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On 30/10/17 23:42, Rich Freeman wrote: |
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> If the big banks thought that investing for the long term would make |
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> them more money they would do it. They have no loyalty to the |
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> companies they invest in. If they can invest in a company one month, |
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> and make more money by investing in a competitor that will put them |
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> out of business the next month, they will. I'm not sure why a "long |
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> term investor" wouldn't do the same if they could make money doing it. |
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> They have money for the long-term, but that doesn't mean that they |
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> have to keep it in once place. |
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The banks have nothing to do with it. |
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The fund managers are rewarded for beating the index. They are NOT |
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punished for missing the index. That means a fund manager who is bang on |
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the average will get a bonus every second year. Paid for with investors' |
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money. |
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The quickest way for day traders to make a profit is to predict what the |
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big boys are going to do (easy if you understand that most of them are |
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index trackers who have little choice where to invest) and beat them to |
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it. Buy shares that you have good reason are going to join the index |
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next week, and dump them as soon as they do. Sell shares short that you |
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think are going to be dumped from the index, and buy them back |
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afterwards. Easy money! |
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The thing about investing is to remember that the big boys are simply |
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gambling with your money. If you can, do a Buffet, buy stocks you |
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understand, and hang on to them. They'll go up. |
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Imho the quickest way to stabilise the market and kill a lot of these |
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shenanigans would be to demand that pension funds invest in companies |
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that pay good dividends, well covered. In other words, if a company |
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earns 50p/share and pays a 10p dividend, then the dividend "is covered 5 |
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times". That means the pensions can't invest in speculative, highly |
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geared companies. Which means those companies ARE going to invest in |
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themselves, and will be good, solid companies unlikely to go |
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spectacularly bust. |
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Cheers, |
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