Reply to: FTSE 100 - hold or sell?

[lukemg]

I can confidently predict that house prices are definitely NOT going to crash after the next election.
It is clear that due to the impact on voters and the economy, whoever is in charge will do anything they can to stop this happening.
If anything they are likely to rise too far.

[CoolCat]

the thing that's gonna crash is house prices, probably just after the next election

[lukemg]

1 - You haven't got a clue and NEVER try to 'time the market', you can't and no-one else can either no matter how certain they sound.
2 - Forget all the US analysts say this bollocks and QE will do that, they have no idea.
The reason is that no-one has any idea which way it will bounce.
To compensate for the additional risk and volatility (potential big ups and downs), an investment in the tracker you describe SHOULD provide a reasonable level of gain ahead of that from cash etc over a long time (10 years+) IF you can hold your nerve, most can't and sell out low.
That is all you can safely say.
It's a small part of your assets, you don't need the money so where are you going to put it ?
You are using PCA - that's good, not because it gets you better returns (reports say a lump sum wins 90% of the time over a long time) but it does stop you chucking it in at a highpoint, can help with regular saving = discipline = not timing the market + you might not have a lumpsum to start with.
You are doing the right think, keep adding, hold your nerve, if you MUST try some timing chuck in some extra when the market kicks down 10%.
Consider Vantage lifestyle 80% fund to get a more global coverage, get on with your life.
Good Luck all...

[Barley]

Not sure what to do with it, was just thinking of taking profits now as I'm a bit of a pessimist regarding how all this quantative easing will play out and I see the UK declining in the medium term compared to Asia/South America.
The Tracker fund is about 6% of my liquid/other pension assets.

Im not qualified to give financial advice, depends how long you would intend to leave it in the tracker but compare long terms FTSE (dividend return) to alternatives, i.e. cash savings etc. Long term the FTSE with dividends reinvested out performs cash savings by a good margin.

Its very difficult to time the market, I think the chances are 50:50 whether the FTSE rises or falls over the next year but id not be surprised to see it break 10000 in the next 5 years.

Who knows though, its a guessing game, depends on your attitude to risk and how soon you need the money.

[BjornMorg]

Couple of questions, if you cash in the tracker what will you do with the money? Why a FTSE tracker, what proportion of your investment portfolio does this represent, if over 25% its not very diversified.

Not sure what to do with it, was just thinking of taking profits now as I'm a bit of a pessimist regarding how all this quantative easing will play out and I see the UK declining in the medium term compared to Asia/South America.
The Tracker fund is about 6% of my liquid/other pension assets.

[IR35 Avoider]

I have a spreadsheet where I recalculate the FTSE in inflation-adjusted terms, so that the inflation-adjusted current value is the same as the actual current value, but older values are stated in today's money. When I last recalculated it, in August last year, the FTSE was at 6682 and the inflation-adjusted previous high was 9466, so it was 29% below its peak.

So I disagree it is anywhere near its all-time high.

In any case, that's a flimsy basis for decision-making. Based on the smoothed earnings yield (current price divided by average earnings over last ten years) I calculated a central estimate of future (real) returns of about 6% a year. I would use that expected return in deciding how much I want to allocate to UK shares.

(For comparison, the median monthly expected returns had you invested in different months in the last 20 years was 4.3%, so 6% is historically attractive.)

[Barley]

Same predictions as last year then

US markets are already much more bullish than UK, sure I guess there will be some correction as the FTSE rises but id be interested to know the rationale for a steep decline (20% is steep)

I to was waiting for a dip to add to a couple of smaller company funds and was very lucky to time the December dip to 6480, how big a dip are you waiting for?

I remember all last year people suggesting the market was going to crash / dip (call it what you like), over the year many smaller company funds have risen around 40%.

[sirja]

Same predictions as last year then

US markets are already much more bullish than UK, sure I guess there will be some correction as the FTSE rises but id be interested to know the rationale for a steep decline (20% is steep)

ouch!

[Fred Bloggs]

The only thing you can be sure of - nobody knows what will happen. I have ~£40k in cash in my SIPP waiting for a decent dip in the market in order to invest. I've been waiting for months now.

[Barley]

For what it's worth I follow a few US investment newsletters and they are most calling for a continued bull run in US markets till about May, followed by steep decline towards the end of August. Nothing in life is ever 100% but you may want to consider taking some profit off the table if there is indeed a bull run till May

Same predictions as last year then

US markets are already much more bullish than UK, sure I guess there will be some correction as the FTSE rises but id be interested to know the rationale for a steep decline (20% is steep)

[sirja]

For what it's worth I follow a few US investment newsletters and they are most calling for a continued bull run in US markets till about May, followed by steep decline towards the end of August. Nothing in life is ever 100% but you may want to consider taking some profit off the table if there is indeed a bull run till May

[Barley]

FTSE all time high?

Im not sure I agree, its been pushing towards 7000 quite a few times but never quite got there, maybe a few more false starts to come but it seems likely it will push through some time this year.

The all time high was 15 years ago, price inflation and dividends into the graph and its no where near that now.

When the fed scaled back its stimulus a few weeks ago the markets jumped significantly that seems to indicate with stimulas scale back is already priced in.

Seems there is a recovery well underway now, lots of positive macro indicators, business confidence up, more investment, inflation falling, low interest rates, low wages. To me it looks like a perfect storm for the FTSE to go on rising, just one element in the room and this is how much a recovery is debt fuelled?

Personally I predict there is far more chance seeing the FTSE break 8000 in the next couple of years than dip below 6000. To recover to 1999 levels it would need to push on to 10000.

Couple of questions, if you cash in the tracker what will you do with the money? Why a FTSE tracker, what proportion of your investment portfolio does this represent, if over 25% its not very diversified.

[MarillionFan]

It's within a Shares ISA, does capital gains tax still apply?

No. It's Tax Free baby! Spend spend spend.

[BjornMorg]

You sell in one dollop you have capital gains tax.

It's within a Shares ISA, does capital gains tax still apply?

[BlasterBates]

You sell in one dollop you have capital gains tax.

In my view hold at the moment. Generally the stock market goes up well beyond the record high in a bull market, and then will crash.

It's unlikely that there will be a crash for a few years, we've just had one, correction yep that might be an opportunity to buy a bit more.

Build up cash reserves in anticipation of a crash at some point. When the crash happens then pile in with more. This will more than cover any losses on your existing portfolio.

A recovery after a crash is usually pretty quick.

....and remember a crash is not a loss if you have enough cash around to pile in when it happens, it's a chance to get rich

If you are approaching retirement and you need it then you probably would want to sell at least part of your portfolio.

If you have everything on the stock market and no savings I would start selling some of it over the next year or so to accumulate some cash.