UKC

I've got a sum of money invested in a Stocks and Shares ISA. I was a bit alarmed yesterday to see that the valuation had dropped by about 2% in a week. I know that the value of investments does FALL and rise but can anyone reassure me. Have any other investers noticed a drop?

In reply to FesteringSore:

Yes, the stock market has fallen in the last ten days, footsie going from about 6800 to about 6500, owing to worries about developing-market economies and the effect of the withdrawing of quantitative easing. This sort of thing is fairly normal for stock markets, a 2% drop is a rather minor affair. In the long term, though, shares beat all other asset classes.

In reply to FesteringSore: It's recently been at an all time high and there are rumours about a Chinese default which are worrying some investors.

In reply to Coel Hellier:

Thanks Coel. Just that the drop had taken my valuations back to what they were October/November following a rise. Hope for improvement.

PS Always notice that your answers on here are direct and informative - no stupid comments - credit

In reply to Cambridge-Climber:

Thanks.

In reply to FesteringSore:

Perhaps worth mentally seeing if you would be happy with a 25% drop or more. It may happen, or shares may rise by that or more within a couple of years. If you are worried about a 2% variation, are you truly happy with the risks of owning shares in the short to medium term?

In reply to FesteringSore:
Yes, as said, shares can drop quite rapidly. One of my AIM quoted shares (admittedly a more volatile market than the main market) dropped about 20% a week or so ago (but had risen much more than that since I acquired it). However, that's also how much you might expect the market generally to drop if there were a significant "correction".

In reply to FesteringSore:

Sell in May and go away...

I sold up in December, but I'm fairly cautious

I noticed this as well. I checked my portfolio last week and saw that I was looking to make 3% with most of my funds doing well apart from the one investing in emerging markets which I was reasonably pleased with. I checked again this week and my valuation was lower than my initial capital which was shocking. A lot my funds units are with large UK based companies such Royal Dutch Shell and I noticed their share price index took quite a drop over the last week. It has picked up again this week though. I just think there is some uncertainty in the market and it is best not to check the valuation too often. FTSE100 trackers and low(ish) risk UK companies should provide a reasonable return in the medium to long term as long as growth continues to increase.

In reply to JM:


Sure stocks and shares is the right game for you? Seriously you saw you were going to get less than initial return and panicked is rather worrying.

Risk=Reward

Low to high risk would be (roughly in this order)

NS&I
Building Society
Gilts
UK Corporate Bonds
Overseas Corporate Bongs
Blue Chip Equities
Developed economy equities (europe/US/possibly Japan)
Commodities
Uk smaller Companies
Developing Countries equities
AIM/VCT etc

In reply to FesteringSore:

The main markets have had a real good run over the last couple of years. The Fed. has recently started tapering and just the other day took another $10 B. off the table. For what its worth i think the FTSE is starting to look very toppy and we could have a decent correction. Oh and lastly....... never ever take investment advice from people on public forums.

In reply to FesteringSore:

Warren Buffet has a good take on this.

If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the "hamburgers" they will soon be buying. This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.

In reply to FesteringSore:

As well as investing in decent companies the key factor to me seems to be to know when to buy and when to sell.

In reply to bdgm:

And once you know that, you will be able to become staggeringly wealthy. In fact, most regular folks and many professionals tend to buy high and sell low by letting their emotions dictate what they do.

Nutkey's comment is exactly right - when everyone is panicking and there is the sound of wailing and gnashing of teeth, that's the time to buy. When everyone is recommending things, that's the time to move to cash.

While I hate to quote Joe Kennedy (a noted appeaser prior to WWII) "You know it's time to sell when shoeshine boys give you stock tips"

But when are these times? Precisely? No-one knows and so the best protection is diversification between low risk things and high risk things (stocks and shares - Is there really such a thing as a "stocks and shares ISA"? That's uncommonly vague). There is a vast amount of data showing that if you pile on more risk beyond a certain point, you actually don't get a better return in the long run. Although you might be lucky in the short term.

In reply to pneame:


Not uncommonly vague at all. See:

http://www.which.co.uk/money/savings-and-investments/guides/stocks-and-shar...

http://www.moneysavingexpert.com/savings/ISA-guide-savings-without-tax

The OP doesn't specify which funds or shares he has specifically invested in but since he is reporting a lower valuation when the market as a whole has fallen it is a reasonable assumption that he has his money invested in a tracker fund.

Historically speaking, stocks and shares provide a better return than cash so quite right to invest in them, assuming a diverse portfolio of investment and no expensive debt of course.

In reply to Edradour:


Ah. A wrapper. I'm suitably enlightened