I am just one of the sheeple.

[Van]

Hi Van,

I would also like to invest in Online Gambling as I think the growth potential is excellent. Hey, even I started to do it.

I wondered if you would care to suggest some stocks for online gambling companies as I havn't found any yet.

Thanks

sine270

<{POST_SNAPBACK}>

Hi Sine,

There are plenty of online gambling stocks to pick from, but I'm not really into tipping specific stocks. Look at PRTY, WMH, SBT, BSS, UKB, PAP, NLR, FPA, CRP etc. Any serious investor knows that you have to do your own homework in this business, and your picks will be as good as anyone's once you've done your research properly. Don't invest in anything you don't understand. Or, if you must, then accept that you are speculating a bit and be prepared to accept the risk that comes with this (and only risk amounts that you are comfortable with).

I wish I could earn 3% real interest in a savings account. In reality, the interest they're paying probably isn't even keeping up with the real rate of inflation and then I'm taxed on top!

Exactly! Let's face it, our savings and investments need all the help they can get in this day and age, which is the best reason to ensure that your money is working as hard as it can earning those few extra %'s that will make a huge difference when you compound them all together.

Edited August 3, 2005 by Van

[Phaedrus]

Not the same Warren Buffett who when ask a little while back what he considered to be the best future investment, at which he replied, I can think of three.

1. Cash.

2. Cash.

3. Cash.

I think he now holds $42 billion of the stuff. 

<{POST_SNAPBACK}>

Cheers Charlie, yet another poster whom I have great deal of respect for has slapped me in the face. i am in fact, mere sheeple.

[Phaedrus]

Ph,

It is my opinion that stocks are overvalued and due a correction,

but that is not an established fact (yet)

I may be wrong, stocks may rally from here

<{POST_SNAPBACK}>

B,

I really respect your opinions. You are a top poster on here, a real intellectual. I'm having a bit of a banter with you. I like this site, but find it a bit serious at times.

I'm not offended. I have stated on this forum that money is not my prime motivator, but I do like my money to work for me. I have a very intense job, so cannot be bothered to spend all my free time following the ups and downs of the market. I want no-brainer investments, really. Historically, the stock market has returned 7-8% pa, compound that and you have tidy sum after 30 years(divs reinvested), more than property, which has just kept pace with inflation over the same time period, so I think we are singing from the same hymn sheet. I know I will never be a millionaire, that doesn't bother me, I'm happy with my lot in life. I enjoy my job, will have a generous pension, so invest what I can afford to lose in the SM. That is why I do what I do. However, unlike the property bulls, I am not wedded to this position. If you can give me some decent advice or a link that will make me more then PM me.

I'm off to bed now, lives to save in the morning.

[737]

Well it is said the MPC look at 5.25% to 5.50% as the neutral rate.

The average rate the past forty years is around 9.75%. 

<{POST_SNAPBACK}>

It was generally assumed to be about 5%-5.5% but rates have only risen to 4.75% in this cycle and the economy has slowed fairly drastically. Maybe suggesting the neutral rate may be lower than that?

Generally, falling interest rates are usually good for stocks but beware, once the Mail, Express and Telegraph start telling their readers what good value stocks are then the wise man leaves the party! At the moment though private investors haven't really joined in so, hopefully there's a little more to go for.

Edited August 3, 2005 by 737

[Guest Charlie The Tramp]

It was generally assumed to be about 5%-5.5% but rates have only risen to 4.75% in this cycle and the economy has slowed fairly drastically.  Maybe suggesting the neutral rate may be lower than that?

<{POST_SNAPBACK}>

The service sector being the mainstay of the UK economy appears to be doing well, it appears the retail sector is taking the biggest hit. If people have borrowed to the limit and are completely maxed out no cut in rates will make any difference.

As I said in another thread the retailers have had their bonus and must now expect to return to basic pay. Unless investors and savers are rewarded the future for the young is very bleak.

I have great deal of respect for has slapped me in the face. i am in fact, mere sheeple.

I would not dare slap you in the face, I might find myself under your scalpel ( checked spelling with MS word spellchecker ) one day.

Edited August 3, 2005 by Charlie The Tramp

[Van]

B,

I really respect your opinions. You are a top poster on here, a real intellectual. I'm having a bit of a banter with you. I like this site, but find it a bit serious at times.

