Does this mean our global trackers are about to tank?

[grabbango]

We invested some money in a global tracker fund , just before the Ukraine war, and the markets have obviously been choppy since then, but we've stuck with it. But the combination of this headline and the Taiwan situation makes me wonder if we should just pull out and put it all in a high interest account instead. Anyone else get the feeling their investments are about to nosedive?

Meh,
there’s always something throwing a spanner in the works but over the long term, the stock market has always gone up.

What's the money for? It short term it shouldn't be invested, long term it'll likely be a tiny blip. I don't even check mine, it's all just noise

Nobody asks the hedge fund managers what their money is invested for, do they? The money is invested for growth, and not for anything specific. It's one thing to ride out unforseen bumps in the road, but when the indicators are for a big fall, surely it is best to pull out, then buy back when they drop?

It seems to be that the hedge fund managers of this world make their money off the back of other people's passivity.

If you can accurately pinpoint the best place to sell (before a drop) and the best place to re-buy then yes it will be quite successful.

Not a lot of people can do that consistently. I pulled out at the start of covid and bought after the markets had tanked. Great news for me - it probably balanced out against all those times I didn't time the market successfully.

Investing in savings accounts is much lower risk, with a reward of 4-5%.

Great for the short term (I'm saving for a house deposit in the next couple of years), but my longer term investments (for 60+ holidays and retirement) are in riskier funds which will hopefully pay a higher reward.

If you pull out now you crystallise any losses. Investing is a long term gain.

Of course, but if the timing is right then crystallising a current loss may prevent a much greater loss, and enable a future gain.

Like I said, there are people making a lot of money out of mass-market passivity and predictability.

If your investments are for long term growth why care about what happens to them in the short term? If the markets tank then its a good opportunity to buy.

Reacting to media headlines is going to do you much good really. I'm sure if you look back over head lines for the past two years you can find similar predictions.

How would you feel if you sell your fund and it increases 30% over the next 12 months?

Unless you have some specialist knowledge that will allow you to time the market then don't make things more complicated than they have to be

3/4 of all fund managers cannot beat an index/tracker.

Being successful in the stock market is not about timing the market, its about time in the market.

They can't beat it over time, no, but that's not what I was suggesting. Some major events are more predictable than others.

TBH i'm in your shoes, i ve seen, over the last 2 years a significant loss, in a so called low risk investment, now if i cashed it all in, within 2 or 3 years in a fixed term bond, i'd recover most of that.

We have had a good run of investment growth over the last 40 or 50 years, there is zero reason why we cannot equally see a long period of turbulent markets.

All these little phrases people use like "time in the markets/over the longer term etc etc" are dreamt up by the very people whose job it is to get your money in their accounts, they are the only people not losing.

The way a tracker works is that when a stock drops out of the relevant index (e.g. the FTSE 100) it is automatically sold, so the mass sell-off causes its price to drop further. Its replacement stock in the index is automatically bought, so the mass buy-up causes its price to rise further. There must be a lot of people making a mint off the back of that predictability.

@grabbango I'm very new to investing. I don't understand how people make money as you say? When a stock drops out of FTSE 100 why is it automatically sold? And how is this predictable and how do you make money from that? I'd like to understand how it works.

I listened to a podcast where it was said that a "crash" should be reframed as a "sale" ie 10, 20, 30% off etc. I think it's a good way of looking at it and I'd buy more when it's on sale.

A tracker fund buys shares from a specific index, for example the FTSE 100 - the 100 companies with the highest share price listed in the UK. If Stock A at number 100 reduces in value, below Stock B at number 101, a FTSE tracker fund will automatically sell Stock A and buy Stock B. As there are a lot of large FTSE 100 tracker funds the sales and purchases will be large enough to further influence the prices, so Stock A's price will dip further, and Stock B's price will rise further.

People who make a living out of buying and selling shares are basically gamblers who bet whether prices of individual stocks will go up or down, so anything that makes those movements more predictable helps them to make money.

