Are markets expensive and about to crash

Glen_Clark

Linton wrote: »

There are plenty of solid companies paying a reasonable dividend.

But how that can change. A few years ago I phoned my broker and split £24k equally between Tesco, Sainsbury, and Morrisons. I remember she said 'your playing safe aren't you' Last time I looked I was down 30% (although dividends will have reduced the loss a bit compared to cash). If I had put it all on Dixons, who all the 'experts' were saying was doomed, I would have been up about 400%

Glen_Clark

gadgetmind wrote: »

Templeton was on a discount of about 10%

I've got some Templeton which uis up about 6%. But I got Caledonian around the same time when their discount was just over 20%, and thats up 22%. I realise that going for the biggest discount is a crude and blunt instrument, but it has served me well so far.

gadgetmind

Glen_Clark wrote: »

I remember she said 'your playing safe aren't you'

It's not really playing it safe if you're buying into just one sector in one asset class in one territory(1). If you restrict yourself to max 10% in any one sector, and spread yourself across territories and asset classes, then you can come out of bank crashing, and supermarkets losing their shine, without too many regrets.

(1) - yes, I'm sure you weren't, but she wasn't to know that based on your order.

Borrowedtune

gadgetmind wrote: »

Sorry, but we have a large body of historical evidence that active fund managers add little value and only a tiny minority manage to beat their benchmark over long periods of time.

Predicting which managers this will be in advance is close to impossible.

Using a middleman to choose these managers (adding an extra layer of costs) will given even worse results.

I can recommend a few books and web sites you can read, if you like, but something tells me that you're unlikely to change your mind.

I can recommend a few active fund managers who've consistently beaten their index and helped grow my wealth substantially, but something tells me you're unlikely to change your mind.

Glen_Clark

Borrowedtune wrote: »

I can recommend a few active fund managers who've consistently beaten their index and helped grow my wealth substantially, but something tells me you're unlikely to change your mind.

You can recommend them on past performance. How do you know what their future performance will be?
Otherwise you might as well recommend last weeks lottery winner to win next week.

Glen_Clark

gadgetmind wrote: »

It's not really playing it safe if you're buying into just one sector in one asset class in one territory(1). If you restrict yourself to max 10% in any one sector, and spread yourself across territories and asset classes, then you can come out of bank crashing, and supermarkets losing their shine, without too many regrets.

(1) - yes, I'm sure you weren't, but she wasn't to know that based on your order.

Yes, I think the highest sector allocation I have is about 8% in Shell and BP (6% direct and the rest in funds) but I am looking to reduce that a bit now ETFs are so cheap. Warren Buffet is more courageous with his sector allocations, but then he has the means to research them fully.

gadgetmind

Borrowedtune wrote: »

I can recommend a few active fund managers who've consistently beaten their index and helped grow my wealth substantially, but something tells me you're unlikely to change your mind.

I form my views based on the available evidence, particularly when that evidence is in the form of multiple peer-reviewed studies (rather than anecdotes from unknown individuals. So, if you have the former, please provide details, if just the latter OTOH ...

Chenner

Thank you all for the replies. Has anyone got any insight into this - which was the main point of my question:

Are all historical 'normal' P/E and P/E10 for FTSE and S&P 500 based on times of higher interest rates and higher yields on other asset classes or is there any precedent for what level of P/E or PE10 was normal/sustainable in times of comparably low interest rates and bond yields? Or it the current environment a first?

Linton

Chenner wrote: »

Thank you all for the replies. Has anyone got any insight into this - which was the main point of my question:

Are all historical 'normal' P/E and P/E10 for FTSE and S&P 500 based on times of higher interest rates and higher yields on other asset classes or is there any precedent for what level of P/E or PE10 was normal/sustainable in times of comparably low interest rates and bond yields? Or it the current environment a first?

The current level of interest rates and low risk bond yields has never happened before. See here and many other places on the net for data.

IronWolf

Not all markets are doing well, emerging markets have taken a battering over the last 12 months, Brasil is in recession, everyone's avoiding China because of worries about a credit bubble, and India is fighting high inflation.