I'm not offended. I have stated on this forum that money is not my prime motivator, but I do like my money to work for me. I have a very intense job, so cannot be bothered to spend all my free time following the ups and downs of the market. I want no-brainer investments, really. Historically, the stock market has returned 7-8% pa, compound that and you have tidy sum after 30 years(divs reinvested), more than property, which has just kept pace with inflation over the same time period, so I think we are singing from the same hymn sheet. I know I will never be a millionaire, that doesn't bother me, I'm happy with my lot in life. I enjoy my job, will have a generous pension, so invest what I can afford to lose in  the SM. That is why I do what I do. However, unlike the property bulls, I am not wedded to this position. If you can give me some decent advice or a link that will make me more then PM me.

I'm off to bed now, lives to save in the morning.

<{POST_SNAPBACK}>

Phaedrus: why can't you ever be a millionaire? Nearly everyone I know could be a millionaire if they wanted to.

If you invest a modest amount of your wages into the stock market each year, you could end up a multimillionaire by the time you retire in 30 or 40 years (Admittedly, purchasing power will not be the same, but hey, it's still a lot).

Let's do some figures:

Start off by investing £3600 of your earnings in the stock market (£300 per month), which returns 11%pa (8% growth + 3% divi) Assume 4% wage inflation. Look what you get after 30 or 40 years:

Year	Investment	Total1	3600	36002	3744	81523	3894	133714	4050	193365	4211	261386	4380	338757	4555	426578	4737	526089	4927	6386410	5124	7657711	5329	9091512	5542	10706713	5764	12524314	5994	14567315	6234	16861716	6483	19436117	6743	22322518	7012	25556419	7293	29177120	7585	33228521	7888	37759222	8204	42823323	8532	48480924	8873	54798725	9228	61850826	9597	69719727	9981	78496728	10380	88283529	10795	99193030	11227	111350431	11676	124895132	12143	139981433	12629	156781234	13134	175485035	13660	196304636	14206	219474937	14774	245257138	15365	273940939	15980	305848240	16619	3413362

Okay, so this is a hypothetical model, and nothing grows in a straight line, but it goes to show the power of compounding, that if you start off by putting aside a chunk of your current wages into the stock market each year, and increase this by the assumed 4% wage inflation each year for 40 years, you would have £3.4m at the end of it. Is 300 quid a month such a huge amount to set aside? What's that, 20% of the average take home salary? Shouldn't we be putting very nearly that much into our pensions anyway?! :-)

Edited August 3, 2005 by Van

[Guest Charlie The Tramp]

I know I will never be a millionaire, that doesn't bother me, I'm happy with my lot in life. I enjoy my job,

Funny, I know exactly what you mean.

Phaedrus: why can't you ever be a millionaire? Nearly everyone I know could be a millionaire if they wanted to.

Van I know many people who made it financially only to go to a early grave.

I retired 5 years early with good financial back up, and I am amazed how my outlook has changed. I no longer want the roller I could now afford, quite happy with my 91 volvo estate. ( no I do not have a cloth cap and leather gloves )

We work towards the day when we no longer have to work, and my greatest pleasure is cruising the Norfolk Broads studying the beautiful wildlife

which gives such an inner peace.

Edited August 3, 2005 by Charlie The Tramp

[Phaedrus]

Funny, I know exactly what you mean.

Van I know many people who made it financially only to go to a early grave.

I retired 5 years early with good financial back up, and I am amazed how my outlook has changed. I no longer want the roller I could now afford, quite happy with my 91 volvo estate. ( no I do not have a cloth cap and leather gloves  )

We work towards the day when we no longer have to work, and my greatest pleasure is cruising the Norfolk Broads studying the beautiful wildlife

which gives such an inner peace. 

<{POST_SNAPBACK}>

Spot on philosophy on life there, Charles. I take my work seriously, and always do my best, however, I long ago realised work isn't the be all and end all. I like a bit of fun too.

[Sledgehead]

.... forward, not back.

<{POST_SNAPBACK}>

Van me old mucker, are you thinking what I'm thinking

[dogbox]

Amateur that I am,  I got nervous at the start of May and sold my shares.

How p****d off am I?

Bah!

When it crashes, I will be a bit braver, and stay for a while longer.

I'd buy back - in now if I were you as there is much more momentum to come driven by the general return to favour of the sm. I also wouldnt panick sell if we get a drop soon, as the general upward momentum has a long way to go. It will take some time for the sm to suck in all the 'fashion cash' jo public has available.

