Has the market peaked?

economic

chucknorris wrote: »

I was going to look at P2P earlier this year, but as we are intending to buy a home before selling our existing one, I need to keep hold of my cash at the moment, until we have bought (then sold). But I wouldn't tax wrap them either, I see them as potentially quite risky, and IMO it is bad enough to lose with reducing my tax wrapped investments. It was the 10-12% loans that were secured on property that interested me.

If your income is already taxed at 40% or even 20% it isn't worth the risk as you need to look at the returns post tax (unless you do want to use an ISA). You can deduct defaults against tax on interest but you don't intend for defaults to happen just to save on tax!

P2P is risky for sure but if you are well diversified and across the good platforms (with good underwriting), then a lot of risk is mitigated. You are pretty much left with the risk of:
- rates rising substantially
- economy turning down
- property prices correcting
- platform failure

(The above are not mutually exclusive).

economic

Im looking to increase my allocation with Ratesetter and funding circle. RS i will wait till they offer around 6% which they have in the past. Funding Circle offer 7% (net after expected bad debts) or so now.

economic

Commodities seems to be missing actually from my allocation. I'm looking to add at least 5% of my portfolio to commodities. Mixture of agri, pm, base metals and energy. Some of these look very cheap particularly agri. I think they will do well as the global economy picks up.

Problem is finding the right instrument to buy. ETFs is probably the only way to buy direct exposure but you gotto be careful of futures roll costs.

GreatApe

Just spend it on fast cars drugs women and alcohol

In 20 years we either have the replicator or become ash in which case the savings now are pointless.

I don't know how convinced I am of this.
While it seems far fetched I can't say its zero probability.
I think >30% chance we will enter a new tech age within 20 years max and if it happens you can probably write down the value of pretty much all investments by 100%

economic

GreatApe wrote: »

Just spend it on fast cars drugs women and alcohol

In 20 years we either have the replicator or become ash in which case the savings now are pointless.

I don't know how convinced I am of this.
While it seems far fetched I can't say its zero probability.
I think >30% chance we will enter a new tech age within 20 years max and if it happens you can probably write down the value of pretty much all investments by 100%

We are already slowly in an industrial revolution. Called the technological revolution. The problem is if socialism gets in the way before this fully materialises. Much better chance of that (socialism) happening in uk/europe then US. Thats why i am so overweight US stocks. You have a pure capitalist of a president running the greatest economic project ever in history. Pretty much all the innovation happens in the US, everyone else copies it after.

Im not sure value of everything goes to 0. There is always value in something. Mad max scenarios you have lot of value in food, guns etc.

Maybe the new tech age means BTC will be the only thing that has value? There always needs to be a transaction of some sort. Be it prostitution or food. Maybe the holders of most of the value will be the people who invented/marketed/branded the tech that gets us there (and maybe that's when socialism actually becomes a good thing!!). And those who owned BTC since 2010.

westernpromise

economic wrote: »

Commodities seems to be missing actually from my allocation. I'm looking to add at least 5% of my portfolio to commodities. Mixture of agri, pm, base metals and energy. Some of these look very cheap particularly agri. I think they will do well as the global economy picks up.

Problem is finding the right instrument to buy. ETFs is probably the only way to buy direct exposure but you gotto be careful of futures roll costs.

I'd be cautious with agri. If you look at cocoa there are two futures contracts, one US and one UK, which share many origins so you'd expect them to track one another - broadly, after allowing for lot size and currency unit. In fact, quite often one's in contango and the other's in backwardation, and this has to be a consequence of how they are regulated. Coffee same thing - OK,, the US contract is Arabica which is 60% of production and the UK is Robusta, but even so, they are used largely for the same things.

Regulatory risk should I suggest be an important consideration given Brexit and the fact that MIFID II was designed to stuff the UK financial industry. There is acute regulatory risk to new property investment right now, for example, and commodities are little different.

economic

westernpromise wrote: »

I'd be cautious with agri. If you look at cocoa there are two futures contracts, one US and one UK, which share many origins so you'd expect them to track one another - broadly, after allowing for lot size and currency unit. In fact, quite often one's in contango and the other's in backwardation, and this has to be a consequence of how they are regulated. Coffee same thing - OK,, the US contract is Arabica which is 60% of production and the UK is Robusta, but even so, they are used largely for the same things.

Regulatory risk should I suggest be an important consideration given Brexit and the fact that MIFID II was designed to stuff the UK financial industry. There is acute regulatory risk to new property investment right now, for example, and commodities are little different.

So are you saying avoid all UK contracts and stick to US? Are the US ones generally in backwardation vs UK?

Im looking at DBA (Powershares DB agri fund). Looks like it has all US contracts. Generally agri have been shorted to death by CTAs as they just follow trends with their algos. I would expect once a reversal of the trend to occur that Agri prices to shoot up. The problem is would i see a 50% decline first (some of it due to the significant contango) before a 100% rise in which case i've made nothing?

I am also looking at the base metal equivalent (DBB) which seems to be a lot better. Most of it is in Zinc which is in backwardation.

chucknorris

economic wrote: »

Commodities seems to be missing actually from my allocation. I'm looking to add at least 5% of my portfolio to commodities. Mixture of agri, pm, base metals and energy. Some of these look very cheap particularly agri. I think they will do well as the global economy picks up.

Problem is finding the right instrument to buy. ETFs is probably the only way to buy direct exposure but you gotto be careful of futures roll costs.

Do they provide an income, or are they for capital growth only?

economic

chucknorris wrote: »

Do they provide an income, or are they for capital growth only?

No income, purely capital growth.

GreatApe

economic wrote: »

We are already slowly in an industrial revolution. Called the technological revolution. The problem is if socialism gets in the way before this fully materialises. Much better chance of that (socialism) happening in uk/europe then US. Thats why i am so overweight US stocks. You have a pure capitalist of a president running the greatest economic project ever in history. Pretty much all the innovation happens in the US, everyone else copies it after.

Im not sure value of everything goes to 0. There is always value in something. Mad max scenarios you have lot of value in food, guns etc.

Maybe the new tech age means BTC will be the only thing that has value? There always needs to be a transaction of some sort. Be it prostitution or food. Maybe the holders of most of the value will be the people who invented/marketed/branded the tech that gets us there (and maybe that's when socialism actually becomes a good thing!!). And those who owned BTC since 2010.

What are houses worth if its as easy as picking a design on a website and hitting print and some bots get to work and builds it in 48 hours?

What are the oil and gas companies worth if the bots drive the price of installed solar and batteries down 10x?

What are the car companies worth if the bots drive the cars so we need 1/4th as many vehicles produced?

What are the consumer goods companies worth when anyone can start up a fully automated factory producing the same things?

What are agri businesses worth if agriculture goes fully automated. You just log into google maps select an area pick the crops and hit farm.

What are telecommunication companies worth when tech advances to the point of not needed nodes and works on say mesh networks?

What is samsung or apple worth when the most basic generic phones are 10 x better than current best of class phones? There is only so much resolution our eyes can see and only so much speed of loading a browser our brains can detect. I am still using a 6 year old laptop just because it does everything I need.

What is facebook worth if there is much less of a need to advertise. For instance car companies advertise but if the future is self drive uber type affair then the car companies have no need to advertise to the public. Likewise car insurance or AA breakdown cover or Autotrader none of them need to advertise in a self drive fleet world