We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Correction or bear market in stocks this year?
Comments
-
I may be wrong here as I obviously don't have all the facts but it sounds to me like your investment plan may be deficient.
If a few hundred grand landed in my lap tomorrow, say from an unexpected inheritance, my plan would tell me pretty precisely what to do with it and it'd be fairly swiftly allocated. Even more so if the cash arose from an asset sale of mine as I'd have more forewarning of its arrival.
You mention that you're keeping an eye out for opportunities which is taking up time and that you're waiting for the next crash.
If it's lower valuations that you're awaiting, do you have some specific, measurable condition that you're waiting for or are you running on gut feel? Intuition (heuristics and recognizing cues and patterns) can be useful for people operating in a field where they are very experienced but less so for those less experienced where it may be more akin to guesswork.
Or is what's taking the time the actual thinking through of what it is you want to do and how to go about it, ie. back to my initial sentence? If so, and you're working on a plan then that's good.
If it is specific valuations that you're awaiting, then it may be advisable to plan in the possibility that the market does not provide you with those target valuations for a very lengthy time. I'm not saying this will happen but it can, and it can cause a couple of problems:
(i) the benefit of the lower valuations you were seeking, if they take a very long time to occur, can be more than outweighed by the cash flows that you have foregone by holding a lower yielding asset such as cash while waiting; you may achieve your lower price entry but end up worse off than if you'd bought earlier but at higher prices.
(ii) depending on your personality type, the psychological pressures brought to bear by standing aside while markets rise without you being invested to the extent you would like; often this can lead to capitulation buying where the fear of missing completely out overrides the earlier caution that was being exercised; no one thinks this will apply to them but strongly rising markets do very strange things to many people.
Some scenario planning might help anticipate these and other issues, which may prompt a less black-and-white and more shades-of-grey manner of approaching the market.
nice reply, couldnt have done it better myself.0 -
VLS60 should see you through good times and bad. No need to complicate things.0
-
He said VLS60 would see them through good times and bad, that doesn't change even if one of the bad times for the 40% bonds is coming up right now. And people have been saying that interest rates must go up and cause bond prices to crash for years.
There may be a bond crash but worldwide equities may benefit, which would mean the value of VLS60 would not go down by as much. Or there may be a real 2008-style crash where everything goes down, in which case VLS60 and VLS100 will both crash (but VLS100 would be expected to fall by more).
VLS100 will of course also see you through good times and bad, providing that you are sanguine enough to tolerate your investment falling by 40% or more in the short term without panicking. Conventional wisdom says that most people are not which is why VLS60 may be more suited to them.
The entire point of VLS style funds is to take asset allocation out of your hands. To save you the job of picking an asset allocation and the worry that you may lose out by picking the wrong one. By giving you an asset allocation that may not be perfect, but will almost certainly not be disastrous no matter what market conditions. To decide that you want a VLS fund but then pick VLS100 instead of VLS60 because you think bonds are about to crash (something you've probably thought for five years) is to miss the point.
You may well be right that putting money in bonds is a bad idea right now - I do too and I haven't put money in bonds either. But if you are that confident in your ability to make asset allocation decisions then you should be building your own portfolio and VLS is not for you. The decision of whether to pick VLS60 or VLS100 is about risk tolerance, not market timing.0 -
-
Malthusian wrote: »He said VLS60 would see them through good times and bad, that doesn't change even if one of the bad times for the 40% bonds is coming up right now. And people have been saying that interest rates must go up and cause bond prices to crash for years.
There may be a bond crash but worldwide equities may benefit, which would mean the value of VLS60 would not go down by as much. Or there may be a real 2008-style crash where everything goes down, in which case VLS60 and VLS100 will both crash (but VLS100 would be expected to fall by more).
VLS100 will of course also see you through good times and bad, providing that you are sanguine enough to tolerate your investment falling by 40% or more in the short term without panicking. Conventional wisdom says that most people are not which is why VLS60 may be more suited to them.
The entire point of VLS style funds is to take asset allocation out of your hands. To save you the job of picking an asset allocation and the worry that you may lose out by picking the wrong one. By giving you an asset allocation that may not be perfect, but will almost certainly not be disastrous no matter what market conditions. To decide that you want a VLS fund but then pick VLS100 instead of VLS60 because you think bonds are about to crash (something you've probably thought for five years) is to miss the point.
You may well be right that putting money in bonds is a bad idea right now - I do too and I haven't put money in bonds either. But if you are that confident in your ability to make asset allocation decisions then you should be building your own portfolio and VLS is not for you. The decision of whether to pick VLS60 or VLS100 is about risk tolerance, not market timing.
but i did say VLS100 AND cash. that way you get the liquidity and not have to worry about rates moving higher. yes yiu may miss out on rates falling, but so what? not much upside even from here.0 -
Even more so if the cash arose from an asset sale of mine as I'd have more forewarning of its arrival.
Not sure if you have ever had a chain fall through.
This is a related scenario.
With a failed chain, the money you expected to turn up doesn't.
With this situation, money I didn't expect suddenly lands in my lap.
Basically, I booked a holiday, and then he made up his mind, because it finally clicked that he had to pay 3% extra stamp duty after March 2016. I was frantically scanning documents to the solicitors before my flight. Up to February 2016, I was sitting pretty, with a BOE+1.75% BTL mortgage having about 15 years more to go, and then he called up.
I haven't stuck all the money in NS&I and done nothing.
In fact, the ISA is up from £75k to £90k, and I am nursing £70k+ in capital gains, plus £8k in dividend already received. Can't bank £50k of the gains yet, because it will push me into higher rate tax.
People do things the most convenient for them, and don't care if it's awkward for you. At least he was willing to pay extra for my inconvenience.
0 -
Didn't think it was possible to have £90K in an ISA. How long have they been going?0
-
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352.4K Banking & Borrowing
- 253.7K Reduce Debt & Boost Income
- 454.4K Spending & Discounts
- 245.4K Work, Benefits & Business
- 601.2K Mortgages, Homes & Bills
- 177.6K Life & Family
- 259.2K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards