The latest market fall

[rajagainstthemachine]

[JR8]

I cancelled the China fund purchase and eventually bought Aberdeen Global Opportunities.
https://secure.fundsupermart.com/main/a ... 370293.pdf
And I think I got it at the bottom. European markets are up and American futures signal a rally as well

So this latest pick has returned half (14.3%) the benchmark (28.2%) over a 14 year period. I.e. take out inflation and you're paying someone to lose money for you, brilliant. Why would you do that versus a simple low/nil fee index tracker? Or better still, hand pick some solid reliably dividend-paying stocks?

Do they have the equivalent of the fable of The Tortoise and The Hare out your way? Better not plan on early retirement just yet
http://en.wikipedia.org/wiki/The_Tortoise_and_the_Hare


.... I had wondered if you're taking the pi$$, but I suspect you're not. Are you able to buy just regular equities, outside of a fund structure?

[Wd40]

I have stopped trading in direct equities long long ago. I started off in 2005 with day trading, long/short, futures etc and burnt my fingers. I simply don't have the temperament needed to buy stocks and hold them when they are going down. So I am sticking with funds instead. Also I work for an Investment Bank and you might be knowing this yourself, all investment banks have restrictions on personal account trading like you need to get approval before buying a stock and then you need to hold it for min 30 days. Funds are exempted. The kind of jittery person I am, I wont be able to concentrate on my work and just stare at my stock portfolio instead.

Funds are a lot less stressful and fee is not a lot. Its initial fee is 0.5% and then annual fee of 2%.

[JR8]

Just done my final tidying up exercise for this year, something that had been nagging the 'seeker of perfect order/balance' pedant in me

Glaxo, on 5.70% div. That for me is now my 24 stock portfolio (mostly FTSE-100, 3-4 are big FTSE-250 caps) topped-up and balanced as I want it. Net overall yield 5.4%, zero fees (once set up, and minimal to do that).

It doesn't really matter what the Glaxo stock price now does, that 5.7% income is pretty much locked in barring Armageddon. Your units? Nil income and going backwards. Your desire for drama comes at a hefty price; I do hope you're getting quite the thrill from your ride.

[Wd40]

If HSBC was such a sure shot 5% dividend yield bet, can you please explain why is everyone flocking to Treasuries with 2% yield?

I mean when there is so much liquidity in the system and interest rates are so low and everyone is chasing yields, how can a HSBC still trade at 5% yield, that just beats me.

[JR8]

Apologies, when I originally posted I stated HSBC. But I meant, and subsequently edited my post to Glaxo, which is the correct chip.


p.s. HSBC has been on my mind as it's Asian (and I traded it this week), has exposure to China, and regional emerging markets, and yields 5.0% which though less than than GSK, still knocks your investments stone dead...

[Wd40]

You are right when you say HSBC is trading at 5% dividend yield. This article further supports that:

http://www.fool.co.uk/investing/2014/02 ... elsewhere/

I am just saying if HSBC is such a sure shot 5% yield, there should be lot of people flocking to buy up that stock and then it wont be trading so cheap. Especially when we are in such a euphoric, "all time highs" market.

[JR8]

If HSBC was such a sure shot 5% dividend yield bet, can you please explain why is everyone flocking to Treasuries with 2% yield?

I mean when there is so much liquidity in the system and interest rates are so low and everyone is chasing yields, how can a HSBC still trade at 5% yield, that just beats me.

Who is 'everyone'?

Maybe only 5% of financial market investors have accounts that have access to direct bond investments. Oh dear 'everyone' isn't looking so accurate any more.

In fact isn't that the thing.... when you see things are going to pull back, it's really hard for the 'average Joe on the street, stock investor', to hedge for a month or three, i.e. go 'risk off' and sit it out.

I mean, how would you do it? I.e. keep your portfolio but go 'risk off' for a while.


p.s. If HSBC is such a sure-loser, why do you pay some fund manager big fees to invest in HSBC? Ha, got you there.

[JR8]

I'm glad you're reading TMF... that is a very very, very positive thing you can do for your long term financial well-being. Not least for the investment ideas, suggestions etc. But how it inculcates that ... you are on your own buster, and you better financially prepare for your own future ...

If you were to guage websites into the net-worth equivalent yielded, TMF would be hands down the biggest one for me... they totally changed my way of 'thinking about money'.

[JR8]

You are right when you say HSBC is trading at 5% dividend yield. This article further supports that:
http://www.fool.co.uk/investing/2014/02 ... elsewhere/
I am just saying if HSBC is such a sure shot 5% yield, there should be lot of people flocking to buy up that stock and then it wont be trading so cheap. Especially when we are in such a euphoric, "all time highs" market.

I'm not sure which market you follow, but London has been slapped pretty hard this week.

Only a week ago I was rubbing my hands at the phenomenom of 'Dow 17k' being breached, but now that looks a loooong way off again. So bide your time, meanwhile 5.4% (portfolio net)..... not too rough.

