Funds Insider - Opening the door to funds

Welcome to the Citywire Funds Insider Forums, where members share investment ideas and discuss everything to do with their money.

You'll need to log in or set up an account to start new discussions or reply to existing ones. See you inside!

Notification

Icon
Error
Is now the time to take profits?
+ Reply to discussion
Options
Tom 123
Posted: 22 January 2025 10:26:32(UTC)
#25

Joined: 13/09/2016(UTC)
Posts: 1,606

Thanks: 892 times
Was thanked: 3468 time(s) in 1105 post(s)
Peanuts;331833 wrote:

UK is a difficult one - feels like it’s going to crater but keeps popping back up.



Everything is already in the valuation of the UK: brexit, Ukraine, inflation, the pound. It went through a 20 year bear market.

I can see the FTSE 100 compounding nicely at around 6-8% (on the basis of a P/E of around 15, inversing the yield to say 7%).

Add in a rerating and 8-10% compound annually could be achieved.

Selling nothing UK based. And a weak pound only boosts the FTSE 100.
Back to top Quote
 |  Edit by user
5 users thanked Tom 123 for this post.
Sheerman on 22/01/2025(UTC), ravedeath on 22/01/2025(UTC), Mr Bean on 22/01/2025(UTC), dlp6666 on 22/01/2025(UTC), The Spanish Inquisition on 25/01/2025(UTC)
Rookie Investor
Posted: 22 January 2025 10:35:13(UTC)
#26

Joined: 09/12/2020(UTC)
Posts: 2,081
Tom 123;331868 wrote:
Peanuts;331833 wrote:

UK is a difficult one - feels like it’s going to crater but keeps popping back up.



Everything is already in the valuation of the UK: brexit, Ukraine, inflation, the pound. It went through a 20 year bear market.

I can see the FTSE 100 compounding nicely at around 6-8% (on the basis of a P/E of around 15, inversing the yield to say 7%).

Add in a rerating and 8-10% compound annually could be achieved.

Selling nothing UK based. And a weak pound only boosts the FTSE 100.


How???

FTSE100 has companies with poor growth prospects, a low ROIC and FCF yield is too low to justify the poor growth prospects, especially considering where gilt yields are.

It is a poor index to compound your wealth. I can see doing not much better than a bond,, and likely worse given many of the businesses do not have a moat and are cyclical.

Don't believe me? Have a listen to a proper investor who understands businesses and investing:

https://www.youtube.com/watch?v=PYXtFKFsI0U
from 43mins about ftse100.
Back to top Quote
Tom 123
Posted: 22 January 2025 10:52:26(UTC)
#27

Joined: 13/09/2016(UTC)
Posts: 1,606

Thanks: 892 times
Was thanked: 3468 time(s) in 1105 post(s)
Rookie Investor;331869 wrote:
Tom 123;331868 wrote:
Peanuts;331833 wrote:

UK is a difficult one - feels like it’s going to crater but keeps popping back up.



Everything is already in the valuation of the UK: brexit, Ukraine, inflation, the pound. It went through a 20 year bear market.

I can see the FTSE 100 compounding nicely at around 6-8% (on the basis of a P/E of around 15, inversing the yield to say 7%).

Add in a rerating and 8-10% compound annually could be achieved.

Selling nothing UK based. And a weak pound only boosts the FTSE 100.


How???

FTSE100 has companies with poor growth prospects, a low ROIC and FCF yield is too low to justify the poor growth prospects, especially considering where gilt yields are.

It is a poor index to compound your wealth. I can see doing not much better than a bond,, and likely worse given many of the businesses do not have a moat and are cyclical.

Don't believe me? Have a listen to a proper investor who understands businesses and investing:

https://www.youtube.com/watch?v=PYXtFKFsI0U
from 43mins about ftse100.


Its being doing 7-8% for the last few years. It doesn't need earning growth at current valuation to achieve this. Any earning growth that does come through will only be a boost.

