dirtydog said:
Just as many people have lost money on the stock market as have made money.
Firstly, unless you are referring solely to people who invested over a period of decades as opposed to less than one, then you and I are not discussing the same thing.
(It's an all too familiar story, the herds with a bit of spare cash getting on board a popularised steam roller, such as the 'dot.com' debacle, neither having the good sense to initiate risk management rules to govern their investment nor keeping track of it, then panic selling for silly hits when they happen to realise a few weeks or months too late that like most of their cohorts, they've stayed on the train too long and it ran out of rail a while ago. But that is a different kettle...)
Secondly, and in any case, I'd like to know how you formed that opinion. Is it what your mind tells you is about right, because of stories you've heard from various people over the years, or have you actually done some research?
dirtydog said:
Am I right in inferring that you have made a bit of money on the markets yourself in recent years and thus think you know it all?
No. I have made money, but it has not been through long-term trading. It has been through day trading, which has nothing to do with the type of investment to which I refer.
The reason I think I know enough, is that I have spent hundreds of hours over the last decade reading up on stock trading (for the private individual).
The type of pension fund I am suggesting is nothing so wild as what you think. I'm not suggesting, for example, just to buy shares in a company you like and have confidence in, then sit back and wait for your nest egg to grow. No no no! Nothing so stupid. Nor do I merely suggest the above but for a diversified portfolio of such companies. Again, very stupid.
There are common sense rules which have to be applied. Firstly, you can't sit back! You have to watch, and watch, and watch. Weekly at the least, but better daily. Sounds like an awful chore I expect, but it's nothing so demanding. Have a diversified portfolio, have risk and performance rules in place i.e. a system for determining when you should drop & replace a stock, and then just glance at the day's prices in the evening, so you know where you are, and read any RNSs for the companies so you're aware of anything noteworthy happening in the background. Have stop losses in place, so if the sp goes too South for comfort, while you're in your office or on holiday or fishing and completely oblivious, you're protected from any serious downwards movement. Incorporate into your system a trend of regularly modifying your stop losses upwards with the progress of your stocks, so that your profit is protected as well as your initial capital.
Surprise surprise, this is nothing revelationary. It has been done by the independently wealthy for over a century...albeit they have enough money to pay people to do it for them of course. Furthermore, you'll find that all those common sense rules I mentioned can be applied in so simple and formalised a tax-efficient wrapper as a SIPP...you don't have to do this directly through an elaborate brokering service. However, I'd be wary of SIPPs for the same reason I'd be wary of pension funds...especially as SIPPs have rules about when you may and may not withdraw your own money.
Of course none of this is advice to anybody. It's just how I, as Joe Bloggs, would self-govern a pension fund. It's all opinion, and if it makes sense to anybody with a bit of gusto and imagination, then it would be in their best interest to go away and spend at least twenty hours, preferably fifty, doing solid research into the background of long-term stock market investments! Don't just act! Think first, and do your own research!
