UKC

The original thread is archived:

https://www.ukclimbing.com/forums/off_belay/pensions__savings-704579?v=1#x8...

However, it deserves this link, as a salutory tale of the fallibility of active funds:

https://www.bbc.co.uk/news/business-48506032

Also worth noting that Lendy, a peer to peer lending company went bankrupt last week. P2P is not covrered by the FSA compensation scheme so lenders will only get a fraction of their money back possibly over a long period of time.

Be careful out there.

I am amazed that it has taken so long for this to happen with Woodford. The finance world is littered with so called stars like this who moved to set up  a new operation only for it to all go pearshaped.

As they say past performance is not a guide....

Amazed that somebody like a county council has so much money there, mind you its probably a tiny % of their overall funds.

I am sure that ST articles on him , questioning his investments, have not helped.

You can match the average fund manager most of the time (just buy the index ETFs) but, by going out on a limb like Woodford has, combining UK deep-value (tobacco, property) with illiquid unlisted punts (bioscience), you may score big sometimes but you are also sure to underperform dramatically from time to time.

It's 4% of the whole KCC pension pot, so not huge.

Build 'em up and knock 'em down.

Shows that perhaps when he had a management chain above him that his riskier punts were probably being limited to a much smaller percentage of the pot. He has too many eggs in the same sectors. He comes across as more of a gambler than investor. 

Regression to the mean. Get yourself a cat! 

https://www.theguardian.com/money/2013/jan/13/investments-stock-picking

I think it illustrate the points I’ve made in the previous thread. Yes the stock market is lucrative and safe if you can play as long as you want, but the problem is that your investment horizon is rarely known in advance. You may be forced to exit at exactly the wrong time and then you’ll be shafted.

Gamblers are a lot better than fund managers because

1) They play with their own money, not that of others

2) The risk they take can be measured and can be limited to them.

I was about to say “but what about addiction”, but thinking about it for a moment I guess there are quite a few fund managing addicts - just, as you say, playing with others money?

Depends. If you trade you need to know your traits. Over cautious, eterrnal optimist etc.. gamblers always think the next bet will bail them out, most traders don't..  Although I'll agree folk like  Nick leeson do show similar traits. 

There is nothing wrong with investing in higher risk markets, AIM etc.. But your clients need to know this so they don't commit 100% of their money, especially a public sector pension fund from a council that also lost loads in Iceland. I'd question their ability too. 

Woodford might not be fully promoting the risks he is running, but the council's and the likes of hargreaves Lansdowne aren't doing sufficient due diligence. 

Perhaps.. But most will take a high risk punt with say 0.1%(often less) of a fund. This guy is pushing well into whole numbers. When the boss, the trader and the management chain are the same person there are no checks and balances. 

There is only one rule that matters in trading, it is that whatever strategy you have, whatever you do, whatever happens, you must have enough to still be in the game the next day. If you don’t follow this rule, then over a long enough period time, you will be taken out. It’s a mathematical certainty.

Absolutely right, in fact taking more risk is often the only way to get high returns, you can take high risks, but that is as long as they cannot blow you up.

In fact it’s much better to take high risk that can harm you but not kill you, than to take low or medium risk that can kill you. 

It all goes back to my point, the absolute pre-condition to success in investing is survival.

Get in on the Nesquik bubble. Sales have gone through the roof recently 

The Woodford saga is an interesting counterpoint to Crypto-currency sceptics: 

https://www.ukclimbing.com/forums/off_belay/bitcoin_again-673611?v=1#x86730...