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

In message <fcdg58$c1v$1$8300dec7@xxxxxxxxxxxxxxxx>, Norman Wells <norman@xxxxxxxxxxxxxxxxx> writes

"John Boyle" <john@xxxxxxxxxxxxxxxxxxxxxx> wrote in message news:4isqONBPJY6GFwWs@xxxxxxxxxxxxxxxxxxxxxxxxx
In message <fcasq6$5hv$1$8300dec7@xxxxxxxxxxxxxxxx>, Norman Wells <norman@xxxxxxxxxxxxxxxxx> writes

In a market, the current price is that at which the number of sellers equals the number of buyers,

Pardon? I hope you have not typed what you meant. The price is that at which buyers agree to buy from sellers. The number of buyers or sellers is irrelevant.

so there's an equal split between those who think any investment is a good one and those who think it's a poor one.

Now I can see you HAVE typed what you meant, which means you do not understand how the market works.

You are right that the price is that which buyers and sellers agree. But I am right too, because, on average, there will be equality in the number of buyers and sellers. If you disagree with that, why, and which are in the greater profusion?

My point was that the number of buyers and sellers does not determine the price. On the market as a whole If the number of buyers and sellers in the market is generally equal it is a side issue and does not have the effect upon which you base your faulty theory.

If you are referring to just one stock, then the number of buyers and sellers is far far less likely to be equal. e.g. when an institution bails out of a stock it is likely to drip it out over a period of time. i.e. 1 big seller but 100's of smaller buyers

The next movement in price is therefore equally likely to be up or down.

Now you are on an imaginary route. Is Thursday your 'mystery tour' day? Or is this your interpretation of 'random walk' theory?

If the number of sellers equals the number of buyers, opinion is equally split as to whether the product is a good buy or a good sell.

I note you use of the word IF and that you are referring to a single stock. The likelihood of that is small.
Any shift in that opinion will change the price upwards or downwards, but it's impossible to say which way it will go.

Again, you are discounting the reason why the seller is selling.

Every investment decision in such a case can therefore be made by the toss of a coin or by use of a pin.

I agree. If such a case existed. Which it doesnt. so your theory is fales.
Since that is the case,

Which it isnt.

Ah, but it is. So you do agree.

Lets go back to your previous statement that in a rising market it is better to invest a lump sum. According to your theory there can be no 'rising market' because you would never know if it was rising or falling.

No, not at all. I do not need to know that it's a rising market for it nevertheless to be one.

Then how would you know if it was better to invest a lump sum?
The facts after the event speak for themselves.

BUt they do have a choice, i.e. to invest monthly in the stock market or not to. We are really discussing equities v cash arent we?

No, we're not.

Yes we are.
We were discussing your statement that drip feeding your money into the stock market produced better returns than lump sum investments in the stock market.

I didnt say that, I said "Pound Cost averaging shows over the same period as we are talking about shows substantially better gains than any cash investment."
I just pointed out the obvious, that you must get better returns if the market is rising by investing a lump sum at the start.

The point of my original post was, of course, that measuring the index of the 100 biggest mammoths does not tell an investor if investing in the stock market is a good ting or not. and nothing else you have said contradicts my view.

Au contraire. It encapsulates more or less everything you need to know.

??? 100 mammoths?

After all, it represents 80% of the entire capitalisation of listed companies.

So what? You consistently ignore that measuring the market as a whole is not the answer.

If 80% of the zoo is mammoths, how they perform is pretty indicative I would have thought of the state of the zoo.


Exactly. That doesnt mean the other 20% are worth investing in though does it?
--
John Boyle
.

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