De-risking equity portfolio..?

bostonerimus

C_Mababejive wrote: »

Hi all,
I have quite a lot of money invested in shares and think i should start to slowly de-risk by selling at opportune moments and then buying into something else. The problem is, what should i be looking to buy into?

This is the wrong approach to investing. You should be investing for the long term with an asset allocation that makes you comfortable. There are no magic solutions or assets.

System

According to this article in the FT, 'the best strategy is to sell when realised volatility rises':
https://www.ft.com/content/b2add7c8-0c18-11e8-8eb7-42f857ea9f09

Thrugelmir

C_Mababejive wrote: »

I suppose if we look at the 2008 crash it recovered after maybe 2 years

Amongst many support measures at the time. BOE base was reduced from 5.0% to 0.5% in that period. Slightly behind the Fed. Who reduced the Funds Rate from 4.25% to 0.25% in 2008 alone.

Concern now is that companies are sitting with leveraged balanced sheets. In 2016 around 20% of US share transactions were companies buying their own shares. Cheaper to borrow money (interest being tax deductible) in the US than repatriate funds from overseas and pay high levels of tax.

As Tesco's showed a while back. Even a company with what appears to be a simple business model isn't immune to using financial engineering.

coastline

Alexland wrote: »

I agree. In the next 10 years we are expecting a period of low investment returns caused by the high p/es but we don't know how it will look. It might just be a nice straight wobbly line or it might be another crash like the GFC followed by a lumpy recovery. It makes sense to hold some cash and possibly funds with equity hedging while asset prices are high.

Alex

Trailing P/E now 21..

https://pbs.twimg.com/media/DVywyRiW4AEkbZ1.jpg

Forward P/E now 16..

https://pbs.twimg.com/media/DVzFUQTW4AEiSYP.jpg

FTSE will be even less I would think ?

Alexland

Interesting data as always coastline. I'm not sure what we would read into the FTSE100 forward P/E as so much depends on exchange rates.

fun4everyone

The best time to sell should be dictated by planning around personal circumstances. Not by what some newspaper/website/person with agenda/wannabe fortune teller says.

bostonerimus

Economic wrote: »

According to this article in the FT, 'the best strategy is to sell when realised volatility rises':
https://www.ft.com/content/b2add7c8-0c18-11e8-8eb7-42f857ea9f09

It would be instructive to show the results for starting at different decades......The differences would not be as pronounced between volatility management and buy and hold if we started at 1970, 1980 etc rather than 1928........

redux

The best time to sell is a week before you find out you wish you'd done it.

Thrugelmir

bostonerimus wrote: »

It would be instructive to show the results for starting at different decades......The differences would not be as pronounced between volatility management and buy and hold if we started at 1970, 1980 etc rather than 1928........

In the 20's investors had disruptive technologies to contend with. Wireless, telephone, motor vehicles etc. Today we have Amazon, Google, UBER and Netflix. Though EU Commissioner Vestager may well be their nemesis.

The S&P 500 now accounts for around 70% of US GDP. Top 50 companies some 20%. Average lifespan of a quoted company is now little more 15 years.

The world is moving much much faster. Actual comparisons are meaningless.

IanSt

C_Mababejive wrote: »

I have quite a lot of money invested in shares and think i should start to slowly de-risk ...

Are these individual company shares or is it funds that you're invested in?

If individual then personally I'd move them across to a low cost global equity tracker as soon as possible.

If funds then consider where they are invested, then if necessary move them to more accurately reflect your needs over the coming years. But personally I'd be very wary of moving them out of equities.