In this new series of posts, I'm going to take you through a rare opportunity for ISA and SIPP investors. This same opportunity is right under everybody’s noses but because they have not been informed about it, they have no idea it exists. There is an English Proverb that sums this up beautifully, ‘Some men go through a forest and see no firewood'.
Quite simply, the next 5-10 years could see the market outperform. For more on this investment opportunity, please just download our latest report, A Golden Opportunity.
To explain how it’s possible to capitalise on this opportunity, we'll start with some basic lessons about the stock market. Most Britons have heard of the FTSE 100, but fewer have heard of the S&P 500. The FTSE 100 is an index in the UK that has the top 100 companies trading in it. The S&P 500 is its equivalent in the United States and, you guessed it, this one has 500 companies that belong to it.
What long-term trend has this index formed? Is it up, down or sideways? Yes, that’s right, it’s in an uptrend.
Can you see the grey vertical shaded areas on the chart? These represent the down periods in the market. They are known as bear markets. On the other hand, the white areas on the chart are the times when the market rose. These periods are called bull markets.
What do you see happening after each bear or down market? That’s right. The market goes up. Would you agree that, prior to the year 2000, after every bear market the index has always eventually moved into new high ground?
Did you know that historically, bull markets or up markets have lasted between two and four years?
Bear or down markets tend not to last as long. Bear markets last between nine and eighteen months and therefore are much shorter than bull markets. Because bull markets last longer, the stock market forms an uptrend. It’s like a staircase effect where you have three stairs up and then one stair down.
Just before we move on, take a look at the period on the chart from 1970 to 1980.
Notice that the market made very little price progress over that decade. Do you see that? Do you also see what happened before it went sideways? Can you see the strong uptrend?
And what happened after 1980? Do you see that after the ten year sideways period the market had a nice run?
You may also notice that prior to 1970 the market was in a strong uptrend, then it went sideways for ten years and then it resumed its uptrend. Did you see that? Good, because we will be talking more about that in our next post, when we'll be looking at how investment funds, along with ISAs and SIPPs, are at the heart of the opportunity facing investors today.
For more on this investment opportunity, please just download our latest report, A Golden Opportunity.
As always, if you have any questions or thoughts on the points I've covered in this post, please leave a comment below or connect with us @ISACO_ on Twitter.
ISACO is a specialist in ISA and SIPP Investment and the pioneer of ‘Shadow Investment’, a simple way to grow your ISA and SIPP. Together with our clients, we have £57 million actively invested in ISAs and pensions.*
Our personal investment service allows you to look over our shoulder and buy into exactly the same funds as we are buying. These are investment funds that we personally own and so you can be assured that they are good quality. We are proud to say that by ‘shadowing’ us, our clients have made an annual return of 17% per year over the last three years** versus the FTSE 100’s 7.9%.
We currently have close to 400 carefully selected clients. Most of them have over £100,000 actively invested and the majority are DIY investors such as business owners, self-employed professionals and corporate executives. We also have clients from the financial services sector such as IFAs, wealth managers and fund managers. ISACO Ltd is authorised and regulated by the Financial Services Authority (FSA). Our firm reference number is 525147.
*15th November 2012: Internal estimation of total ISA and pension assets owned by ISACO Investment Team and ISACO premium clients.
**Dec 31st 2008 - Dec 31st 2011. ISACO investment performance verified by Independent Executives Ltd.