You think HSBC wouldn't yield 5%[+] it it were worth it, as everyone would pile in. Don't know, maybe you're weaned on drama. ?How about National Grid (perhaps the most boring company in the UK) on 5.05% or Vodafone on 5.6%, or Sainsbury's on 6.0%?

Anyway... enough already. You see the spectrum of opportunities there.

[Wd40]

You are right I don't really follow UK markets. At the individual stock level, I used to follow only the Indian markets and being a high growth market, nobody there ever talks about dividend yield. No Indian company trades at yields higher than bank fixed deposits, which is why I am ignorant about dividend yield. Also I am accustomed to high stock fluctuations. You cant think about 5% yield when your stock has just crashed 20%.

The motley fool site and the dividend yield thing is very interesting. I will do some research on this.

[zzm9980]

The motley fool site and the dividend yield thing is very interesting. I will do some research on this.

More than that, you should *follow the advise you hopefully learn*. I actually have a small folder of bookmarked JR8 posts with some links he gives I mean to get to one day.

It seems your bad lesson in day-trading hasn't taught you much since you're doing something similar with bad funds now.

[JR8]

I was looking at the BSE and a couple of the constituents. Woah, no wonder 'no one ever talks about yield'
I picked two random large stocks...
HDFC Bank - yield 0.80%
http://www.bseindia.com/stock-share-pri ... pandable=5
TATA - yield 0.40%
http://www.bseindia.com/stock-share-pri ... pandable=5

For comparison inflation this year has moved between 11% and 6.5% (now), what in heaven's name is going on!? What a roller-coaster. Why are the dividends relatively so low? Is it tax driven? HDFC is a curiosity it had what would be termed a 'progressive dividend policy', i.e. progressively rising year on year, but then it skips any dividend in 2012 (in western stockmarkets usually an act of last resort, and often an extremely bad sign of things to come), but then in 2013 starts paying out again, but with the figure reset to that of 5 years earlier. The picture at Tata is not entirely dissimilar! Did dividend taxation or similar change between 2011/12? It's hard to interpret.

The TMF approach is 'slow and steady ultimately wins the race'. Something else that rears it's head in regional markets here is political risk. One reason the SG index might look rather boring, at least it's not likely to be the rollercoaster of the BSE index. But is there a risk of China being 'out of the frying pan into the fire', after all, it's run by money-grabbing 'communists'. Don't know, just a thought.



p.s. Wow, ZZM, most kind of you. Any credit should go to TMF, of which I admit I am something of a long-time disciple

[Wd40]

Yeah, Indian stock markets and western stock markets are completely different. Also people's asset allocation is completely different. You will be surprised to know what is the ratio of Indian households who actually invest in stocks or mutual funds. Its probably one of the lowest in the world. Indians know only about real estate, gold and fixed deposits.

Even the savviest of investors will have very very little exposure to equity. BTW, BSE is not a rollercoaster. Consider this, FTSE hit 6900 in Dec 1999 and last week it was at 6200. BSE was 5447 in Feb 2000 and now it is 26100. India was also an epicentre of the dot com boom and bust, so its not like it was only the UK market that was frothy in 2000.There is plenty of wealth created for people who have stayed invested in growth stocks in India, which is another reason why no one talks about yields

The stock price of HDFC in 2000 was Rs 33 and now it is Rs 860

Regarding, inflation, well, our salaries in India also grow at the rate of inflation, fixed deposits also return 9% per year.

[JR8]

Interesting, thanks.
FD's at 9%. What are BSE returns like when you strip out inflation?
UK interest rates (Bank Base Rate) are at 0.5%, a record low, and have been for over 5 years!! So the FTSE yielding 5+% looks pretty sexy yah?

People like my parents who have used their retirement savings to invest in FD's (fixed term 'investments bonds') are lucky if they earn 0.75%. I've tried to gently outline the approach I use [cue: blank/glazed looks]. You'd have thought a move from say 0.75% to 5+% would be compelling, you know like a 500% pay hike!, but I think it intimidates them. They're of an era when you did as your bank manager suggested and together with your company pension that was that. They're not only uninterested in money, they're actively disinterested, to me that's quite a travesty, but hey.... they seem happy enough, so ... [sigh!].

The FTSE at 6310, yes not very exciting eh. But I only hold about 20 carefully chosen FTSE-100 stocks, and 4 of the bigger FTSE-250 stocks.

So I'd like to think I've got a diversified 'best of bunch', rather than an equal measure of the good, bad, and ugly [index].
Either way there's so much going on impacting the FTSE...
- US interest rates
- the EU, and it's heading towards recession (again)
- The Greek economy imploding, again.
- Ukraine
- ISIS
- Ebola, etc

So yes the FTSE is a complete bag or nerves. Stumbling along from one day to the next grasping at anything to stress about. Perhaps it's good that my interest is yield based, otherwise I'd have had a few pretty damned grumpy years