Buying Opportunities or Falling Knives

[fca2019]

i got so excited when the red tide flowed over the markets. I’m hoping they’ll remain this low or even lower in April

You're in a minority there mate, most of us are peed off losing 13% in a couple of weeks. And pensions took a dive too. Hoping for sanity to be restored but, may be a good few months to recover or even a year who knows.

[kempiejon]

I'm pretty sure that ADrunkenMarkus is still working (exactly what industry he is I'm unsure but young and virile does start me thinking) as am I (working not necessarily young and virile) so I'm reinvesting dividends and adding into a SIPP and ISA but as both are full for this year I'm expecting the discount to still be around come the new tax year and if not and markets are back where they were at Christmas it was an insignificant blip.
My Plus500 shares have done OK in the volatility, morbidly I did find a list of the companies that make the most from funerals, flowers and headstones etc in the US.

[johnhemming]

My view is that this is not a good time for trackers. Some stocks (eg Carnival TUI) will do particularly badly simply because they will suffer more financially. Exactly where hydrocarbons or banks go is not clear at the moment. However, one would expect other stocks currently suffering losses to not really be impacted that much.

For extractors one needs to analyse the hedging strategies. Some do hedge some don't. That will in the end feed into the share price.

[brightncheerful]

Falling knives!

Assuming the FTSE 100 settles around 4500 and the sps of most companies follow suit their divi yields are in my view likely to temp reduction of the divi payout so that the yield is more in line with Base Rate plus up to 5%.

Generally, a high yield is perceived as little or no growth. Most companies prefer to see themselves as growth companies so psychologically prefer to give that impression.

[ADrunkenMarcus]

I see a number of high quality companies in my portfolio coming into my line of sight for my April top ups, such as Unilever on a 6% free cash flow yield and a 4% dividend yield. More growthy companies such as Diploma, MasterCard and Kainos are coming down to attractive valuations. I expect to have cash equivalent to over 10% of my portfolio value (today) to invest in April and I am looking forward to it.

I have a unitised portfolio and each year runs 1 May to 30 April. Since 1 May 2019, I am pleased to note my accumulation units have fallen 11.8%, which compares to 24.9% for the FTSE All Share, 26.5% for the FTSE 100 and 18.8% for the FTSE 250 (all TR). I don't yet have the FTSE All World data.

If I did have a tracker, I'd want an all World one. The FTSE 100 is a pretty bad index!

Best wishes

Mark.

[hiriskpaul]

I see a number of high quality companies in my portfolio coming into my line of sight for my April top ups, such as Unilever on a 6% free cash flow yield and a 4% dividend yield. More growthy companies such as Diploma, MasterCard and Kainos are coming down to attractive valuations. I expect to have cash equivalent to over 10% of my portfolio value (today) to invest in April and I am looking forward to it.

I have a unitised portfolio and each year runs 1 May to 30 April. Since 1 May 2019, I am pleased to note my accumulation units have fallen 11.8%, which compares to 24.9% for the FTSE All Share, 26.5% for the FTSE 100 and 18.8% for the FTSE 250 (all TR). I don't yet have the FTSE All World data.

If I did have a tracker, I'd want an all World one. The FTSE 100 is a pretty bad index!

Best wishes

Mark.

Since 1 May 2019, the Vanguard FTSE all World ETF (VWRL) is down 10.6%, excluding dividends, so yes the World Index is definitely a better one to track then the FTSE 100!

[ADrunkenMarcus]

Since 1 May 2019, the Vanguard FTSE all World ETF (VWRL) is down 10.6%, excluding dividends, so yes the World Index is definitely a better one to track then the FTSE 100!

Home bias is a severe disadvantage for UK investors. Where will the growth come from in the FTSE 100?

Looking at my UK holdings, on a total return basis for 13 March 2019 to 13 March 2020 I do have some winners:

Domino's Pizza Group (FTSE 250) is up 33.99%
Spirax Sarco Engineering (FTSE 100, recently promoted!) is up 17.02%
AstraZeneca (FTSE 100) is up 3.44%
Diploma (FTSE 250) is up 0.71%

I guess AstraZeneca might be expected to benefit from demand for drugs and as a pharma company it's seen as defensive and less tied to the economic cycle or reduced leisure activities (which Cineworld might suffer from). However, it's the only FTSE 100 stock I hold which has gained other than Spirax Sarco Engineering, which I still think of as a mid cap because it has only just been promoted to the FTSE 100 and is right near the bottom of the index far removed from the Shells and the Lloyds.

Best wishes

Mark.

[mc2fool]

Since 1 May 2019, the Vanguard FTSE all World ETF (VWRL) is down 10.6%, excluding dividends, so yes the World Index is definitely a better one to track then the FTSE 100!

Home bias is a severe disadvantage for UK investors. Where will the growth come from in the FTSE 100?

One could ask the same question for VWRL, and it seems to have been from only one place ... VWRL vs VUSA chart

According to HL the 5 TRs for VWRL and VUSA are 36.37% and 60.8% respectively.

As VWRL is currently 55.2% in the USA, that portion at 60.8% would give a contribution of 33.56% to its overall gain, indicating that the vast majority of the 5 year returns of VWRL have come from the US, with the "World ex-USA" having provided a return of less than 3% over the last 5 years.

[ADrunkenMarcus]

As VWRL is currently 55.2% in the USA, that portion at 60.8% would give a contribution of 33.56% to its overall gain, indicating that the vast majority of the 5 year returns of VWRL have come from the US, with the "World ex-USA" having provided a return of less than 3% over the last 5 years.

I spent some time on the Blue Whale website as I thought that was where I'd seen it, but I recall seeing a chart a few months ago, going back two or three years which looked at US equity returns. From memory, it had a total return chart and then a chart of total return excluding the so-called 'FAANGS'. It indicated that the FAANGs accounted for the entirety of the aggregate returns. If so, it's not only returns from the US, but FAANGS within the US itself.

Best wishes

Mark.