How does it go broke if it’s just an index tracking the price of oil?
Because it is not an index tracking the price of oil. Oil is not a security, it needs to be stored if you want to hold it. As much as you cannot store oil in your garage, the ETF (which is not an ETF, but an ETC) cannot do it either. Hence it's buying derivatives, which exposes it to the financial equivalent of storage costs: contango.Originally Posted by mr noble
Read this and that.
Ok, got it. Thanks again Raffe.
I’ve just told the wife that I won’t be betting the house on oil tomorrow.
That sounds like a good idea.
You are presupposing that governments have the ability to control their country's (and world?) economies. There are 7-1/2 billion consumers who say otherwise, along with a million(?) corporations, 20 million(?) "mom & pop" businesses, and more than a billion workers.
Thinking that the 'government' can dictate the economy is like believing this child can control the car he sits in!
A country's fiscal policies during economic calamity are about as effective as the kid above hollering "I have to go pee!" over and over - - not very precise control!
Yes I understand that, but what I was getting at is governments pour money into their economies in the hope of propping them up and trying to stop further market falls during time of crisis.You are presupposing that governments have the ability to control their country's (and world?) economies. There are 7-1/2 billion consumers who say otherwise, along with a million(?) corporations, 20 million(?) "mom & pop" businesses, and more than a billion workers.
Thinking that the 'government' can dictate the economy is like believing this child can control the car he sits in!
A country's fiscal policies during economic calamity are about as effective as the kid above hollering "I have to go pee!" over and over - - not very precise control!
Trillions have already been thrown at stock markets so without this money where would we be??
You are mistaking saving the companies for saving the stock market. But you are forgiven, the stock market seems to be doing the same mistake.
Let's all pile into equities!
https://www.bbc.com/news/business-52566030
Thanks for the link, explains why markets are up again today.
Perhaps news of lockdown in the UK easing from Monday...Thanks for the link, explains why markets are up again today.
Another novice question....
Does it make a difference if you sell a fund prior to its annual dividend payment date, or does the value of the fund adjust on that date to the same amount as the divi payment, meaning that it makes no difference to the value of the fund's unit price and not matter when you sell?
I am about to sell a huge chunk of Vanguard LS80 but notice that the dividend payment date is only 3 weeks away on 31st May.
Should I wait until then, or won't it make any difference?
ETA - I have been reading up. Seems if you're selling an accumulation fund it won't make a difference when you sell, but if you sell an income fund, you should wait until after the ex-dividend date before selling if you want to receive the divi payment for that period...
Last edited by mr noble; 7th May 2020 at 13:29.
The markets make so little sense at the moment.Thanks for the link, explains why markets are up again today.
- - - Updated - - -
Oops, I thought that would embed into the post.
It won't make a difference whether you sell before or after the ex-dividend date, the price of the fund will adjust downwards by the dividend amount after that day. But you may want to check on the tax treatment of dividend versus capital gain (or loss) before you decide what to do. Actually even if there are differences in tax treatment, you should think twice about whether you want to risk a lower price for your entire holding of the fund just to maximise on the tax treatment of the dividend.
Thanks Raffe.
It's in my SIPP so no tax treatment to worry about.
The sentiment of a poster earlier in this thread has been clanging about my brain for days and I have finally caved.
"Passive on the way up, active on the way down."
So I have sold a large proportion of the two passive tracker funds I held and have switched into a couple of the biggest active funds. Maybe a good move, maybe not. Time will tell.
It does still seem totally bonkers being invested almost entirely in equities when we all know there's a massive storm on it's way. Hopefully the fund managers have a better idea than me of which stocks will fair better than others. Something which the passive fund cannot do...
Last edited by mr noble; 7th May 2020 at 13:50.
Another 3.2 million file for unemployment benefits in the USA (past week) surely another reason for the stock market increase.Thanks for the link, explains why markets are up again today.
I also wonder if IAG is a good longer term punt just now.
Just out of curiosity: Are you therefore expecting the active funds NOT to drop at all or at least not significantly?
Equities are just being seen as a way to avoid cash because cash could de-value with all this money being printed. We'd see an increase in property if we could actually purchase property.
I'm now stumped what will happen when the recession actually hits. Clueless. Ryan's bet with Raffe which seemed folly at the time, may work in his favour.
Wait.. you think house prices would increase if people could currently buy?
For a certain segment of property I think quite possibly yes.
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That's an interesting discussion. Given the trend in equities, I find no suggestion too crazy (even if I initially thought real estate would take an ugly turn). Who knows?
