What assets will suffer in the global crash?

parkin

The chairman of the OECD's review committee says we are heading for a global economic crash.

Debt levels are now unsustainable and unlike the 2008 crash emerging markets cannot help drive any recovery as they are in trouble too so in the next recession many debts will never be repaid. He warns that this will be uncomfortable for a lot of people who think they own assets that are worth something.

What assets do you think he refers too? Who will be the big losers?

What assets should be unloaded now? What assets would be good to hold?

warehouse

Quick, everyone panic and run for the hills.

InvestInPoker

It will be carnage and A Flock Of Sheep will have predicted it

ChesterDog

So basically you're saying that he's saying that this time it's different? Again.

Radiantsoul

Presumably every asset class will be impacted. In the scenario he has painted there will be a wave of forced sellers who dump assets in order to repay their debts or leverage.

In that scenario the best assets are probably to hold are cash. Lots of people felt last time that inflation would surge, but it seems the problem is deflation. If there really is a big sell off then it is likely to go too far and those with cash will be able to acquire assets cheapily from the forced sellers.

I suspect he is being too pessimistic though, perhaps because he is trying to highlight how bad things are and drive a change. And perhaps because a really positive or negative forecast grabs attention better than saying he doesn't really know if things are good or bad.

Flobberchops

Oil!

In general though, isn't the standard advice to stay put and weather the storm? Only a fool (or a desperate person) buys high and proceeds to sell low. In fact, if you've been drip-feeding a sharedealing account, now's a good time to pick up cheap stocks.

Radiantsoul

Flobberchops wrote: »

Oil!

In general though, isn't the standard advice to stay put and weather the storm? Only a fool (or a desperate person) buys high and proceeds to sell low. In fact, if you've been drip-feeding a sharedealing account, now's a good time to pick up cheap stocks.

I think you probably do need to stay put, but share may be cheaper now for a good reason. So it is not necessarily the case that shares are 18% better value than last year, but rather than the price has fallen because future profits have also fallen.

dunstonh

In general though, isn't the standard advice to stay put and weather the storm?

Most people that try and time the market tend to make less money than those that just see it through (especially if those that see it through can make the occasional increment to benefit from those lower asset values)

If we look at it now, the markets are down nearly 20%. A typical crash tends to be 20-25%. There tends to be an overreaction on a drop that means there is often a bounce (and more often than not a crash comes with two periods of decline with a bit of a recovery in the middle. A "W" shape. However, you never know so staying put and seeing it out is usually best. Once you have gone through several crashes you just end up thinking "here we go again".

_CC_

We do seem to have the recipe for a 2008 style crash, but accurately predicting such things is nigh on impossible.

Generally you'd be best just ignoring the market movements, assuming you're paying regularly into an S&S ISA or pension. Timing the markets is usually a fools game, although I would have thought such people would be delighted with a crash as you'll be able to buy at better value :dance:

Glen_Clark

Radiantsoul wrote: »

In that scenario the best assets are probably to hold are cash. Lots of people felt last time that inflation would surge, but it seems the problem is deflation.

Deflation? Even taking the Government's statistics which conveniently ignore the biggest risers like house prices, we still have some inflation.
I would be worried about holding all my assets in cash when the National debt is still rising, and the Government sees rising house prices as 'GDP Growth' and 'Recovery' - I see rising housing costs as a negative because it makes it harder for Britain to pay off its debts - if Britain's creditors start to worry about that we will get the inflation that was predicted..

mike88

All assets will be affected but some more than others. Welcome to the World of share ownership.