Next recession, trade wars, up to 50% portfolio losses

slapmatt

So... what are people using to hedge against a potential drop in the stock market?

ProDave

So Maybot is about to put our 3 nuclear powers up against the might of Russia.

Anyone now still feel a stock market crash is not iminent.

As before I am keeping my pension pot in cash right now.

What do the DUP think? If they are against war, vote of no confidence = Jeremy as PM. That might be good for keeping us out of a war but I still see that crash.

Lungboy

Historically, what have wars done to stock markets?

e: Not an awful lot by the looks of it

stoozie1

slapmatt wrote: »

So... what are people using to hedge against a potential drop in the stock market?

I'd be interested to know if anyone is holding cash as a hedge.

Filo25

stoozie1 wrote: »

I'd be interested to know if anyone is holding cash as a hedge.

Was asking the same question last night on the cash thread, I am getting very tempted to sell my bond funds and hold cash as my de-risking asset instead (in my SIPP), but really not sure if I am missing something.

Filo25

ProDave wrote: »

So Maybot is about to put our 3 nuclear powers up against the might of Russia.

Anyone now still feel a stock market crash is not iminent.

As before I am keeping my pension pot in cash right now.

What do the DUP think? If they are against war, vote of no confidence = Jeremy as PM. That might be good for keeping us out of a war but I still see that crash.

Don't hold your breath on the DUP voting in any way to help Corbyn potentially get into power, it is hard to overstate just how much they despise him and McDonnell.

Equally while there may be some posturing and limited action around Syria, nobody on either side has any real interest in getting into a real escalating violent conflict between the West and Russia.

ProDave

Filo25 wrote: »

Don't hold your breath on the DUP voting in any way to help Corbyn potentially get into power, it is hard to overstate just how much they despise him and McDonnell.

Equally while there may be some posturing and limited action around Syria, nobody on either side has any real interest in getting into a real escalating violent conflict between the West and Russia.

If Obama was still president, I would agree with that. But Trump?

Filo25

ProDave wrote: »

If Obama was still president, I would agree with that. But Trump?

Just means even more posturing, especially as he no doubt tries to prove he isn't in Russia's back pocket. But no doubt as before Russia will be forewarned of any limited military action in Syria, so that they don't get caught in the crossfire.

Russia has actually gotten away with a lot in recent years with relatively little serious reaction from the West in general

Sue58

Filo25 wrote: »

Was asking the same question last night on the cash thread, I am getting very tempted to sell my bond funds and hold cash as my de-risking asset instead (in my SIPP), but really not sure if I am missing something.

I suppose it really depends on individual circumstances mainly people's age group. If you're an investor ranging from 20-45 then you're more likely to just stay in the market with your own asset allocation/risk profile that suits your needs. My husband is 60 this year and has always had a portfolio of 100% equities in both ISA and SIPP so now he is thinking of moving his SIPP into cash because he wants to drawdown the maximum that he can tax free until his state pension in 6 years time. Fortunately, at the moment he doesn't need the money (I'm still working), so the money he draws down each year will be to put into our S&S ISA allowances but in wealth preservation IT's or funds.

So IMO it's pointless trying to time the market, however, you have to make your decision based upon your own personal circumstances. As an example on trying to time the market, after the Brexit result I decided to move my S&S ISA investments into cash whereas my husband stayed in the market, I went back into the market 6/7 months later and I am now quite a bit behind my husband on our total returns even though we have invested the same amounts and in the same funds over the years. So lessons have been learned from me panicking.

Filo25

Sue58 wrote: »

I suppose it really depends on individual circumstances mainly people's age group. If you're an investor ranging from 20-45 then you're more likely to just stay in the market with your own asset allocation/risk profile that suits your needs. My husband is 60 this year and has always had a portfolio of 100% equities in both ISA and SIPP so now he is thinking of moving his SIPP into cash because he wants to drawdown the maximum that he can tax free until his state pension in 6 years time. Fortunately, at the moment he doesn't need the money (I'm still working), so the money he draws down each year will be to put into our S&S ISA allowances but in wealth preservation IT's or funds.

So IMO it's pointless trying to time the market, however, you have to make your decision based upon your own personal circumstances. As an example on trying to time the market, after the Brexit result I decided to move my S&S ISA investments into cash whereas my husband stayed in the market, I went back into the market 6/7 months later and I am now quite a bit behind my husband on our total returns even though we have invested the same amounts and in the same funds over the years. So lessons have been learned from me panicking.

Just to be clear here I'm not talking about changing my equities proportion here, just considering whether it makes sense to move from bonds into cash for my risk reduction asset, so moving from 65% Equities:35% bonds to 65% Equities:35% cash.

My logic being that currently as market volatility has increased in recent months, most bond funds have not done well, it doesn't look like we have that traditional relationship at present where bonds are likely to do well in an equity downturn. (not altogether unsurprising as bond valuations look stretched by QE as well)

Obviously you would probably be insulated from that if you moved your bond funds into short dated gilts/AAA rated bonds, but with rates this low I would think those remain uneconomical to hold after allowing for management and platform fees.

I'm a relative noob at investing so I'm sure I am missing factors here, but interested to hear other opinions on that one.