What assets will suffer in the global crash?

enthusiasticsaver

I would imagine stocks and shares, (pensions) and property would be hurt most and cash least. So long as we have enough cash to weather the storm I am not panicking. My monthly £500 into my stocks and shares isa this month should buy me more units in my fund and we do not intend moving any time soon At the moment I am working on the principle 33% of my assets in the stock market and 66% in cash, ignoring property and pensions altogether.

System

If there is a big crash....

Are our savings in any threat of being taken away from us by the Government or Banks?

If you have a lot of savings like me - is there anything you should/can do to protect them?

Or should I not worry. Should my money be safe?

As far as I understand it - if a bank takes your money then the FSCS will compensate you for losses up to £75,000......

But could the economy get so bad that the FSCS/Government won't compensate any losses due to being so screwed themselves?


I'm with Santander - if that means anything.

joe_mcclaine

I don't think you can ever rule anything out.

Laws, rules, regs, terms, conditions can all be changed.

If anything was to happen, I doubt you'd get a "heads up".

Glen_Clark

If Brritain continues to add to its debt pile, with Osborne borrowing taxpayers money to throw at the housing market telling us that rising house prices is 'Recovery' 'GDP Growth' and a good thing, the end result would be hyperinflation like Weimar Germany. In that situation those holding real assets like property (the landed gentry he sucks up to), gold, and equities, did best because they had something of value. Those holding cash did worst because hyperinflation made it worth almost zero.

lawriejones1

One of the issues I've been hearing about from friends is the huge exposure banks have to derivatives (Deutsche Bank is something like €75 trillion), which is an incredible risk, particularly as commodities are being hit and they're exposed massively to the downside in oil.

I'd be interested to learn more, but information is hard to come by (naturally). In the case of Lehman the bank collapsed with little warning. We don't seem to be in 08 crash territory yet, but if it does happen there won't be much warning.

Linton

dburford9 wrote: »

If there is a big crash....

Are our savings in any threat of being taken away from us by the Government or Banks?

If you have a lot of savings like me - is there anything you should/can do to protect them?

Or should I not worry. Should my money be safe?

As far as I understand it - if a bank takes your money then the FSCS will compensate you for losses up to £75,000......

But could the economy get so bad that the FSCS/Government won't compensate any losses due to being so screwed themselves?


I'm with Santander - if that means anything.

Could something happen? The answer of course is that unless it's a logical or scientific impossibility anything could happen. We could be invaded by forces under the command of the arch-regent of the planet Zog. What would happen to your savings then?

3 questions to ask yourself...

a) Is the event likely to happen?
b) Can you do anything about it?
c) Is what you want to do to protect yourself against an unlikely event going to lead to a significant loss if a more likely event happens?

DiggerUK

The value of asking "What assets will suffer in the global crash" can be seen if you then ask the opposite, 'what assets won't suffer in the global crash'. Valiant attempts can be made to answer both questions.
To raise the question as it has been, with the presumption of a global crash in the making doesn't help either.

For sure, dangerous signs are emerging, the main one being liquidity, but nothing that low interest rates and monetary easing can't quell again.......but they can't keep that show on the road for ever; or do you think they can?

A point of interest is the price of gold since christmas, up 10%, when all other assets and commodities have gone the other way.
Gold is way down on its high of September 2011, but take this on board.......after ten years in gold, my average cost of under £650 per ounce means I have never once been under water..._

atush

lawriejones1 wrote: »

One of the issues I've been hearing about from friends is the huge exposure banks have to derivatives (Deutsche Bank is something like €75 trillion), which is an incredible risk, particularly as commodities are being hit and they're exposed massively to the downside in oil.

I'd be interested to learn more, but information is hard to come by (naturally). In the case of Lehman the bank collapsed with little warning. We don't seem to be in 08 crash territory yet, but if it does happen there won't be much warning.

Oil just took another dive due to Iran being able to sell again on the market.

In the end, fracking or not, hydrocarbons are a finite resource and the price for oil (and other commodities) will rise again in the end.

The exception would be if something like cold fusion was ever achieved.

bowlhead99

DiggerUK wrote: »

A point of interest is the price of gold since christmas, up 10%, when all other assets and commodities have gone the other way.
Gold is way down on its high of September 2011, but take this on board.......after ten years in gold, my average cost of under £650 per ounce means I have never once been under water..._

Well, there will be investors saying .... take this on board, after almost five years in gold, my average cost of $x per oz means I have never once been above water and I've been laying out money in insurance or storage costs and never received so much as a sniff of a dividend or interest payment for my troubles. So a token rise since Christmas is scant comfort other than as a reminder that asset classes do not always move the same way as each other at the same time, meaning diversification is useful.

If equities are worth less pounds and less bars of gold this time next year it will have been better to have held pounds or gold. Of interest rates go up then bonds will fall in value too so you could cash them in for cash or gold too. Although if interest rates are going up then it is relatively less attractive to hold gold which doesn't produce income unlike cash or bonds.

When uncertainty looms it is good to understand the characteristics of all asset classes and the likely (and unlikely-but-feasible) interplays between them. Often this will lead to people holding quite diversified portfolios - because aside from the obvious point that the potential interplays are quite tricky for the common man to understand, never-before-seen events are sometimes seen, and blind faith in one asset class is a recipe for (potential) disaster.

redux

I'm confused about the timing of this so-called crash, as different things are going in different directions at different times.

The headline is the market is down 20% from the peak at the end of April last year. They are talking about the FTSE100, I assume.

Further up the thread dunstonh discusses that some crashes are of the order of 20% down.

But if I look at some investment trusts I hold, some peaked at about the end of December and are down a few per cent from there, but still between minus 5% and plus 15% from last April.

Others were heading down in the second half of last year, and now 10% or 15% lower than April.

The viewpoint varies depending on whether we are looking at the well-known large companies, or smaller companies, or property, or other asset types. Funds only in resources are some of the worst.

So when is this global crash actually supposed to be, ahead of us, or much of it already happened? Do we expect more downs, doldrums for years, or are some things already back on the way up after a 5 to 10% setback?

To me personally, all I can see is confirmation of my belief that the merits of tracker funds are overrated in this type of market behaviour, and having fund managers with opinions on the companies they like seems to work better for the moment.