Revenge of the FTSE

[vand]

UK was the best performing developed stock market in 2022

Over the last year the FTSE100 crushed the Nasdaq by 38%. I wonder how many investors were lured into the attractive US techs at the peak post-pandemic boom and now regretting their bandwagoning. In fact, it was one of the greatest years on record for value in comparison to growth.

While I doubt that 2023 will be a replica, it just shows once again that hopping from strategy to strategy only during the good times is usually a recipe for disaster.

[DelianLeague]

Luckily my complete portfolio is about equal.

My SIPP is invested in World index Equity Trackers and some bonds. This is down but my ISA that's invested mainly in the FTSE 100 is up.

My trading account is a mix of opportunistic equity buys and fixed income/bonds. This is about equal.

D.L.

[mc2fool]

UK was the best performing developed stock market in 2022

Over the last year the FTSE100 crushed the Nasdaq by 38%.

Well, yeah, but it did so by going sideways while the NASDAQ bombed. Unfortunately the FTSE 250 didn't do as well as the 100.


https://uk.advfn.com/stock-market/FTSE/UKX/chart/real-time

For a TR (ish) GBP practical investors' view this is iShares FTSE 100 ACC ETF (CUKX) vs iShares NASDAQ 100 ACC ETF GBP class (CNX1)


https://uk.advfn.com/stock-market/london/ish-ftse100-acc-CUKX/chart/real-time

[swill453]

The FTSE All Share Total Return index was pretty much flat over the year - 8363 to 8391 (sorry no chart).

Scott.

[vand]

Sometimes its not about how much you make, it's about how much you don't lose, and if you are able to go sideways while everything else around you is tanking it pretty good place to be.

Berkshire Hathaway went sideways through the dotcom crash which set them up to outperform the market over the following 20 years.

RIT Capital beats the market over the long term because they claim to participate in 76% of bull market upside but only 40% of bear market downsides.

Playing a good defense may not be very glamorous, but its just as important for your long term results.

[vand]

Thinking about this some more, it's arguably more important that you can play a good defense doing tough times, which is why going nowhere in the last year should be seen as major achievement.

Under which scenario would you rather underperform by 40% as Index B?

Scenario 1:
Index A beats Index B by delivering a +40% return while Index B delivers 0%.

Scenario 2:
Index A beats Index B by delivering 0% while Index B delivers -40%.


Clearly Scenario 2 is more difficult to recover from, as we know the bigger the fall the larger the following increase is required to get catch up.

Under Scenario 1, Index B will just need replicate Index A's performance (ie return +40%) in order to catch up. Under Scenario 2, Index B now needs to deliver a 66.67% return in order to catch up to Index A that hasn't even gone anywhere!

[SalvorHardin]

Unfortunately over the past 22 years the FTSE100 isn't a good pick.

[Adamski]

Surprising uk markets done so well given doom and gloom in the UK news. Think partly because was better value because the ftse 100 had a rough few years since the brexit vote, then Covid.

A good number of us here been predicting this a long time, my thread Tech correction March 2021, and Rotation into Value by vand in Jan 2022,. The highly inflated PE multiples of Faang, Tesla and China Tech were bound to need correction, was just a matter of when.

Now they're lower would think now good time to get into Tech if you can stomach risk of further falls. Personally I'm going to wait until after interest rates start coming down, so stick with a risk averse portfolio for now.

[mc2fool]

Sometimes its not about how much you make, it's about how much you don't lose, and if you are able to go sideways while everything else around you is tanking it pretty good place to be.

Berkshire Hathaway went sideways through the dotcom crash which set them up to outperform the market over the following 20 years.

RIT Capital beats the market over the long term because they claim to participate in 76% of bull market upside but only 40% of bear market downsides.

Playing a good defense may not be very glamorous, but its just as important for your long term results.

Yeah, agree. I see my "wealth preservers" have been fairly flat over the last year, except for RCP, which isn't properly a wealth preserver although is often mentioned with CGT, PNL and RICA (the PNL share split isn't handled properly by ADVFN and messes up the chart so I haven't included it, but it more or less tracked CGT).


https://uk.advfn.com/stock-market/london/capital-gearing-CGT/chart/real-time

[vand]

Sometimes its not about how much you make, it's about how much you don't lose, and if you are able to go sideways while everything else around you is tanking it pretty good place to be.

Berkshire Hathaway went sideways through the dotcom crash which set them up to outperform the market over the following 20 years.

RIT Capital beats the market over the long term because they claim to participate in 76% of bull market upside but only 40% of bear market downsides.

Playing a good defense may not be very glamorous, but its just as important for your long term results.

Yeah, agree. I see my "wealth preservers" have been fairly flat over the last year, except for RCP, which isn't properly a wealth preserver although is often mentioned with CGT, PNL and RICA (the PNL share split isn't handled properly by ADVFN and messes up the chart so I haven't included it, but it more or less tracked CGT).


https://uk.advfn.com/stock-market/london/capital-gearing-CGT/chart/real-time

Yes, RCP has been a bit disappointing but it's also trading at a much deeper discount to NAV than usual, so the fall looks worse than it really should

[1nvest]

Everyone knows that on average stocks are the more rewarding asset ... right?

