Fellow armchair economists....

Hallion

What's your prognosis of the global economy over the next couple of years? Is it time to sell your stocks and shares and sit on cash until the next downturn or will you bull ahead and keep investing?

BTW, professional IFA's etc, feel free to comment as well :money:

kidmugsy

I'll avoid Wall St and most bonds.

Reaper

The trouble with bubbles is they are only obvious after they have popped. At some point there will be a fall but my gut feeling is it is still some way off.

I don't think Greece leaving the EU would cause more than a temporary ripple. If the UK does that would cause huge volatility in UK shares, but not much in the rest of the world.

The only serious cloud I can see on the horizon is eventual inflation, and there must be some with all the "printed" money sloshing around the world. When that happens governments are meant to reverse QE. That would badly harm stock markets which are addicted to the stuff, though I rather doubt they will. If they don't I am not sure savings accounts would be any better than the stock market as a place to put your money, and fixed rate accounts would be a disaster (as would other fixed rate returns such as bonds, gilts, and preference shares).

All uninformed speculation but my feeling is in the short and medium term we will be OK, but in the long term things look ugly.

Kendall80

Reaper wrote: »

The trouble with bubbles is they are only obvious after they have popped. At some point there will be a fall but my gut feeling is it is still some way off.

I don't think Greece leaving the EU would cause more than a temporary ripple. If the UK does that would cause huge volatility in UK shares, but not much in the rest of the world.

The UK leaving the EU would have a much greater impact. At least europe-wide if not globally. A grexit or brexit (hate those terms) should not be thought of in isolation. There will be knock-on/ripple effects with other economies maybe deciding to default on debt and consider leaving the union too.


In any case personally I want to ride this bubble out. If we're going to take a fall i'd rather fall from a greater height. A dangerous sounding analogy but you get my point.

Reaper

Kendall80 wrote: »

The UK leaving the EU would have a much greater impact. At least europe-wide if not globally. A grexit or brexit (hate those terms) should not be thought of in isolation. There will be knock-on/ripple effects with other economies maybe deciding to default on debt and consider leaving the union too.

I am not so sure.

Giving in to Greece would encourage others to default. Standing firm and forcing them to exit would be a disincentive for others and would actually strengthen the EU.

As for a Brexit: UK companies may suffer as they will be locked out of a trading block. The anti-EU group seems to think Europe will let us remain in the trading block even if we break all political ties, but I don't see why they would - that would encourage others to do the same.

Any export trade lost by the UK means increased orders for European companies. Some banks and other multinational companies may also relocate outside UK costing us lost jobs and tax revenue but our loss is somebody else's gain.

However bad it turns out to be for the UK (and it is very unclear what effect it would have) I think the effect on Europe will be temporary. It is the largest trading block in the world. We were late entrants and they managed quite well without us.

JohnRo

Everything is pinned to the flip flop nonsense spounted by the central banking cabal and the reckless experiments designed to do nothing more than bail out their insolvent clients toxic debts at everyone else's expense, so until they're prevented from rigging markets and imposing ZIRP forever while creating fiat ponzi tickets from thin air the alice in wonderland nonsense will continue. In other words, it'll continue.

There is no proper price discovery, just dirt cheap money for the privileged, stock buybacks pushing valuations and malinvestment, fat cat options, rampant tax avoidance, money laundering and massive global financial distortion. Party on!

I'll just stay invested, no one knows when or more importantly how all this CB market manipulation will end but when and however it does I'll just keep on investing.

Mistermeaner

I'm buying shares in the illuminati

kidmugsy

Hallion wrote: »

What's your prognosis of the global economy over the next couple of years? Is it time to sell your stocks and shares and sit on cash until the next downturn or will you bull ahead and keep investing?

http://www.zerohedge.com/news/2015-05-29/robert-shiller-unlike-1929-time-everything-stocks-bonds-and-housing-overvalued

BrockStoker

kidmugsy wrote: »

http://www.zerohedge.com/news/2015-05-29/robert-shiller-unlike-1929-time-everything-stocks-bonds-and-housing-overvalued

I read a similar "the sky is falling" piece on zerohedge about 6 months ago. If I had sold up then I'd be regretting it very much now. It certainly put me on edge back then, and perhaps they are right that things are over valued, but who knows when it'll all come to a head? It could be next week or it could be next year.

I'm still a newbie and every other day there is a new article about some bubble about to burst that gives me the jitters. I more or less ignore it now and go back to watching my portfolio value steadily climbing up... although it's still at the back of my head that there could be a crash at any time.

All the more reason to be in the market/making gains (while they are possible) now, to be well diversified, and to keep some/a little cash on hand for when a good buying opportunity (aka crash) comes around. I currently have just under 6% of my main portfolio's value in cash, and if things start to get more volatile again I may up it to around 10 or even 15%.

Given that I plan to be invested for at least another 10 years, even if there is a big(ish) crash in the near future, it will probably be irrelevant over the course of 10+ years, and buying oportunities during any crash would probably help to soften the temporary blow considerably.

KNJ_2

Please read "Second Chance" by Kiyosaki ( he of "Rich Dad Poor Dad"
The fall is coming, and riding it out next time will not be a matter of years but possibly decades.
Your Home is NOT an Asset, Savers are losers......


I would seriously recommend all arm chair pundits read this

Kendall80

KNJ wrote: »

Please read "Second Chance" by Kiyosaki ( he of "Rich Dad Poor Dad"
The fall is coming, and riding it out next time will not be a matter of years but possibly decades.
Your Home is NOT an Asset, Savers are losers......


I would seriously recommend all arm chair pundits read this

Presumably you're referring to this very long bull market cycle we are in. Who is to say that the following bear market will last years/decades? Looking over trends for various indices it instantly becomes apparent that dips/crashes occur over shorter timescales than the following recoveries which tend to be gentler.


That said, you make another very good case for diversification. Cash, property, bonds, commodities, undervalued regions. Everything declining for 10-20 years or so though possible is surely extremely unlikely and is a very difficult scenario to plan for.