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

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.

ArchBair

stoozie1 wrote: »

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

I have a couple of friends that have recently moved their SIPP investments into cash, but they are retired and around 60, so maybe they are happy to just take the profits and go into drawdown as cash. I myself, although in the same age bracket intend to stay in the market for the time being even though I will be going into drawdown next year.

Zola.

dunstonh wrote: »

A typical stockmarket crash is around 20-25%. We are currently down around 10%. So, you are pulling out after half a typical crash.

Lets say we do get to crash territory. When will you go back in again? it wont be at bottom as you wont know when that is. There is usually a quick bounce from the bottom (or a double dip). So, you will probably go back in after it has recovered half its loss.



Punching through it usually results in better returns than trying to guess the market. There has been a crash coming since 2012. We had one in 2015 but it recovered quickly. Crashes are always coming and you cant time them. So, whats the point of pulling out and getting it wrong most of the time?

Was it Bogle who said it that in these times that it's not

"Don't stand there, do something!"

its

"Don't do something, stand there!"

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.

Lungboy wrote: »

Historically, what have wars done to stock markets?

e: Not an awful lot by the looks of it

The 2003 invasion of Iraq killed the housing marked dead for a while due to the uncertainty. I had just put my house on the market and it was something like 6 months before we had the first viewing and nearly a year to sell.