There are three factors driving returns which every investor should understand:

1) Change in P/E.
2) Dividend yield.
3) Earnings growth.

https://awealthofcommons...hat-drive-stock-prices/
https://my.morningstar.c...h-to-stock-returns.aspx

For the first two the FTSE 100 is well set up. The latter, sure not the best earnings growth but that is not the only driver of equity returns.
Back to top Quote
 |  Edit by user
Rookie Investor
Posted: 22 January 2025 11:08:09(UTC)
#28

Joined: 09/12/2020(UTC)
Posts: 2,081
Tom 123;331873 wrote:
Rookie Investor;331869 wrote:
Tom 123;331868 wrote:
Peanuts;331833 wrote:

UK is a difficult one - feels like it’s going to crater but keeps popping back up.



Everything is already in the valuation of the UK: brexit, Ukraine, inflation, the pound. It went through a 20 year bear market.

I can see the FTSE 100 compounding nicely at around 6-8% (on the basis of a P/E of around 15, inversing the yield to say 7%).

Add in a rerating and 8-10% compound annually could be achieved.

Selling nothing UK based. And a weak pound only boosts the FTSE 100.


How???

FTSE100 has companies with poor growth prospects, a low ROIC and FCF yield is too low to justify the poor growth prospects, especially considering where gilt yields are.

It is a poor index to compound your wealth. I can see doing not much better than a bond,, and likely worse given many of the businesses do not have a moat and are cyclical.

Don't believe me? Have a listen to a proper investor who understands businesses and investing:

https://www.youtube.com/watch?v=PYXtFKFsI0U
from 43mins about ftse100.


Its being doing 7-8% for the last few years. It doesn't need earning growth at current valuation to achieve this. Any earning growth that does come through will only be a boost.

There are three factors driving returns which every investor should understand:

1) Change in P/E.
2) Dividend yield.
3) Earnings growth.

https://awealthofcommons...hat-drive-stock-prices/
https://my.morningstar.c...h-to-stock-returns.aspx

For the first two the FTSE 100 is well set up. The latter, sure not the best earnings growth but that is not the only driver of equity returns.


It has done just under 7% the last 8 years. Not bad, but not great either compared to the global market.

I would not assume there will be a rerating of the index higher given what ti contains. Coupled with what I said in my previous post, the index appears to be setup for low returns going forward with quite a bit of volatility, especially during economic downturns.

I prefer the US market by miles.
Back to top Quote
4 users thanked Rookie Investor for this post.
Keith Cobby on 22/01/2025(UTC), Guest on 22/01/2025(UTC), Johan De Silva on 22/01/2025(UTC), Jesse M on 22/01/2025(UTC)
Tom 123
Posted: 22 January 2025 11:17:12(UTC)
#31

Joined: 13/09/2016(UTC)
Posts: 1,606

Thanks: 892 times
Was thanked: 3468 time(s) in 1105 post(s)
In the last US downturn (2022) the FTSE 100 held up. Its valuation risk is low. Its earning are international and mostly in dollars.

In my view it has one of the best risk adjusted returns.

volatility, a lot lower than other indexes from what I can see.

It will spin off 4-5% divi a year. Allowing for small earnings growth you probably get to 6-7%. Any rerating of P/E and that could easily go to double digits.

The US is on an extreme multiple of valuation (no ability to grow higher on a P/E basis), little to no dividend. So your left with the third equity return only, i.e. earnings growth. This is questionable. I don't see earnings growth as good as the 2018 -2021 period. The bounce back in share values since 2022 is mostly a rerating of P/E. At 30x, can it go to 40x, 50x? Possibly but it will be a bubble that will shortly snap back as history has always shown.

So risk adjusted returns, the FTSE 100 wins hands down.
Back to top Quote
1 user thanked Tom 123 for this post.
Johan De Silva on 22/01/2025(UTC)
Keith Cobby
Posted: 22 January 2025 11:28:17(UTC)
#32

Joined: 07/03/2012(UTC)
Posts: 5,061

Thanks: 5958 times
Was thanked: 12438 time(s) in 3855 post(s)
What to do? There's a wealthy capitalist in the White House surrounded by immensely wealthy tech capitalists. Next year is their 250th anniversary from leaving us. Against that we have an idiot socialist running things, markets which are hemorrhaging companies, infrastructure which is on the floor, and rising gilt yields from inexorably increasing borrowing. Difficult decision!
Back to top Quote
10 users thanked Keith Cobby for this post.
Guest on 22/01/2025(UTC), guantou on 22/01/2025(UTC), Guest on 22/01/2025(UTC), Mr Bean on 22/01/2025(UTC), Chalky W on 22/01/2025(UTC), Jesse M on 22/01/2025(UTC), dlp6666 on 22/01/2025(UTC), Guest on 22/01/2025(UTC), Micawber on 22/01/2025(UTC), Special Kloud on 22/01/2025(UTC)
ravedeath
Posted: 22 January 2025 11:33:57(UTC)
#33

