5 Dec 2013, 4:50pm
personal finance shares
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  • Interesting times on the stock market again?

    May you live in interesting times

    American proverb and non-Chinese non-curse

    The stock market has been tedious for a lot of this year. I’m a net buyer, and probably will continue to be for about 10 years. So the whole ‘I’ve no ‘king idea what we are doing up here mate… market level hasn’t really got me going that much. Yes, it’s dandy to look at my ISA and see it has risen a lot. However, I have less than half my target amount in the market – more than half is locked up in my AVC fund and only released when I take my pension, which for various reasons doesn’t make sense yet.

    Often this time of year there’s a sudden rush of blood to the head anyway,  the Santa Rally. I had to sell a load of The Firm’s shares in my ISA to release enough for the Royal Mail float, which was then cut down dramatically. So I’ve had some of the cash to redeploy – but there hasn’t been much to tempt me. I’ve been playing the diversification card – RDSB as it was a sector I didn’t have, but what I also need is a modest exposure to emerging markets, to lean against the overwhelmingly UK and EU bias of my HYP.

    I’m not looking for a huge amount, let’s face it EM is all about potential growth rather than the exciting divi. About 10% would be plenty.

    A couple of potential targets have been MYI and AAS, and the latter has just dropped to a discount, with the share price heading south. I’ve tended to spread myself out with things like than, buying about £1k a go spread over a couple of months. That works badly with a trading cost of £13.5 (plus the 0.5% stamp duty, but that would be there anyway). That means I eat a 1.2% entry fee that I could halve by buying twice as much, but I’m prepared to pay the extra to spread my purchases and integrate the share price over time.

    Aberdeen Asian Smaller Cos IT - going down...

    Aberdeen Asian Smaller Cos IT – going down…

    After all, this is going down. It could go down more, or not. Spreading my purchases out over time derisks that. If it sky rockets, I stop. If it goes down further then I was wise not to buy all in one go. This policy has worked well for me for collective investments – I used it on CLDN a couple of years ago in 2011 early and than through the Summer of Rage – my holding is built of about five itty-bitty purchases around th £500 mark. The whole ISA is bigger now so £1k is roughly the minimum purchase these days…

    An alert of Murray International’s share price also came through – I find it easier to set alerts on stocks dropping below levels I consider interesting, then get on with the rest of life.

    Murray International - Sp going down

    Murray International – SP going down

    but they’re still on a premium, I don’t buy investment trusts on a premium, so I’ve reset the alert a bit lower

    still on a premium, but getting there

    still on a premium, but getting there

    I’ve had a European slant of late – well, for some reason European shares have been good value, I do wonder what everybody is so scared of, maybe the doom and death spiral of the Euro ;) MYI is sort of a mix of EM and EU shares and a scattering of others, it has a lowish UK exposure so it’s a good fit. I’ve reset my alert to a bit lower as this premium really does have to go. If it does go then the stock is interesting – the yield is a bit more exciting than AAS and would pull its weight in a HYP these days ;)

    Of course, Dr Doom predicted the mother of all dooms in 2013, so those interesting times might be on the way again, despite Osborne telling us all about the green shoots. I recall the last time I heard about green shoots, that was in the early 1990s when I was paying mortgage rates of 14%. That’s the trouble with green shoots, they’re always on somebody else’s patch, which is what makes their grass greener…

    I’ve only got about £1000 of ISA cash left now, so I’ll let Dr Doom off if his doom is a little on the drag, y’know, like after April. I’ve become a bit more sanguine about buying in my unsheltered account if the opportunity arises and bed and ISA-ing  that when the opportunity arising. That works better with funds than shares, but on a good rout like the Summer of Rage it’s better to pay the purchase fee twice than lose out. So bring it on, Nouriel, make my day…

