Should I put 10K in a US equity tracker now?

jamei305

So my portfolio has been a bit of a mess but I'm slowly getting it into shape. I have £48K which is very underweight in US equity. To help bring it into balance I could use £10K cash I've just added to my ISA to buy a US equity tracker.

I know the answer is yes, I should balance my portfolio and not try to time the market. However with everybody and their dogs saying the US is more overvalued than it has ever been apart from before the dotcom bubble and the great depression I'm finding a hard leap to make. Is geographical balance really the bees' knees and wouldn't less overvalued markets like the EU, Japan or specific sectors be a more rational choice for this £10K?

AnotherJoe

jamei305 wrote: »

So my portfolio has been a bit of a mess but I'm slowly getting it into shape. I have £48K which is very underweight in US equity. To help bring it into balance I could use £10K cash I've just added to my ISA to buy a US equity tracker.

I know the answer is yes, I should balance my portfolio and not try to time the market. However with everybody and their dogs saying the US is more overvalued than it has ever been apart from before the dotcom bubble and the great depression I'm finding a hard leap to make. Is geographical balance really the bees' knees and wouldn't less overvalued markets like the EU, Japan or specific sectors be a more rational choice for this £10K?

I dont believe thats true.

And in any case, how come if "everybody and their dogs are saying the US is more overvalued than it has ever been" then why haven't they sold up and the market already tumbled ?

Of course, some people are saying that, and maybe their dogs and cats also, but there's always someone saying that. Or if not saying its overvalued, they would say the reason the market is so "undervalued" is because its going to go even lower. Those people never invest.

Factually, the market is neither over or under-valued. Its valued at exactly what the consensus between buyers and sellers is. Now, it might be out of whack according to various metrics, but maybe that means something and maybe it doesnt, because those metrics dont hold true anymore.

If you are investing for the long term, then unless you think you are clever enough to time it (in which case how come its £10k and not £10Bn you are investing? ) presumably you are doing it because long term you think the market will rise. OK it might dip back a bit from here but ultimately you think it will carry on rising past where it is ? (otherwise why invest?)

So, either just get on and do it, or if not, pick a point (which is what?) at which number you'll invest, and if the market starts falling will you be brave enough to invest then or hold back in case it falls more?

ColdIron

I remember a chap called Ryan Futuristics on these boards a couple of years ago that used to post voluminous amounts of CAPE charts to support his assertion that US markets were overvalued and had nowhere else to go

[Deleted User]

Not sure what a CAPE chart is, but you mean threads like this one?
https://forums.moneysavingexpert.com/discussion/5196971

economic

if i have already a large proportion of my net worth in stocks even though i wasnt balanced and underweight US, i would probbaly try to time it. it markets rise then you have some in stocks so you are good. if they fall then you can invest in US to rebalance.

Timing is a mugs game but you can time it if you already have desired equity exposure already.

masonic

Sleazy wrote: »

Not sure what a CAPE chart is, but you mean threads like this one?
https://forums.moneysavingexpert.com/discussion/5196971

:eek: Don't remind me about that thread!

No, stuff like this: https://forums.moneysavingexpert.com/discussion/comment/67103129#Comment_67103129

TheLastMongoose

For me 10k would be a large amount and I too would be nervous investing it all at once. So I would drip feed it at a rate that I feel comfortable with, probably £500 per month. I know that I could lose out on some gains but my mental health is more important than my compound interest so that's that.

Mogley

I would be inclined to invest in US. If you are happy with your portfolio balance after you have bought US, continue with this in the long term and re-balance at times to suit your needs.

Monevator uptdated their Slow and Steady passive portfolio blog recently which includes a graph on Bull Markets related to the US.
http://monevator.com/the-slow-and-steady-passive-portfolio-update-q1-2017/

BrockStoker

The question you should be asking yourself is: "Do I believe Trump will live up to expectations?"

The markets believe he will (for the most part) and this is priced into the market, so if it turns out that he doesn't, we can expect a correction. If you think Trump is going to be able to make the USA "great again", it might be worth buying some.

I personally wouldn't buy right now since US equities have gone up quite a bit recently, and exchange rates are not helping, but all the question marks over Trump is the main reason. I'm happy to wait for a significant correction (and or recovery in GBP vs. USD) before putting more money into the US, but then I'm already overweight US equities.

masonic

BrockStoker wrote: »

The question you should be asking yourself is: "Do I believe Trump will live up to expectations?"

The markets believe he will (for the most part) and this is priced into the market, so if it turns out that he doesn't, we can expect a correction. If you think Trump is going to be able to make the USA "great again", it might be worth buying some.

I personally wouldn't buy right now since US equities have gone up quite a bit recently, and exchange rates are not helping, but all the question marks over Trump is the main reason. I'm happy to wait for a significant correction (and or recovery in GBP vs. USD) before putting more money into the US, but then I'm already overweight US equities.

It's pure speculation to suggest what the markets believe or don't believe. People who listen to speculation about what will happen to markets if X, Y or Z happen or fail to happen have very short memories, because these predictions turn out to be wrong more often than they are right. Investing on the basis of what market commentators are saying about world events is the worst kind of market timing IMHO.

economic

BrockStoker wrote: »

The question you should be asking yourself is: "Do I believe Trump will live up to expectations?"

The markets believe he will (for the most part) and this is priced into the market, so if it turns out that he doesn't, we can expect a correction. If you think Trump is going to be able to make the USA "great again", it might be worth buying some.

I personally wouldn't buy right now since US equities have gone up quite a bit recently, and exchange rates are not helping, but all the question marks over Trump is the main reason. I'm happy to wait for a significant correction (and or recovery in GBP vs. USD) before putting more money into the US, but then I'm already overweight US equities.

this is a very simplistic view and very poorly thought out. remember the US stock market is global and people are treating it as a safe haven. this can continue even if Trump fails. what if EU crumbles to dust? where does the money from there go to? it will be the US stock market and USD.