Global Equities - still the best place for core holding?

Thrugelmir

talexuser wrote: »

Presumably that was part of what they called "Abeonomics". Ditching free markets and much more government intervention to stimulate growth and inflation? To simplify a complicated policy.

On a simple level. BoJ owns not just bonds, but company shares as well. Biggest shareholder in a number of companies. Likewise owns 75% of the ETF market.

In a nutshell on a broader level the risk is that the BoJ could under certain circumstances could effectively become insolvent. A mightly complex situation that has to be unwound. Not aided by a rapidly ageing population.

short_butt_sweet

Thrugelmir wrote: »

On a simple level. BoJ owns not just bonds, but company shares as well. Biggest shareholder in a number of companies. Likewise owns 75% of the ETF market.

In a nutshell on a broader level the risk is that the BoJ could under certain circumstances could effectively become insolvent. A mightly complex situation that has to be unwound. Not aided by a rapidly ageing population.

how could the BoJ become insolvent? they are the currency issuer for the yen. they can't become insolvent unless they have liabilities which aren't denominated in JPY.

i do agree that the endgame for japanese QE is more complex because they've been buying a range of assets, including shares. what are they going to do with all those shares? keeping them indefinitely is a possible answer - not so much because that answer sounds especially good, as because all other answers sound worse

the UK's QE is relatively simple, in that 98% of it was buying back gilts (and those gilts should just be regarded as cancelled - as discussed on another thread). the other 2% was buying corporate bonds. some decision about what to do with those corporate bonds will need to be made.

Glen_Clark

kidmugsy wrote: »

I suspect that (almost?) all financial assets are grossly overvalued. Maybe cash is less at risk than global equities but that leaves open the question of which currencies to hold your cash in.

It may be that sovereign bonds will suffer less than equities in a great crash - except for those bonds that governments renege on, either by simple default, or by inflation, or by other nefarious mechanisms.

And if enough governments respond to calamity by running inflations then your cash might not be safe either.

All of which suggests that cash is as over valued as everything else.
So diversify and chill.

Glen_Clark

Thrugelmir wrote: »

BOJ - QE 79% of GDP
ECB - 41%
US FED - 21%

Telling figures as to the level of central bank support.

Yes but even that can be misleading as there are different kinds of GDP.
Some is income from productive industry.
Wheras some is just higher rental income caused by Government intervention in the housing market.
One is more sustainable than the other.

RomfordNavy

Well, its been an interesting discussion, thank for the info everyone.

All equities are a risk, just good to try and make it as much of an educated guess as possible.

In the final conclusion decided to increase Japan exposure from 1.75% to 3%, only time will tell if this was a good decision or not.

Voyager2002

The link below is to a blog post that I find interesting about whether equities are over-valued. I think it is relevant to this discussion even though it does not discuss QE.
https://blog.moneyfarm.com/en/financial-markets/has-moneyfarms-view-of-us-equity-changed/

A_T

RomfordNavy wrote: »

Well, its been an interesting discussion, thank for the info everyone.

All equities are a risk, just good to try and make it as much of an educated guess as possible.

In the final conclusion decided to increase Japan exposure from 1.75% to 3%, only time will tell if this was a good decision or not.

It's so small a difference it hardly matters

Alexland

A_T wrote: »

It's so small a difference it hardly matters

And wasn't RomfordNavy also keen to buy into Lindsell Train whose flagship Global Equity fund is over 20% Japan?

https://forums.moneysavingexpert.com/discussion/comment/74988506#Comment_74988506

My gut feeling is that over the long term they would probably get a better result with mostly passive allocations in a global fund of funds.

Alex

Malthusian

kidmugsy wrote: »

Only if (i) you select the country you look at with some care

Nope, this applies to any decently globally diversified portfolio. An investment in the FTSE World TR index in mid 2007 had beaten cash by 2013. Add a few months to take into account charges.

and (ii) the investor lives for a very long time.

If you're in your nineties, maybe.

Have shares really beaten cash since the end of 1999?

I haven't got access to Morningstar right now, but after nearly 20 years of compounded dividends a properly diversified investment will be miles ahead.

I wouldn't be surprised if it's close enough that you can get whatever answer you want by making different assumptions about tax and charges.

Using sensible assumptions, shares beat cash over the long term. That is the point of them.

RomfordNavy

Alexland wrote: »

And wasn't RomfordNavy also keen to buy into Lindsell Train whose flagship Global Equity fund is over 20% Japan?

https://forums.moneysavingexpert.com/discussion/comment/74988506#Comment_74988506

My gut feeling is that over the long term they would probably get a better result with mostly passive allocations in a global fund of funds.

Alex

Didn't buy into Lindsell Train in the end: didn't much like the idea that I would have to open an account with Hargreaves Lansdown just for that one investment, didn't like what appears to be a bit of an incestuous relationship between LT and HL. Why LT insist on keeping that (unused) entry fee I don't know.

Also found that LT is highly invested in Unilever which I already have a sizable holding in so decided that LT was not for me.