use my full isa allowance

cash isa

stock/shares isa (pound/cost monthly –ftse-all-share tracker 0.27% t.e.r

adding both together hopefully giving a yearly compound return of at least 5%

i wont be the richest but im cautious

Thanks for your comment. Of course some investors will get out of markets before and after crashes. If I was another sort of blogger, I’d brag about how I went 30% or so into cash towards the end of 2007 and sold out of most of my dodgy bank shares, and how I bought heavily in March 2009 (which I detailed at the time, here).

But I’d prefer to highlight how hard these things are – I thought the London property market too expensive back in 2003, and it’s cost me dearly!

Any single investor can be right — or lucky — a few times, or even for a lifetime. That doesn’t prove anything.

You missed out the important part of my quote, which was ‘by definition’” — I wrote: “most investors will never manage to get out before a stock market plunge, by definition”.

If the mass of investors thought the market was too expensive six months earlier, then all that happens is the crash starts six months earlier. Equally, if *most* investors think the market is cheap and buy in, then a minority of smart/lucky market participants will already have bid the market up beforehand.

*By definition* the big pushes need the masses. So while you, I, and hopefully a few Monevator readers might aspire to beat the rush, the majority simply and mathematically cannot!

It’s not necessarily true with regard to the Dow Jones or FTSE as a whole.

But by looking at valuations I was able to get out of the UK property market before it dried up in 2007, and out of tech before the 2001-2 bust. The fact is that it’s not being ‘in’ and ‘out’ of the market per se that creates portfolio outperformance, but refusing to get carried away by overvalued ‘hot’ sectors. Being a value investor can save you a lot of heartache, so I wouldn’t advise a purely passive investment methodology.

On the other hand, I completely missed the ‘dash for trash’…