Are markets expensive and about to crash

talexuser

QE on this scale is a huge experiment, so present conditions have not really been seen before, and can hardly be seen as normal markets working, more like props to keep markets from collapsing. 6 years after the crash the euro, Greece, Spain, Italy... still here more or less as before and the dollar still the "world" currency... but I don't think 6 years is long enough to judge whether unwinding can be achieved in a controlled way without inflation and bond default shocks down the line?

Chenner

Linton wrote: »

The current level of interest rates and low risk bond yields has never happened before.

Interesting thank you.

So except perhaps property - which may explain that boom too - investors have no-where to put their money unless they want to let it reduce in value with inflation. So even if there is a correction it could be short lived as any dip will soon attract money back in.

In this context I wonder if all this talk of PE and PE10 showing the S&P 500 and FTSE as being dangerously over-priced is meaningless if the historical reference points for PE and PE10 are based on times when investors had a realistic choice.

DUS

gadgetmind wrote: »

..., but one portfolio is at 10% cash, which is the point at which I should be looking to rebalance.

That raises a question that I currently wonder about: What do investors on this board consider to be a "good" cash position in their portfolios?

I understand that timing the market is more often than not a futile enterprise but nonetheless, given all the potential black and grey swans that might negatively impact the stock markets in the next 12 months, I´ve started to position myself a bit more conservatively by increasing my holdings in physical gold to 10% and a current cash position of 15% of my total portfolio. I actually plan to increase the latter to 20% over the next few months.

So, just out of curiosity, what is your current cash position with your portfolios and do you plan to increase/reduce it within the next 6-12 months?

Thank you!

DUS

droopsnoot

gadgetmind wrote: »

I can recommend a few books and web sites you can read, if you like

Sorry for the hijack, could you add a few please? My knowledge is severely lacking with regard to investments, leaving me with the majority held in cash and doing me no good at all.

gadgetmind

droopsnoot wrote: »

Sorry for the hijack, could you add a few please? My knowledge is severely lacking with regard to investments, leaving me with the majority held in cash and doing me no good at all.

I usually recommend "Smarter Investing" by Tim Hale and the Monevator web site. The latter covers many subjects, so make sure you read quite a few articles.

Some find Smarter Investing a little dry in places, but as an engineer I like its rigorous approach and extensive use of back-tested data reference to relevant research. However, it's still very readable for this, just not in the "coo gosh!" style of some investing books.

Linton

DUS wrote: »

That raises a question that I currently wonder about: What do investors on this board consider to be a "good" cash position in their portfolios?

I understand that timing the market is more often than not a futile enterprise but nonetheless, given all the potential black and grey swans that might negatively impact the stock markets in the next 12 months, I´ve started to position myself a bit more conservatively by increasing my holdings in physical gold to 10% and a current cash position of 15% of my total portfolio. I actually plan to increase the latter to 20% over the next few months.

So, just out of curiosity, what is your current cash position with your portfolios and do you plan to increase/reduce it within the next 6-12 months?

Thank you!

DUS

As I am retired I need steady income from my investments to supplement guaranteed pension income and dividends. For peace of mind I like 2-3 years income requirements held as cash. If I didnt need the cash for say 10+ years I would invest 100% in equities. So basically I would say only hold cash if you need it rather than regarding it as an investment to be balanced with all the others. This view is based on a high but considered acceptance of risk.

gadgetmind

Across all of my assets (other than home) I'm at 7% cash but this doesn't include cash in the various ISAs and SIPPs. If I add on these, I'm at about 10% with half of this in NS&I index linkers.

I'd also like 2-3 years of essential income as "cash like" assets when I retire and am currently at probably a shave under 2 years.

Glen_Clark

Im at
73% equities
13% in a 4.5% fixed rate ISA
10% NSI Index Linked
4% on instant access earning between 1.7% - 2%

Thrugelmir

Linton wrote: »

If you are investing for the long term rather than trading it cant be too difficult to find something that is better than cash. There are plenty of solid companies paying a reasonable dividend.

Companies rise and fall. Just as the Roman Empire did. The recent bull run has bred compancey I feel.

Any particular Companies that you feel good value at the moment? With a solid sustainable yield that's likely to increase.

gadgetmind

I prefer holding around 25 different stocks, but if asked to pick one? Hmmm.

Diageo? Unilever?

N Brown is also very well managed, but perhaps a trifle small for a single holding.