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

Thrugelmir

Filo25 wrote: »

When valuations start to look a bit stretched, it doesn't take much to rattle confidence, and there are a few headwinds around at present.

Be interesting to see how the dominant index tracking funds weather the volatility.

IanManc

Thrugelmir wrote: »

Be interesting to see how the dominant index tracking funds weather the volatility.

Yes it will. :eek:

One would expect that they will follow the markets down and then follow them back up again, if they're proper trackers.

The US does seem very overvalued though - although the price is set by the market and so the market apparently thinks not; and the market is supposed to "know" everything.

Thrugelmir

IanManc wrote: »

Yes it will. :eek:

One would expect that they will follow the markets down and then follow them back up again, if they're proper trackers.

The US does seem very overvalued though - although the price is set by the market and so the market apparently thinks not; and the market is supposed to "know" everything.

When "you" become the market how do you follow the market though. The upward trend has become a self feeding loop. The market isn't setting company valuations. Instead the influx of cash into the same concentration of shares takes over. Broking houses rarely publicly issue on a "sell" rating on their company clients own share price.

The illiquidity in trading lines of stock. Has the potential to make markets more volatile.

TBC15

dunstonh wrote: »

Been there before and will go through it again.

50% losses would make it worse than both the dot.com crash and the global financial crisis. Which itself was similar to the 1930s depression. So, you are predicting another 1 in 100 year event (making it 3 in 100 years and 2 in the last 10)

And a recession would be unlikely to create 50% drops in the market. You are talking depression levels for the markets to fall back like that unless there are other events involved (dot.com wasnt just dot.com. It was a string of events over a period of multiple years)

Bearing in mind that markets are already down around 10%, predicting a further 50% puts it at a level that was last seen in the South Sea Bubble of 1769.

Very true, but not a bad mindset to have if you are in it for the long term and wish to avoid sponging one's fetlocks occasionally.

Bravepants

I think what drives people's fears are the rather dramatic headlines on places such as the Business page of the BBC News website. "Dow Jones PLUNGES 2%", well actually at time of writing it's down 0.5% on the day or so. These headlines play on our inate negativity bias. The fact is on major exchanges there are always "buyers" that match the "sellers", hence the almost daily bounce backs. Yes people are selling shares (in a "sell off" as the headlines may put it) but then there have to be people prepared to buy the shares that are being sold, and there nearly always are! Hence the bounce back.

Thrugelmir

Bravepants wrote: »

The fact is on major exchanges there are always "buyers" that match the "sellers", hence the almost daily bounce backs. Yes people are selling shares (in a "sell off" as the headlines may put it) but then there have to be people prepared to buy the shares that are being sold, and there nearly always are! Hence the bounce back.

When did you start investing?

dividendhero

Seems likely that the hedge fund managers that surround Trumpski will be manipulating the markets - they'll have shorted the Dow, Nasdaq etc, then make another profit on the upside when they tell Trumpski to declare victory and ease off the trade war

Carrieanne

Never mind stock market fluctuations, John Bolton's appointment to Trump's administration should alarm anyone who's paying attention.

Carrieanne

OldMusicGuy wrote: »

No. I have enough cash/near cash to last at least 10 years and my investments are not going to be touched for 10 to 15 years.

I'm in an identical situation. The big concern is raging or hyperinflation somewhere down the line, that's why my investments are overwhelmingly gold related.

Thrugelmir

dividendhero wrote: »

Seems likely that the hedge fund managers that surround Trumpski will be manipulating the markets - they'll have shorted the Dow, Nasdaq etc, then make another profit on the upside when they tell Trumpski to declare victory and ease off the trade war

Whose money are the hedgefund managers using though?