Joined: 10/01/2024(UTC)
Posts: 229

Thanks: 261 times
Was thanked: 633 time(s) in 166 post(s)
Keith Cobby;331878 wrote:
What to do? There's a wealthy capitalist in the White House surrounded by immensely wealthy tech capitalists. Next year is their 250th anniversary from leaving us. Against that we have an idiot socialist running things, markets which are hemorrhaging companies, infrastructure which is on the floor, and rising gilt yields from inexorably increasing borrowing. Difficult decision!



You could always wait and sell it all in a panic in the next crash, Keith?
Back to top Quote
3 users thanked ravedeath for this post.
SF100 on 22/01/2025(UTC), Guest on 22/01/2025(UTC), Alistair Binks on 23/01/2025(UTC)
Robert D
Posted: 22 January 2025 11:42:53(UTC)
#38

Joined: 06/11/2016(UTC)
Posts: 1,468

Thanks: 391 times
Was thanked: 1839 time(s) in 838 post(s)
What to do?

In the White House there is a oligarch president determined to deliver tariffs to disrupt world trade. He claims that these will be paid by countries outside the US. That is his fantasy. The only people who can pay them will be the US consumer. Result = inflation.

And now he is also planning to create domestic chaos in the US by freeing those who stormed the Capitol on 6 January 2021, causing the deaths of people, including law enforcement officers. Undermining the rule of law is, apparently, part of the chaos that they plan.

And criminality, including drugs barons, are also, apparently, to be let loose.

By contrast, the UK is a sea of stability with a rock-solid "socialist" (chortle) prime minister with a huge majority and a mandate for change.

And a Footsie index that is hitting all time highs and outperforming the S&P that has barely budged for years without the Mag7

What to do doesn't need explaining
Back to top Quote
1 user thanked Robert D for this post.
Shaun Fletcher on 24/01/2025(UTC)
Big boy
Posted: 22 January 2025 12:13:33(UTC)
#39

Joined: 20/01/2015(UTC)
Posts: 6,676

Thanks: 5661 times
Was thanked: 11110 time(s) in 4250 post(s)
Ramondo;331454 wrote:
I've just carried out my weekly totals and found that my profit margins have doubled from about 9% back in October of last year to over 18%, Is now the time to take profits of what ever amount or on a specific holding?

I have no doubt that this rise is due to Donald, will it go on after his inauguration? or fall with his actions whilst President?
Decisions, decisions!


Simple answer sell all overvalued stocks and buy undervalued stocks.....don't forget we have access to Global Markets so somewhere its cheap or dear..so why speculate ......
Back to top Quote
 |  Edit by user
1 user thanked Big boy for this post.
Johan De Silva on 22/01/2025(UTC)
Tom 123
Posted: 22 January 2025 13:18:19(UTC)
#34

Joined: 13/09/2016(UTC)
Posts: 1,606

Thanks: 892 times
Was thanked: 3468 time(s) in 1105 post(s)
Keith Cobby;331878 wrote:
What to do? There's a wealthy capitalist in the White House surrounded by immensely wealthy tech capitalists. Next year is their 250th anniversary from leaving us. Against that we have an idiot socialist running things, markets which are hemorrhaging companies, infrastructure which is on the floor, and rising gilt yields from inexorably increasing borrowing. Difficult decision!


There is very little empirical link between GDP, government policy, etc and equity returns. Most studies show a slight inverse relationship, i.e. strong economy have lofty stockmarket valuations aa the herd are all in and future returns are poor.

Equity returns are driven by change in P/E valuation, dividends and earnings growth. Reading this forum these factors get forgotten and replaced by macro political reasoning. A poor way to invest.
Back to top Quote
3 users thanked Tom 123 for this post.
Mr Bean on 22/01/2025(UTC), Robert D on 22/01/2025(UTC), Micawber on 22/01/2025(UTC)
6 PagesPrevious page12345Next page»
+ Reply to discussion

Markets

Other markets