Are you concerned by the current investing climate?

Cintrapark

And would you call mainly investing in Vang FTSE All USD a balanced portfolio?

[Deleted User]

steampowered wrote: »

That is why you have a balanced portfolio rather than putting all your eggs in one basket.

My understanding from a quick google search (http://www.telegraph.co.uk/finance/comment/tom-stevenson/8469660/What-history-tells-us-about-returns-over-the-next-30-years.html) is that a balanced 30 year investment in the stock market would have achieved 8% annual returns, after adjusting for inflation.

Thanks, but it was far from my only investment and as I worked for RBS there were many ways to acquire "free" shares.


Anyway they were an amazing investment which ultimately moved to another investment that continued to provide huge returns, property.


All I'm saying is it is not a good idea to just blindly hold stock with a wing and a prayer...


Cheers

markj113

ColdIron wrote: »

If you bought in 5 years ago today you'd be nursing a 30% loss today without a great chance of recovering it any time soon

And if you bought 1 year ago you would be sitting on about a 28% profit.

Easy to pick and choose data to suit your viewpoint

bowlhead99

Cintrapark wrote: »

And would you call mainly investing in Vang FTSE All USD a balanced portfolio?

It is not a bad start.

VWRL does have over 50% of its holdings in the USA though (because US is the largest equity market in the world) and I would prefer not to have over 50% of my equities in any one country.

Your other investment SAAA is not too bad in terms of country diversification because it limits any one country to 20% of its holdings.

Missing entirely are all types of corporate bonds both UK and abroad, together with emerging market government bonds. Within the government bonds you have, they're not index linked (although a quarter of uk gilts in issue are IL), so that's another sub-sector missing.

Also missing are equities in smaller companies, and other asset classes such as direct or indirect property in any meaningful amount (total real estate vehicles are only a few percent of world equity markets, though it can be a useful class to hold).

There are other types of asset classes that could be held, but perhaps not surprising that things like private equity and hedge funds and commodities are missing as these are hardly essential on small portfolios.

So it is not bad as a start point. Most UK investors -though perhaps nervous about UK's prospects post brexit -would have some "home bias" to the balance in their portfolio. Your VWRL only has under 7% uk while SAAA has under 10% in UK. Arguably you get a better balance by being in more countries though it can make for unpredictable results, if for example you wanted to eventually use the money on something with a heavy UK- cost base but are moving towards that goal with under 10% in UK gilts or stocks.

ColdIron

markj113 wrote: »

And if you bought 1 year ago you would be sitting on about a 28% profit.

Easy to pick and choose data to suit your viewpoint

Indeed but I think you miss my viewpoint. 5 Years ago gold was, coincidently, at pretty much it's highest ever price. Simply fleeing one asset class for another because you've been 'reading articles in the press that we're due for a big crash' is not the wisest move you could make. I am quite keen on gold but don't kid myself that it's an investment, it's more akin to speculation. PMs and equities do different jobs

Glen_Clark

Problem with gold is it doesn't produce any income which makes it impossible to value. Its just a gamble/guess at what people will be prepared to pay when you want to sell. Warren Buffet doesn't touch it because his talent for valuing future earnings wouldn't help him there.
Like the lottery, his expertise would give him no advantage over a fool.

Glen_Clark

bowlhead99 wrote: »

It is not a bad start.

VWRL does have over 50% of its holdings in the USA though (because US is the largest equity market in the world) and I would prefer not to have over 50% of my equities in any one country.

But they are worldwide companies with a listing in the USA. So its not really 50% in one country is it?

Malthusian

Ray_Singh-Blue wrote: »

Yet someone investing a lump sum in 1999 or 2007 would have done significantly worse than someone investing a lump sum in 2002 or 2009.

This would only be relevant if in 2007 I could predict that the stockmarket would have plummeted two years later and therefore sat on my cash waiting to invest in 2009.

This is nothing but market timing, and the evidence is that it loses money. It is easy to think that in March 2009 I would have got up off my pile of cash and invested it. In reality, it is much more likely that I would have called the bottom too early, or too late. And any money I made by staying in cash at the peak would be eaten up by lost dividends and transaction costs.

Or I could have just gone through the process Chesterdog excellently outlined and never have invested at all. "There's still further to fall... it's a dead cat bounce... oh look the market's at its peak again."

Given that market timing is bunk, a far more relevant comparison is that even if I had been unlucky enough to invest an entire lump sum at the worst possible moment in 2007, at almost any point since 2013 it would have done better than cash.

In reality hardly anyone only invests a lump sum at one particular point in history, and only a tiny fraction of them will have been unlucky enough for that point to be mid-2007. Most people invest throughout their lifetime as surplus income becomes available or they make pension contributions.

You've shifted from talking about refusing to invest money whenever markets are within a certain percentage of their peak, which given the nature of stockmarkets is going to keep you out of the market for about 50% of the time or more, to talking about not investing money at two cherry-picked points in history.

System

Any non-investment in equities regarding a crash is an attempt to time the market, whichll probably backfire

Just ride crashes out, don't worry about them

bowlhead99

Glen_Clark wrote: »

But they are worldwide companies with a listing in the USA. So its not really 50% in one country is it?

True, I'm not under any illusion that the 50% is pure US domestic revenue and assets. Much of it is multinational. It is just a hint as to where they are headquartered and what geopolitical risks they may face.

For example Microsoft and Google's annual reports both have 45-50% of their revenue coming from overseas. So just because the company is listed in US, of course you are not actually guaranteed to be getting pure US exposure. But in those cases, almost half of it is.

By the same token, a Japan tracker has Sony which only has 30% revenue as domestic because they sell lots of music and TVs and PlayStations to Europe, US and the rest of Asia. 20% of their income comes from the US. A Europe tracker has AB Inbev which sells plenty of Budweiser to the Yanks. And so on.

So in my Japan and Europe and Asia funds I already have exposure to US consumer and business spending. You could say that's one of the reasons I don't want to buy a lot more of it via the NYSE. It's a good job the stuff I get via the US exchanges is not "pure" US exposure otherwise I would set the arbitrary "50% is probably too much" comment much lower, like 25% or something.

In any kind of broad analysis you have to take shortcuts so using country of listing as proxy for geography is not crazy, as long as you appreciate the limitations.

There are of course lots of "foreign" companies listed on NYSE or Nasdaq, like Tencent from China or Santander from Spain or Lloyds from UK, SAP from Germany. But they are not real listings of ordinary shares, just depositary receipts to help broaden the investor base, so they're not included in a US tracker index anyway, and are a red herring.