Re: maxi-ISAs with online share dealing facilities - which?


"John Boyle" <john@xxxxxxxxxxxxxxxxxxxxxx> wrote in message news:87o7IoBQEx5GFw$L@xxxxxxxxxxxxxxxxxxxxxxxxx
In message <fc3j9e$e70$1$8302bc10@xxxxxxxxxxxxxxxx>, Norman Wells <norman@xxxxxxxxxxxxxxxxx> writes
Maybe I've just been lucky :-)

Or skillful. No, sorry, I don't believe anyone can pick shares consistently,

I know you dont, you've closed your mind to it.

The only reason I don't believe it is that there's no statistical proof that stands up to analysis. Examples are given of one or two individuals who have made substantial profits over 10 years or so as supposed proof, but there is no evidence that they have not just been lucky. If you take a million people and ask them to toss a coin 10 times, there will be some who toss it ten times heads. Are they skilful? Or just lucky?

so you're right, you've been lucky!

Hmm,, perhaps along with quite a few others including a number of well known fund managers.

The FTSE 100 index stood at 6950 in December 1999. Since then it has never recovered fully, and today hovers morosely around 6200. I make that about 10% down over nearly 8 years.


Yes, your arithmetic is right.

Now, perhaps you can tell us how the FTS100 statistic is relevant to the point?

For the very simple reason that, if you own or invest in a range of UK shares, they will on average tend to perform in line with the FTSE 100 index. The more different shares you or your fund manager invests in, the closer your portfolio's performance will be to that index. And most fund managers, being scared of returning a poor result, will invest in a range of shares, and they will all return very similar performances, close to the index, as a result. The herd instinct protects them all.

The only way of significantly outperforming the index is to invest in just one or two shares, and hope they outperform. However, that carries the obvious risk that they will underperform, and you lose out big time. That's too risky for nearly all fund managers and individual investors who see it as gambling, pure and simple.

So, an average investor in most UK funds since the end of 1999 will have seen the capital value of his portfolio fall by about 10%.

It's not good, is it?

.

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