    Talking of chancellors, seems like employees now get to save up to £500 a month into Sharesave rather than the £250 that is was all through my working life with The Firm. Nobody else is going to go round giving you a £6000 p.a. one-way bet on a share price. Even if you think your employer is going to tank, take ‘em up on it, probably spreading your years out across five years worth of schemes. JFDI – it’s only now that I am beating out the win I achieved with sharesave with the appreciation in my ISA. The SIP scheme rate seems to have been upped slightly, from the £1500 p.a. in my day to £1800. This is of particular attraction to higher rate taxpayers and particularly HRT child benefistas – I’m still not quite sure I understand why we should be paying for 40% taxpayers to have kids but it’s a way of knocking £1800 off your taxable salary, so those child benefistas in the £50k to 60k twilight zone can use this together with pension contributions to become poor enough to get Government help with their children ;)

     

     

    5 Dec 2013, 6:23pm
    by mucgoo


    It’s not optimal to be spreading out purchase, particularly if your paying extra transaction fees for the option.
    https://pressroom.vanguard.com/nonindexed/7.23.2012_Dollar-cost_Averaging.pdf

    I’m carried by the argument. But sometimes it feels better, n’est’ce’pas? And sometimes starting at all is better than dallying in the crossways…

    The trouble is we’re not all endowments, with a century-long rollup period…

    Personally, I like the dealing fee to be the same or less than the stamp duty when I trade. This typically means £2.5k or £250 when using regular dealing.

    Normally I have a ‘war chest’ of some low volatility OEICs which I can sell and use to top up IT holdings. (Currently I need my war chest available for withdrawal so can’t take part in the current fun.)

    I do have sympathy with the Vanguard plan but this isn’t quite the same! Did you manage to get MYI before its monster bounce today?

    RE: Dr Doom, I was pleased to see my comments about him on your original post last year. I’m sure he’ll be right again sooner or later. Stopped clocks and all that.

    Re: Commodities exposure, if you feel brave you could look at BRLA. Nice yield, nice discount, albeit in South America. It’s mainly a Brazil play. I wouldn’t go crazy with my allocation, but I have been seriously considering it in a blood on the streets sort of way.

    An alternative — riskier still — is UK asset manager CLIG, which should benefit if EMs come good again, and yields nearly 10%! If they don’t — or if it fails to start selling its funds to US institutions again — then it could fall some way, however, as it’s still not cheap on a market cap to assets under management basis.

    If you don’t care about income but do like LatAm, I’d consider Hansa. I’ve written about it on the site. A 30%+ discount if you count the Russian doll like discount hidden with it in Ocean Wilsons!

    All just ideas, as ever, I know you’ll do your own research and make your mind up. :)

    6 Dec 2013, 6:55pm
    by ermine


    @Greg I like using the idea low-cost presumably index funds as a buffer store, that’s really quite inspired ;)

    No, MYI is now filed in ‘ones that got away’. Still, that’s probably the ‘interesting’ part of interesting times. The bounce must’ve been everybody else who set SP trips of sub 1000…

    @Monevator, that comment tickled me too – Domm for people’s wealth. And looking back I did manage to decently buy into that Summer of Rage as I seemed to be planning it in that post.

    Thanks for some interesting research ideas – HANA’s been on my watchlist but the others look interesting – def a blood on the streets look to BRLA ;)

    I too have my eye on BRLA, though I doubt I’ll ever have a holding as I already hold a bunch of HANA (still cheap, and low correlation) and I have a fair amount of holdings (with piddly little values which I plan to drip into for years) as it is!

    As for my war-chest, I actually used Fidelity MoneyBuilder Balanced & SL GARS (as well as M&G Strategic corporate bond when there was still some up-side left). I picked ones that would not tank just when I wanted the cash! Both give reasonable long-term returns anyway so there’s no feeling of it wasting away. (Investec cautious managed is another possibility I considered.)

    I’m not sure if there’s a better passive replacement for the mixed asset funds – particularly as the Vanguard LS funds have their stamp duty fees (which I’m a fan of normally, but not for my war-chest!)

     

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