best long-term investments

kidmugsy

http://blogs.ft.com/andrew-smithers/2014/08/long-term-investing/

Summary:

100% equities is the most remunerative policy, except when the markets are grossly over-valued.

Currently the markets are grossly over-valued.

Andrew_Cottrell

kidmugsy wrote: »

Currently the markets are grossly over-valued.

The author, Andrew Smithers, is referring to the US market.

John Kingham thinks the UK FTSE 100 is slightly cheap.

The Telegraph has some recent market valuation data.

jamesd

The markets are not universally grossly overvalued at the moment. That section was referring specifically to the US markets, about which he wrote "There have only been five times before in which the market has been nearly as overvalued as it is today and this is over a period of 213 years". He also observes of bond values that they are "in cloud cuckoo land".

That is part of why I'm not keen on high US weightings at the moment, I know what it does to likely future returns.

The blog also suggests selling when the markets are overvalued, as the US ones are at the moment.

Some over-valuation for parts of the UK market, though not all of it and not close to the degree in the US.

Someone who has a global tracker might want to consider adding a short US ETF to reduce their US exposure without selling. Or they could just sell some. Or they could buy options or covered warrants.

atush

kidmugsy wrote: »

http://blogs.ft.com/andrew-smithers/2014/08/long-term-investing/

Summary:

100% equities is the most remunerative policy, except when the markets are grossly over-valued.

Currently the markets are grossly over-valued.

Which markets? By what criteria?

jamesd

US only. Search for the article with Google and you will be able to read it all. It's more interesting then the few initial snippets suggest. Worth a read.

kidmugsy

atush wrote: »

Which markets? By what criteria?

The criteria are CAPE and q, which agree with each other very well over time spans of a few years, and worked very well indeed when he predicted imminent woe in the late 90s.

The market he analyses is Wall St because only there are the records complete and lengthy enough for his style of analysis. You are of course entitled to hope that you can pick other equity markets that will flourish when Wall St next collapses.

http://www.smithers.co.uk/page.php?id=34

lvader

kidmugsy wrote: »

http://blogs.ft.com/andrew-smithers/2014/08/long-term-investing/

Summary:

100% equities is the most remunerative policy, except when the markets are grossly over-valued.

Currently the markets are grossly over-valued.

Where do people put money as an alternative when bonds and gilts beyond grossly over valued?

kidmugsy

lvader wrote: »

Where do people put money as an alternative when bonds and gilts beyond grossly over valued?

Probably they keep it in cash. Or maybe a little bit in precious metals? Or some equity market that they hope will behave independently of Wall St? Put otherwise: "I wish I knew".

lvader

kidmugsy wrote: »

Probably they keep it in cash. Or maybe a little bit in precious metals? Or some equity market that they hope will behave independently of Wall St? Put otherwise: "I wish I knew".

Some dip in and out of cash but it isn't a position you would want to take for too long.

I'm simply pointing out that the current equity market levels need to be viewed in context of very low or in some cases even negative government bond yields.

Equity markets still look like the safest bet at the moment.

atush

kidmugsy wrote: »

The criteria are CAPE and q, which agree with each other very well over time spans of a few years, and worked very well indeed when he predicted imminent woe in the late 90s.

The market he analyses is Wall St because only there are the records complete and lengthy enough for his style of analysis. You are of course entitled to hope that you can pick other equity markets that will flourish when Wall St next collapses.

http://www.smithers.co.uk/page.php?id=34

No hope required. All markets are different to some extent so you can't use a US only model.

I agree some say US markets are now pricy. No one is saying all markets incl China and other asian markets are still pricy

Thrugelmir

kidmugsy wrote: »

Currently the markets are grossly over-valued.

Stock selection is critical I feel. The buy anything and it will rise culture of the past few years is going to catch many out.