Need a nudge to take the plunge

Ryan_Futuristics

Herbalus wrote: »

When I saw your name as last commenter how did I know this was coming.....?

Well if there's a popular narrative on this board, it's the one people should be pushing

No one can predict the future - but it's not hard to assess risk ... And valuation is by far the best long-term indicator of that

As Buffett says: "Price is what you pay; value is what you get" ... Strip everything else away (all the good news and bad, all the greed and fear) and what are you getting from an LS fund today? I'd say about 50p on the £1

InvestInPoker

noggin1980 wrote: »

This investment is going to be for the long term 20 years +....

Ideally I would like 70% in shares and so in future would add another fund, maybe like 10% in a developing markets one.


Am I on the right track?

You've had some good advice in here already noggin and you are on the right track.

For me, if you are really going to invest this money for 20 years+ without ever having to touch it then you should consider going for the 100% VLS option. It is extremely unlikely bonds will beat equities over any 20 year period. Of course this will be higher variance over the timeframe.

The other thing you mentioned about adding funds in on the side such as EM or whatever. The two I would recommend that fit the style you ask for would be Vanguards Emerging Markets index and their global small cap index. VLS funds are light on both these areas and over 20 years they could capture some additional returns for yourself. Again both of these would be higher variance than the main VLS fund however.

InvestInPoker

Ryan_Futuristics wrote: »

No one can predict the future

I predict you will say the US is overpriced and recommend the Woodford Equity Income fund on another thread in the future.

ChopperST

Ryan_Futuristics wrote: »

As Buffett says: "Price is what you pay; value is what you get" ...

He also says: "Charlie and I have always considered a “bet” on ever-rising U.S. prosperity to be very close to a sure thing. Indeed, who has ever benefited during the past 237 years by betting against America? If you compare our country’s present condition to that existing in 1776, you have to rub your eyes in wonder. And the dynamism embedded in our market economy will continue to work its magic. America’s best days lie ahead."

Ryan_Futuristics

bowlhead99 wrote: »

Is it not curious that the S&P 500 is up another 5% since Jan 30th then? Surely if more investors were selling than buying it would be going down. Or are do you have a special insight into the fact it is the clever people selling and the dumb people buying?

Yeah, there are indexes of what top investors and funds are doing, and most seem to moving to cash or short-term bonds

At the same time average institutional investors (for pensions, banks, insurance companies, etc) are some of the worst market timers you can get

Look at this track record:


And right now: 96% expect S&P500 gains

But a significant reason investors are still buying the US is because savings and bonds rates are effectively negative - where else to go? ... Think about this: bond yields say we're in a global recession; equities prices say we're in a period of strong economic growth

Which is right?

It's hard to say, but I think the global demand for oil strongly suggests the former, as do (real) unemployment figures ... And if that's the case, equities have a long way to drop

Ryan_Futuristics

ChopperST wrote: »

He also says: "Charlie and I have always considered a “bet” on ever-rising U.S. prosperity to be very close to a sure thing. Indeed, who has ever benefited during the past 237 years by betting against America? If you compare our country’s present condition to that existing in 1776, you have to rub your eyes in wonder. And the dynamism embedded in our market economy will continue to work its magic. America’s best days lie ahead."

It's possible

But then you really are going on a prediction

Chris75

.............and it hasn't been a nice smooth ride although 20 years is a long time to recover if a fall occurred.

noggin1980

Thanks everyone, I had read quite a few threads and had searched for ones similar to my own before posting and saw quite how many became a debate after a few posts scaring off the original poster, thats why I spelt out so strongly that I'd for better or worse made my decision to go passive. So while I appreciate your opinion Ryan I'd prefer to avoid taking the discussion in that direction.

I think I'm going to set myself a deadline of a few days and try and chose a fund mix and if after that few days I don't feel it's better than the lifestrategy fund I'll go with that. That way by setting a deadline I'll avoid never doing anything (which is what I've been doing for months)

I do want a decent chunk of America despite the warnings but the lifestrategy fund is more America centric than my preference. As long as I pick similar cost funds is the only downside to having multiple funds instead of the 1 that I'd have to rebalance myself? When moving away from a percentage cost platform in a few years would I then have to pay say 5 fee payments per monthly deposit instead of one?

ChopperST

Ryan_Futuristics wrote: »

It's possible

But then you really are going on a prediction

That's all you are doing as well though with CAPE valuations? I would imagine Greece and Russia are looking good at the current point in time, are you investing there?

bowlhead99

Ryan_Futuristics wrote: »

No one can predict the future - but it's not hard to assess risk ... And valuation is by far the best long-term indicator of that

Agreed, some stocks are currently valued at really really low prices because they are very high risk and nobody wants to touch them with a bargepole. Like Russian companies for example. They are valued cheaply because the economy is in the toilet and there are huge political end economic risks to putting your money into them.

Meanwhile, US companies command quite high valuations because as Buffet says in the quote referenced by ChopperST, they have a much more obviously prosperous future and the risks are lower, so people will pay more. So, the valuation of the company (cheap or expensive) gives an indication of the risks faced by the company (high or low).

That follows logically although I expect it's the exact opposite interpretation you wanted us to make.

I expect your point was that if a share is valued highly because the risks are low and the company solid, then you are unknowingly taking on huge risks because the people doing the valuations and declaring the risks are low (those professional investors investing trillions of dollars) are morons and the smart people are the ones investing in the exact opposite way to everyone else.

Well, sometimes betting against the market works extremely well and sometimes it works extremely badly. That is probably one of the reasons why you have said in the past that you run some of your holdings as 'momentum' investing along side others and some as 'value' investing doing the exact opposite to others, so you can declare a win either way, right?