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

ValiantSon

ColdIron wrote: »

This didn't age well did it?

Yeah, but some bloke on Twitter said it wasn't going to turn out so well. Based on authoritative argument like that, who can blame Type45 for selling up now and getting sub-inflation returns in deposit accounts.;)

Type_45

ColdIron wrote: »

This didn't age well did it?

How does that conflict with my post today? Long term vs short term.

ValiantSon

Type_45 wrote: »

How does that conflict with my post today? Long term vs short term.

You're messing with us, aren't you?

If not, and you can't see the incompatibility of your two posts, then I'd advise you to seek some professional independent financial advice.

Oh, hold on a minute. Let me quickly set up a [STRIKE]Speak Your Idiotic Brains[/STRIKE] Twitter account and advise you to invest in my nice new shiny pyramid scheme! I guarantee that it will make you a millionaire, and because I said it on Twitter it must be true! (N.B. Just to be clear, I'm not actually advertising or running a pyramid scheme).

AnotherJoe

Type_45 wrote: »

They weren't referring to VLS funds per se. They were referring to equities generally.

A 30% loss would be "generational"?



Yes. 30% across the board.


The Dot.com happened around 2000.



Dot com was dot com. Not non dot com.


The Credit Crunch happened in 2008. We are due another right about now. These aren't generational, unless by that you mean every 10 years.

It doesn't work that way.

AnotherJoe

Type_45 wrote: »

How does that conflict with my post today? Long term vs short term.

Because you dont get long term returns (except poor ones) by dipping in and out of the market short term . Thats a lesson most people take some time to learn. It did me.

BTW, "hundreds of millions" isn't even a rounding error in terms of worldwide capitalization. If it was significant markets woudl already be falling.

Type_45

dunstonh wrote: »

So, you had a fund that was only invested 60% in equities. So, a 30% loss wouldn't see your fund lose 30%.



I was referring to a 30% loss potential on your particular investment. That is what matters after all. Not some hypothetical spread that you dont have.

When a crash happens, it affects bonds too. General misery pervades. And we live in an age where many people are moving away from bonds anyway in favour of cash.

ValiantSon

Type_45 wrote: »

When a crash happens, it affects bonds too. General misery pervades. And we live in an age where many people are moving away from bonds anyway in favour of cash.

Um, you do know that bonds and equities markets are separate, don't you? You do also know that the forces that move those separate markets mean that bonds don't necessarily follow equities? And you do know that you were originally talking about equities?

"General misery pervades." What exactly does it pervade? During the last market crash I was actually quite chipper.

Oh, and one more, are you really trying to educate an experienced IFA on bond and equities markets? Hubris, thy name is....

Type_45

ValiantSon wrote: »

Um, you do know that bonds and equities markets are separate, don't you? You do also know that the forces that move those separate markets mean that bonds don't necessarily follow equities? And you do know that you were originally talking about equities?

Oh, and one more, are you really trying to educate an experienced IFA on bond and equities markets? Hubris, thy name is....

In theory, bonds and equities are counter balances. But in reality they have been going up and down at the same time in the recent bear market (GFC) and the bull market which has followed.


WHEN the next crash happens, I expect bonds will go down with equities. Not necessarily in perfect unison, but travel in the same direction.

dunstonh

If not, and you can't see the incompatibility of your two posts, then I'd advise you to seek some professional independent financial advice.

Oh come on. Its Friday afternoon. Please do not inflict that pain on some poor IFA.

When a crash happens, it affects bonds too. General misery pervades. And we live in an age where many people are moving away from bonds anyway in favour of cash.

Bonds and equities are not normally correlated. Most stockmarket crashes do not see bonds fall as well. it can happen but it depends on the cause of the crash. More often than not, if equities crash, bonds rise.

In theory, bonds and equities are counter balances. But in reality they have been going up and down at the same time in the recent bear market (GFC) and the bull market which has followed.

Have you taken movements in Sterling into account when comparing differences as well as the individual market events on each asset class?
I suspect not.

WHEN the next crash happens, I expect bonds will go down with equities. Not necessarily in perfect unison, but travel in the same direction.

They may do. However, statistically, they probably wont. Nobody will know until it happens.

ValiantSon

Type_45 wrote: »

In theory, bonds and equities are counter balances. But in reality they have been going up and down at the same time in the recent bear market (GFC) and the bull market which has followed.

Kind of. However, what you are overlooking is that this is a specific feature of a very recent phase in the market. You shouldn't expect it to always be like that.

Type_45 wrote: »

WHEN the next crash happens, I expect bonds will go down with equities. Not necessarily in perfect unison, but travel in the same direction.

Nobody has suggested that there won't be another crash. Indeed, most of the regulars on here make the consistent point that there will be another crash.

You may be right about how the bond markets will behave, or you may be wrong. Either way, it doesn't change the fact that you are conflating a speculative 30% fall in global equities values with the same fall in bond values (and which kinds of bonds are you talking about, anyway?).

As I've said, feel free to do what you want, but your action is based on nothing more than a speculative hunch. It also completely ignores what happens when markets recover, and the erosion in the value of your money due to inflation in the intervening period. If my investments lose 30% in the next 12 months, I will make a big purchase of more fund units, then watch my original holdings recover over the coming years, and my cheap purchases make even more money for me.