[Van]

Van me old mucker, are you thinking what I'm thinking 

<{POST_SNAPBACK}>

Sledgey, I'm thinking "Why didn't I buy more Yoomedia shares when they were at 4p a few weeks back." Already up 150% since I jumped in... for £250's worth

Seriously, I reckon it's futile trying to predict the market. Too many people think they know which way the market is going, end up trying to predict it, and getting crushed when they get caught on the wrong side of the market. I learnt this the hard way back in the April/May sell off and lost a considerable chunk of my capital, which fortunately I've managed to claw back now, but it taught me an important lesson to trade what you see and not what you think, because the market is never wrong but opinions often are.

[dogbox]

Phaedrus: why can't you ever be a millionaire? Nearly everyone I know could be a millionaire if they wanted to.

If you invest a modest amount of your wages into the stock market each year, you could end up a multimillionaire by the time you retire in 30 or 40 years (Admittedly, purchasing power will not be the same, but hey, it's still a lot).

Let's do some figures:

Start off by investing £3600 of your earnings in the stock market (£300 per month), which returns 11%pa (8% growth + 3% divi) Assume 4% wage inflation. Look what you get after 30 or 40 years:

Year	Investment	Total1	3600	36002	3744	81523	3894	133714	4050	193365	4211	261386	4380	338757	4555	426578	4737	526089	4927	6386410	5124	7657711	5329	9091512	5542	10706713	5764	12524314	5994	14567315	6234	16861716	6483	19436117	6743	22322518	7012	25556419	7293	29177120	7585	33228521	7888	37759222	8204	42823323	8532	48480924	8873	54798725	9228	61850826	9597	69719727	9981	78496728	10380	88283529	10795	99193030	11227	111350431	11676	124895132	12143	139981433	12629	156781234	13134	175485035	13660	196304636	14206	219474937	14774	245257138	15365	273940939	15980	305848240	16619	3413362

Okay, so this is a hypothetical model, and nothing grows in a straight line, but it goes to show the power of compounding, that if you start off by putting aside a  chunk of your current wages into the stock market each year, and increase this by the assumed 4% wage inflation each year for 40 years, you would have £3.4m at the end of it. Is 300 quid a month such a huge amount to set aside? What's that, 20% of the average take home salary? Shouldn't we be putting very nearly that much into our pensions anyway?! :-)

<{POST_SNAPBACK}>

Never knew I had so much in common with u Van.

Some people I know scoff at me when I do the following:

Refuse to pay for daily parking (£5.00 per day), avoid buying lunch (£3.00), Minimise all insurance costs etc, minimise business Banking charges.

By doing all this I can put away hundreds extra per month.

My secretary cant understand me, but she invests nothing. She pays for parking (rather than find a street like me) etc,etc, so she spends about £10.00 per day unnecesarily which she could otherwise save, thats £300 per month.

Im not tight and we have a good life (eg expensive holls, nice food, lots of fun) but crucially I dont WASTE money.

Most people dont save, they say thay cant afford it, but a lot of them (not all) could save.

My brother says Im tight for not getting a tip - top TV system, and having an old Mobile. Im trying to get across to him that by buying all these 'fashion' unnecesarry things he is wasting money and acting like a clone. GUCCI, must love all the little sheeple that queue up for his fashions, it makes him rich. Why cant the clones see this, and make a conscious effort not to buy in to the fashion con - trick?

Life is all in the planning.

Edited August 4, 2005 by dogbox

[Van]

Funny, I know exactly what you mean.

Van I know many people who made it financially only to go to a early grave.

I retired 5 years early with good financial back up, and I am amazed how my outlook has changed. I no longer want the roller I could now afford, quite happy with my 91 volvo estate. ( no I do not have a cloth cap and leather gloves  )

We work towards the day when we no longer have to work, and my greatest pleasure is cruising the Norfolk Broads studying the beautiful wildlife

which gives such an inner peace. 

<{POST_SNAPBACK}>

Charlie, I know what you mean. It's no good having money if you become obsessive about it. Life is for living, after all. There's a happy balance in there somewhere.

****

FTSE trading down a bit today. Rate cut was already fully priced in - any idiot could have told you that. What the City wants to know if there are further cuts in the pipeline.

[dogbox]

Funny, I know exactly what you mean.

Van I know many people who made it financially only to go to a early grave.

I retired 5 years early with good financial back up, and I am amazed how my outlook has changed. I no longer want the roller I could now afford, quite happy with my 91 volvo estate. ( no I do not have a cloth cap and leather gloves  )

We work towards the day when we no longer have to work, and my greatest pleasure is cruising the Norfolk Broads studying the beautiful wildlife

which gives such an inner peace. 

At last I agree with u Charles!

Yes, I like investing and do well with my business but as you can probably guess from the number of posts I dont take it too seriously.

