Stock Market Investing

  • by Graham Bond
  • 31 Mar, 2017

FTSE 100 and other Indexes

Stock Market Investing

Think back to Friday 13th   January, Christmas was a distant memory, Spring seemed way off and the paranoid were expecting something bad to happen. It was in fact a historical day as the FTSE 100 Index topped 7,350. Trump was rewriting the history books in the USA but surprisingly the Dow Jones topped 20,000 just a few weeks later.

A few months on and the daffodils bring us cheer and the FTSE 100 is continuing to do great things. So what does this mean to you the investor and that hard earned pot of money? Are great times ahead, can we trust these record highs or should we exercise caution. The Indexes are followed all over the World, day and night we study them like stars, hoping for an answer. In this article, we will look at the Index and help bring greater clarity to this bewildering subject.

The Share Index can be defined as “a statistical measure of change in a securities market”.

The FTSE 100 or   footsie   is a share index of the 100 companies listed on the London Stock Exchange with highest market capitalization. A staggering 81% of these companies have international status.

The Top 5 at time of writing are as follows :

  1. Royal Dutch Shell –   Shell
  2. HSBC Holdings
  3. British American Tobacco
  4. BP
  5. GlaxoSmithKline

There is also a FTSE 250 Index, which itself is making historical highs. It encompasses far more familiar household names and so is often more popular with the average investor as the progress can be more readily accessible.

Of course, these 350 top performers are just part of a very complex financial puzzle, where we try and gauge what is happening in the financial world and whether our own portfolio is on a par with the rest or lagging far behind and in need of a review.

But the Index is just a snapshot of the one second in time…..it is not a crystal ball and cannot determine if it’s a good or bad time to buy, hold or sell. The answer is and always will be to understand your own investment goals and confidence with risk as part of an evidence-based investment strategy.

The Stock Market measure of the UK and the worldwide alike can bring both excitement and devastation to the news but it will never replace the long-term planning of a Financial Adviser and a yearly review of your own investments, values and goals for the future. We spring clean our homes, the car gets a wash and wax, even the family dog gets a regular grooming. Our finances aren’t so transparent but they can be turned into wonderful things if we also give them time and attention.

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by Graham Bond 27 Apr, 2017

Choosing the correct Ethical or Socially Responsible investments will depend on your own beliefs and values. A starting point is to use a screening process.This will help you to analyse which types of industries and companies they would like to either include or exclude.

There are primarily two types of screening, positive and negative.

Negative Screening

The process of Negative Screening excludes investments that you might consider undesirable. For example you might want to exclude some of the following:

  • The arms or defense industry
  • Nuclear power
  • The tobacco and/or alcohol production
  • Gambling
  • Genetic Engineering
  • Third World debt/exploitation
  • Animal Testing

Positive screening

Positive screening helps to identify the businesses that demonstrate the potential to offer good quality, long-term ethical investment opportunities. The positive screening process will help you to avoid businesses that could encounter problems as their day to day operations might not be sustainable in the long term. Positive Screening might include companies involved with

  • Projecting a positive business focus
  • Energy conservation
  • Promotion of Equal Opportunities
  • Renewable Energy
  • Pollution control

Shareholder Engagement

By employing active shareholder engagement it is possible for shareholders and fund managers to encourage a more corporate and social business approach.

It makes sense to consider investing into companies that have the foresight and willingness to adapt.

by Graham Bond 26 Apr, 2017

Anyone seeking evidence that investment decisions can be hard often needs to look no further than the front page news. China, oil, VW and Glencore are among the assets that have made the headlines in the past few months after suffering sudden, unexpected and dramatic changes in price.

Investors with exposure to those volatile assets might be licking their wounds and reconsidering their positions. This is because many investors have an investment strategy that relies on their (or someone else’s) forecasts about the future. In the simplest terms, their starting point is a blank sheet of paper, where they build a portfolio of assets they think will do better than the alternatives. Sometimes those decisions are right; sometimes they are wrong.

We have a different starting point. Our investment philosophy is based on things we know rather than things we don’t know. For example, we know that financial markets do a good job of setting prices, so we don’t try to second-guess them. Instead, we begin with the belief that investors will, on average and over time, receive a fair return for investing their money.

Our aim is to give our clients access to that long-term return through broadly diversified, low-cost portfolios of assets that aim to beat the market average. The portfolios do this by using information in market prices that tells us about a security’s characteristics and its expected future returns.

The decisions we make about what assets to hold are based on decades of academic research rather than short-term hunches. This means we can focus on meeting your long-term goals rather than becoming absorbed by short-term market movements.

Generally speaking, investment decisions are hard, but if, like us, you start with information you know is backed by decades of evidence and build an investment philosophy and strategy around it, we think you can improve your chances of being a successful investor.

by Graham Bond 26 Apr, 2017
This weeks video is by Dr Robert Waldinger of Harvard University. He is the current director of the longest running study about human happiness. Hope you enjoy it
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