Someone who lies about the little things will lie about the big things too.
i've seen quite a few economists forecasting post-war levels of inflation, once the economy starts moving again- which in theory should be good for the property market i imagine? i don't understand how that can square with millions of people losing their jobs though
I do think there is an element of people wanting to park their money somewhere. That being said inflation won't be an issue for the foreseeable so cash isn't the worst. I do have around 40% of my SIPP in tech and pharma equities as I feel that makes sense. The rest of the market mooning doesn't make sense to me but then again I'm not in financial services so am not qualified other than all of the research I have been doing indicates the stock market performance might be upside down and therefore I have to assume timing is everything and that we will have a mother of all collapses. My rudimentary maths indicating EPS and how it correlates against stock prices, and the fact that I can't see how companies are going to pay dividends, plus a real risk of defaults by not only businesses but also countries, and anyway long story short I've priced in a 40% drop FROM HERE for a lot of the market. At 25% down from here I'm going back in (as the better performing tech and pharma stocks will counter the worst performers), so when the Dow is at 18k
How does that forecast square with zero interest rates ?
No, I'm expecting the active funds to drop less than the passive one. I am still expecting a drop, sooner or later.
I don't think it'll be anywhere near the 40% that Ryan predicts though.
I meant 40% in some stocks countered by etch and pharma doing better. Not 40% across the board :)
But who is going to pay dividends? That in itself drops the price intrinsically
Yes, very good, either that or they bomb to zero. One or the other.
See, I am learning something from the thread.
The alerts I set for airline prices a couple of weeks ago have been binging off all day. Will I miss the bottom? Yes. I do care? No.
IAG would be brave. Most airlines aren’t expecting a return to 2019 loads until 2023. Scary stuff
Good rally in crypto last few weeks or so
Can you send link to the HL crypto fund pls. Thx.
Is this thread limited to stocks? Go thru it and you will see alot of it is not just "stocks"
I think in the current environment it’s interesting to discuss all asset classes.
Indeed
Crypto is an asset class?
Someone who lies about the little things will lie about the big things too.
HMRC now class crypto as 'Cryptoassets' rather than 'Cryptocurrency' so they can tax gains on it.
https://www.gov.uk/government/public...or-individuals
I believe so, but not on my investment radar as things stand.
I am not questioning that they are an asset given what people are willing to pay for them, my question is whether they qualify as an asset class in the context of portfolio theory.
Someone who lies about the little things will lie about the big things too.
i know very little about economics, but aren't interest rate hikes the main tool for central banks to rein in inflation? so perhaps that's what some economists are saying, trillions of dollars pumped into the economy, plus no leeway to raise rates= runaway inflation?
I would say that central banks have been desperately trying to induce some sort of mild inflation with their zero-interest rate policy, however have not managed outside of real estate, equities and luxury trinkets.
Why wouldn’t they?
That’s my point, so to encourage a bit of inflation you lower rates .... although it hasn’t seemed to work in recent years.
Typically inflation is a tool to erode debts but it is a dangerous game.
I cannot see one single reason why it would be. Sportsbetting isn't one either, nor are Birkin handbags.
The reason that there are thousands of people shilling for bitcoin et al. doesn't change anything about the fact that they serve no economic purpose and pricing is entirely driven by the greater fool theory.
In other news, the US jobless rate has just been reported at 14.7%. Let's buy some more equities.
And whoever is still clinging onto the old principle of common sense, may want to have a look at the predictions for global GDP by the Dallas Fed:
Don’t get me wrong I wouldn’t touch Bitcoin with a barge pole, but I think crypto is now accepted as a store of capital.
Good depiction.
Really? By whom?
I thought it was either speculation or short term transacting.
If feel like I’m going into bat for Bitcoin, I am not.
However 27 million people hold bitcoin including 9% of Americans so it’s becoming more mainstream.
The Economist are addressing this absurdity with equities this week, "a dangerous gap" between markets and the real world....
https://www.economist.com/leaders/20...e-real-economy
Store of capital? It is until it isn't anymore. Good luck with that.
More like blackmailers', drugdealers' and moneylaunderers' preferred method of payment.
I wonder how many people would own it if it wasn't for the brainless shilling or its moneylaundering capabilities.
Are you sure 9% of America is more then 27M ? and BTC is relatively more popular in Asia?
I don’t need luck because as I said I wouldn’t touch it with a barge pole.
But many would, including as you point out many undesirables.
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