I'm not saying trackers are bad - when the market is generally rising they're great - but for the last year or so the market has been "choppy". High interest rates and global doom and gloom mean there's no clear end to that in sight.

@grabbango thanks. So do you mean that at the moment things are more predictable so you can buy the shares dropping in and out of the FTSE 100 and make a profit?

I've invested in a global tracker so I'm not sure what you've described applies?

I do agree that in a rising market buying a global tracker is a good idea. It is a bit less clear cut in the current environment with rising interest rates and inflation. I've heard that the next 10 years returns are going to be much lower than the past 10 years. It's very difficult to know what to do and I think your time horizon makes a big difference.

I've been reading lots of books and watching YouTube videos about on but nobody seems to have a definitive answer about how to invest right now.

If you buy an index like the Global all cap you own just about all the tradable stocks in the world in proportion to their market capitalisation.
That to me is the best strategy for a long term investor with no specialist knowledge, just look up Jack Bogel who was the founder of Vanguard, he pretty much pioneered index funds and the buy and hold strategy.
If you listen to Warren Buffets he pretty much says he has no clue what the markets are going to do, so if some one like that can not be sure why listen to anyone else.

The hedge funds tell investors what their money is not for op, this question is thoroughly answered in the docs and due diligence. To start with investors must legally be institutional investors or sophisticated investors, and there is a minimum investment amount- £50,000 would be common although too low for the big ones. This is not relevant to an individual normal investors circumstances! The pp asking what is the money for meant do you need a house deposit in a year, are you retiring in 5 years….

So do you mean that at the moment things are more predictable so you can buy the shares dropping in and out of the FTSE 100 and make a profit?

No @Amboseli , that's just for professionals or people with specialist knowledge and money they're happy to gamble with, because it's a high risk game.

I'm saying that the tracker funds help them by making stock movements more predictable than they would otherwise be.

Tracker models are much more sophisticated than buying one fund of the top 100 shares in one country. That’s putting all your eggs in one basket. Diversification is key.

An index can be replicated without buying all the actual shares in it.

You can track a whole stock market. You can track a sector. You can focus on a region. You can use a synthetic index although I’m not a fan.

Global trackers obviously track multiple indexes. I was only using the example of a single index tracker to explain the concept.

People advising amateur investors tend to recommend global trackers, or else a "balanced portfolio" of tracker funds from various different regions or countries.

People advising amateur investors tend to recommend global trackers, or else a "balanced portfolio" of tracker funds from various different regions or countries.
and with good reason- stock picking is for those with the money and knowledge, or who enjoy it and limit their losses.
the best book I read is the bogleheads guide to investing, for capturing the basics (& some us tax centric chapters you should ignore)

Anything you read in the papers is already priced into the markets.

Absolutely no-one knows what the markets will do short or long term. If many people think there is bad news coming, the market drops before the bad news happens (e.g. the US debt ceiling was weighing on the markets last week BEFORE the possible bad news of no agreement and the market moved down, then an agreement was reached and the markets bounced up).

Investing in the stockmarket is not for everyone. If it worries you, then it is better to avoid investing that way and shop around for the best rates in the bank. A jittery or falling market shouldn't give you sleepless nights. If it does, don't get involved. Markets always fall and always rise. There have been a crash every decade or so for the last 40 years (1987, 1999, 2008 & 2020). There will be more, but we will never know when. The nature of a crash is that it wasn't predicted by most people (and there is always a minority of people predicting a crash at any one time).

I invest for my retirement, and nowadays I invest monthly. This is known as price cost averaging. So, if the market falls, I get more shares for the same money that I did last month. I used to invest lump sums but that style didn't suit my temperament.

https://www.moneyboxapp.com/learn/investing/article/what-is-pound-cost-averaging

I am comfortable with this approach - but as I say, investing in the stockmarket is not for everyone. Where you put your money (bank, property, shares, premium bonds) is really an individual choice about what suits your temperament and risk apetite.

If you think you're right and everyone else is wrong, why bother asking for advice? Crack on. You're welcome.

At what point did my post ask for advice? 😂