Less well known is that average is volatile. On a 30 year SWR measure for instance in around 35% of cases all-stock (aggressive) was no better, or worse, than conservative.

The above average measure arises out of a few fantastic cases, more often where the start date followed deep-downs in stock prices. Relatively infrequent, less chance of the average investor actually benefiting from those gains (yes, partake, but not benefit due to riding both the down and up legs).

A conservative asset allocation has the option to rotate into a aggressive asset allocation after such deep-down events have occurred. It's generally better to hold a conservative asset allocation, and deploy that at opportune moments into aggressive, that over a typical 30 year horizon period will tend to arise sooner or later. Reduce the down-leg losses, partake heavily of the up-leg great gains.

BRK didn't really side step the dot com by design/intent, rather it wasn't heavily invested in dot com's. Similar for HYP1, it did much better than most across the 2001/2/3 down run due to being more equally diversified across stocks/sectors.

Don't know how RIT do their

RIT Capital beats the market over the long term because they claim to participate in 76% of bull market upside but only 40% of bear market downsides.

as timing is a known more-luck-than-skill venture. I guess its more on a asset allocation/diversification basis, conservative, with the capacity to leverage/go-aggressive after deep-downs. But perhaps might include elements of buying Puts as/when the markets look iffy.

I posted a No Yield Portfolio here viewtopic.php?p=558301#p558301 comprised of thirds each BRK, MKL (baby BRK) and Gold. Which is perhaps somewhat along the lines of RIT ??

[monabri]

Merchants is holding it's own.....5 year total return

Source for both graphs https://www.hl.co.uk/funds/fund-discoun ... ion/charts



Or, over the last year..

[scotia]

Its a very weak revenge

[hiriskpaul]

Every dog has its day?

[hiriskpaul]

Its a very weak revenge

And over 10 years
[/quote]

[scrumpyjack]

more like dead cat bounce?

[vand]

Everyone knows that on average stocks are the more rewarding asset ... right?

Less well known is that average is volatile. On a 30 year SWR measure for instance in around 35% of cases all-stock (aggressive) was no better, or worse, than conservative.

The above average measure arises out of a few fantastic cases, more often where the start date followed deep-downs in stock prices. Relatively infrequent, less chance of the average investor actually benefiting from those gains (yes, partake, but not benefit due to riding both the down and up legs).

A conservative asset allocation has the option to rotate into a aggressive asset allocation after such deep-down events have occurred. It's generally better to hold a conservative asset allocation, and deploy that at opportune moments into aggressive, that over a typical 30 year horizon period will tend to arise sooner or later. Reduce the down-leg losses, partake heavily of the up-leg great gains.

BRK didn't really side step the dot com by design/intent, rather it wasn't heavily invested in dot com's. Similar for HYP1, it did much better than most across the 2001/2/3 down run due to being more equally diversified across stocks/sectors.

Don't know how RIT do their

RIT Capital beats the market over the long term because they claim to participate in 76% of bull market upside but only 40% of bear market downsides.

as timing is a known more-luck-than-skill venture. I guess its more on a asset allocation/diversification basis, conservative, with the capacity to leverage/go-aggressive after deep-downs. But perhaps might include elements of buying Puts as/when the markets look iffy.

I posted a No Yield Portfolio here viewtopic.php?p=558301#p558301 comprised of thirds each BRK, MKL (baby BRK) and Gold. Which is perhaps somewhat along the lines of RIT ??

It's very little to do with market timing - you think that likes of Buffett are jumping in and out of the market? It's more about judging what the risk/reward on offer is and positioning yourself accordingly. "Luck" can persist for a short run - it can't persist for 25 or 30 years.

Risk is the other side of return - they go hand in hand. If you want to be a great investor you have to understand this relationship, and IMHO you can't be a good stock investor until you do understand it.

One of the best discussions I ever heard on this is from this interview with Howard Marks: so much wisdom rolled up here
https://mebfaber.com/2018/10/03/episode ... nvestment/

[vand]

Take it with a pinch of salt, but FTSE's forward PE is as low as 10. Still compares favourably with S&P's 17ish imo.

https://www.yardeni.com/pub/mscipe.pdf

[hiriskpaul]

Take it with a pinch of salt, but FTSE's forward PE is as low as 10. Still compares favourably with S&P's 17ish imo.

https://www.yardeni.com/pub/mscipe.pdf

The FTSE's PE has been lower than that of the S&P for over 10 years, but the E for the S&P has grown more.

[vand]

Take it with a pinch of salt, but FTSE's forward PE is as low as 10. Still compares favourably with S&P's 17ish imo.

https://www.yardeni.com/pub/mscipe.pdf

The FTSE's PE has been lower than that of the S&P for over 10 years, but the E for the S&P has grown more.

The E has grown more yes, but so too did the P!