What will happen when interest rates rise?

wotsthat

Thrugelmir wrote: »

Mining stocks don't look healthy. :eek:

Potentially nor do banks. Standard Chartered has 4.5% of it's loan book exposed to commodity companies. Globally debt owed to the banks by the miners is estimated to be $125 billion. Must be some nervous bankers at the moment.

My gamble isn't that I can identify whether or not miners/ banks are a good buy (I can't) but a portfolio of shares roughly following the FTSE will outperform inflation by about 5% pa on average although accompanied by much white noise.

So far so (more) than good but who knows what the future brings?

You're quick to point out what might be poor investments. What do you think are good investments or are you shorting the bad things?

Thrugelmir

wotsthat wrote: »

My gamble isn't that I can identify whether or not miners/ banks are a good buy (I can't) but a portfolio of shares roughly following the FTSE will outperform inflation by about 5% pa on average although accompanied by much white noise.

Hasn't averaged 5% in the past 15 years. May have averaged that over the longer term. But I doubt you've held your portfolio for 114 years.........

Reducing dividend cover isn't white noise. That's a bloody big fog horn.

chucknorris

wotsthat wrote: »

Apart from diversifying as dividends come in and diversifying generally my only call is that over the long term the FTSE will rise so I'm always all in and always adding.

I dug this one up because I'm always interested in the 'big call' whether it's 'London has peaked', 'I'm out of the FTSE until 5500' et al. because the most money I've ever made, apart from completely lucky calls, is doing nothing.

As we have 9 properties to maintain, I can't be 'all in' because I need to keep something in cash for an unexpected large repair (replacement roof, major works for a leasehold property or something of that nature). But in a way you could almost say that I am beyond 'all in' of available cash, as I only have about £25k in cash (excluding 2 fixed term cash ISA's, which will be transferred to S&S when they mature, and a NSI certificate). If the sh*t hits the fan, I would have to borrow something short term off my wife.

I too have no inclination to pick stocks or sectors, I just want an index tracker, I don't want to try and maximise returns by taking on more risk.

wotsthat

Thrugelmir wrote: »

Hasn't averaged 5% in the past 15 years. May have averaged that over the longer term. But I doubt you've held your portfolio for 114 years.........

15 years isn't long term on my horizon although 114 years is a touch beyond.

Thrugelmir wrote: »

Reducing dividend cover isn't white noise. That's a bloody big fog horn.

How do you know it's not noise? I think back to the early 1990's (may as well be another world) and the futility of trying to predict the future - I would've been better off doing the sensible thing and investing in clever people rather than thinking I was the clever one and leaving them to it.

Seems to me that although you hear messages where I hear noise you interpret them all as 'bad things will happen' rather than a pointer to what should be invested in.

It must be frustrating to have such a gift and end up investing in exactly the same way as a dumbass like me. Some shares, your own house, your health, a bit of debt, a bit of cash, reasonably frugal lifestyle, an earned income etc. etc.

I'm starting to think the GFC is just noise to be honest even though the latest evidence is I'm the only person on the planet not to have called it.

Thrugelmir

wotsthat wrote: »

I'm starting to think the GFC is just noise to be honest even though the latest evidence is I'm the only person on the planet not to have called it.

People were too busy lining their own pockets to care. There's a good book written about 3 investors who wanted to short the US mortgage market. As they identified the problems with the splicing and dicing of bundled mortgages. No one was interested.

Thrugelmir

chucknorris wrote: »

I too have no inclination to pick stocks or sectors, I just want an index tracker, I don't want to try and maximise returns by taking on more risk.

If you hold a FTSE tracker at the close yesterday Shell and BP alone accounted for 11% of the value of the index.

chucknorris

Thrugelmir wrote: »

If you hold a FTSE tracker at the close yesterday Shell and BP alone accounted for 11% of the value of the index.

Yes I know. In other news Sunday follows Saturday (wow!). But it is still less risky than holding individual shares. Personally I prefer the Vanguard ETF Vhyl, which is very diverse (both in terms of globally and in sector).

wotsthat

Thrugelmir wrote: »

If you hold a FTSE tracker at the close yesterday Shell and BP alone accounted for 11% of the value of the index.

You can't really complain about a lack of diversification and then hint we should be avoiding banks, oilies, miners and, no doubt, property, dividend stocks and exposure to China.

Thrugelmir

wotsthat wrote: »

You can't really complain about a lack of diversification and then hint we should be avoiding banks, oilies, miners and, no doubt, property, dividend stocks and exposure to China.

Being selective is possibly the right approach at the current time. Diversification only needs to be 20 to 30 stocks in total.

wotsthat

Thrugelmir wrote: »

Being selective is possibly the right approach at the current time. Diversification only needs to be 20 to 30 stocks in total.

Great if, like you, you can make sense of the noise and pick the right 20 stocks.

I've not entirely discounted you're doing nothing more than reading tea leaves. Avoiding banks, oil, China exposure, property and miners could look more like you're being influenced by short term news (noise) rather than looking long term.