I am far happier working say 30% less hard than I could in return for a happier life with a bit less money.

Some muppet I know has a recruitment consultancy. Hasnt had a holliday with his kids (now nearly adults) for 14 years. In years to come he will regret this unless he is a single minded fool.

BTW Charles, Im big into wildlife, and envying your lazy days enjoying it all. Look out for Swallowtails.

[penbat1]

No lift in FTSE... from the Rate Cut announcement, it seems

<{POST_SNAPBACK}>

The FTSE250 goes up big time almost every day (including today). It is now way above its record alltime high. Why this obsession with FTSE100 ?

[Numani]

I'd buy back - in now if I were you as there is much more momentum to come driven by the general return to favour of the sm. I also wouldnt panick sell if we get a drop soon, as the general upward momentum has a long way to go. It will take some time for the sm to suck in all the 'fashion cash' jo public has available.

<{POST_SNAPBACK}>

I agree. Bull markets end when Joe Public Punter gets involved. Thats right towards the end of it. Soon they will wake up and see SM is heading towards 6000 and private punters will give us the push towards 7000. Institutions will be selling out as PE's expand beyond the norm and so will I. Then the shorting begins!!

[sp1]

Hi Phaedrus,

You say you want a no brainer...well that sounds like band wagon jumping and feel good investing...not too good for your money health mate.

I can give you a strategy that requires some reasoning..see if you can follow this...

The big money need big volume to trade against. They can not get the volume to trade against.

So when they see value they want buy they need motivated sellers....If they just sat on the bid for a long time they would not get enough and other would get infornt of thier size....SO they try to and DO scare all the little folk some some of them will flock in crowds to sell low thus enabeling the big money to buy lo (first part of this profitable formula) (bear markets are also known as times when stocks return to thier rightfull owners....think about that)

Having accumilated the position they await the earnings results and improving sentiment to realise the paper vaule via the rising stock price.

But the next part is to sell. Now how can they dump all this stock onto the market ....they wave corrots in the faces of the crowd (thus the big money can sell hi only if they can motivate lots of small money to buy hi).....hope and fear or greed and fear.....i'm sure you've heard this many times before.

Others on this board are trying to convey these axioms to you..

Tell me what books on the markets you've read??

Every one knows i'm ganna say search the web and read a free pdf of a book called Reminisients of a stock operator....(the book title wont be misspelt though...thats erm my contribution.)

Take care..

Edited August 4, 2005 by sp1

[penbat1]

why obsessed with FT-100?

Because that is what I trade

Have you a 3-5 year chart on the FT250?

<{POST_SNAPBACK}>

Check this baby out:

http://investing.thisismoney.co.uk/cgi-bin...s&username=&ac=

You can choose different timeframes such as 3 or 5 years.

Incidentally my investments over the last 5 years or so have been mainly a mixture of tech stocks (which have sunk without trace) and FTSE250 stocks (which have flown like crazy).

Edited August 4, 2005 by penbat1

[penbat1]

We work towards the day when we no longer have to work, and my greatest pleasure is cruising the Norfolk Broads studying the beautiful wildlife

which gives such an inner peace. 

<{POST_SNAPBACK}>

Where does that dominatrix come into the equation ?

[Phaedrus]

sp1 and Bubb

Thanks for the replies. So me dripfeeding £x/month into an index tracker over a period of 30 years is not a reasonable investment strategy?

I always thought it was difficult to time the market, just look at the performance of 90% of the actively managed funds, they fail to beat the index over a 5 year time period. This is why I would prefer to track the index, take advantage of pound/cost averaging, low charges and lower risk than trying to pick an active fund or going for individual shares.

I don't know your background sp1(is your username anything to do with motorbikes?), but Bubb I know does this sort of thing for a living. I don't, and I don't really want to spend a lot of time researching stocks. I get the impression you are a chartist B, is that correct? Is that a proven way to make money on the SM?

Edited August 4, 2005 by Phaedrus

[zzg113]

Is that a proven way to make money on the SM?

If there was a 100% proven, bombroof, reliable method of making money on the stockmarket:

A ) everyone would be doing it

B ) if anyone did know of one, they certainly wouldn't tell you about it (some methods, such as contrarian investing, don't work if everyone uses it; others are exactly the opposite [charting, TA])

I think contructing a high-yield portfolio of shares and reinvesting the dividends is a good way of investing.

[Roman Abramovitch]

For what it's worth I'm selling short on the Dow Jones and when word gets around that I'm going short the Dow will sink.

Have yourselves a merry Xmas