Anything which didn't go down in the Oct 2018 crash?

AnotherJoe

RomfordNavy wrote: »

What would be interesting would be to identify some marker relating to whether the market is currently over or under valued which could help with buying decisions and potentially prevent buying in just before a downturn.

The problem with that type of thought is that the market is always valued exactly right, when taking into account the combined thoughts of all the money and sentiment for buyers and sellers.
It was valued exactly right yesterday, it is valued exactly right today and will be valued exactly right tomorrow, taking into account the changing news , information and opinions.


To believe there is some objective "correct valuation" you can use as an independent guideline is fools gold*. And if there was, that would simply be taken into account by buyers and sellers and again, the market would always be at that objective valuation. Because if it was over valued by that measure, people (or more likely computer systems acting in fractions of a second) would sell until it reached that, and vice versa.


* plenty of hedge funds and banks thought they had identified such markers before 2007. That didnt work out too well

MaxiRobriguez

RomfordNavy wrote: »

No intention os selling these for the next ten years unless the situation changes substantially. Just questioning the viability of putting more money into the same funds, wouldn't want to throw good money after bad in the hope that one day it will all recover which of course is never guaranteed.

Most metrics show markets are overvalued and high risk. P/E ratios, leverage volumes, buffet valuation yada yada. You've also got other risks like length of bull market, interest rate hikes, trade wars etc.

What I'm trying to say I suppose is that if you're looking for "warning signals" to avoid bad market beats then there's a raft of them all flashing red.

You have two choices, you can either:
1) Park in cash for now, waiting further declines until levels regress to the mean.
2) Ignore all those metrics, because you understand over the long term equities are a good bet.

Both are fine, what is important is how long it'll be until you want to access and spend your investments. If it's in the next five years then going into equities now is a bad move in my opinion. If you've got a 10 year+ horizon then just get your money in and forget about the short term noise.

seacaitch

RomfordNavy wrote: »

No intention of selling these for the next ten years unless the situation changes substantially.

This confirms my view that you have low conviction in your equity holdings and thus have a high probability of selling out after experiencing heavy falls in a future bear market.

I'm not writing this to be mean to you; I'm simply observing that you seem to fit the profile of private investors I've seen capitulate when the going gets tough and the worry mounts, often leading to horrible returns.

MaxiRobriguez

seacaitch wrote: »

This confirms my view that you have low conviction in your equity holdings and thus have a high probability of selling out after experiencing heavy falls in a future bear market.

I'm not writing this to be mean to you; I'm simply observing that you seem to fit the profile of private investors I've seen capitulate when the going gets tough and the worry mounts, often leading to horrible returns.

Agreed.

"unless" is dodgy ground. You either have a reason for selling or you don't.

If you might buy a new house or retire in the next 5-10 years and would dip into the investments to fund then don't use the money to go into equities.

People need to be really consider their time horizons before assuming they can deal with paper losses.

RomfordNavy

Linton wrote: »

If we take the period of the past 3 months about 150 of all the OEIC/UT funds on trustnet out of 3500 made a profit. Looking at equity funds only the figure is 43 out of 1739, the most well represented sector seems to be Latin America.

Lindeell Train Global Equity and Fundsmith have been mentioned as well performing funds. However over 3 months LTGE is down 5% and Fundsmith down 6%.

Lets now look profitable funds in past 1 year:
All funds:678
Equity funds: 425

And 3 years:
All funds:2951 out of 3033.
- Median(Return of 1516 th fund):7%/year

Equity funds:1515 out of 1540.
- Median(Return of 770th fund): 10%/year


The point being is that how funds performed over the past 3 months is irrelevent.

Fantastic bit of analysis. I was just about to post about expected long-term gains when you posted this, very helpfull, thanks.

Prism

MaxiRobriguez wrote: »

Agreed.

"unless" is dodgy ground. You either have a reason for selling or you don't.

If you might buy a new house or retire in the next 5-10 years and would dip into the investments to fund then don't use the money to go into equities.

People need to be really consider their time horizons before assuming they can deal with paper losses.

Yeah, the way to do it is to split your savings into two pools which is why I don't really like multi asset funds, although I understand the attraction for simplicity
I use my SIPP for equities (10 years +) and barely have anything in equities out side of it. The rest is in cash and fixed interest which covers up to about 5 years (along with earnings)

System

RomfordNavy wrote: »

Interesting, so what indicators did you see to make you buy Gold at that time?

I thought that equity prices were looking high and Brexit uncertainty seemed to be increasing so the pound seemed quite low so rather than buying global equities I bought gold so mainly just a hunch.

RomfordNavy

MaxiRobriguez wrote: »

Most metrics show markets are overvalued and high risk. P/E ratios, leverage volumes, buffet valuation yada yada. You've also got other risks like length of bull market, interest rate hikes, trade wars etc.

What I'm trying to say I suppose is that if you're looking for "warning signals" to avoid bad market beats then there's a raft of them all flashing red.

You have two choices, you can either:
1) Park in cash for now, waiting further declines until levels regress to the mean.
2) Ignore all those metrics, because you understand over the long term equities are a good bet.

Both are fine, what is important is how long it'll be until you want to access and spend your investments. If it's in the next five years then going into equities now is a bad move in my opinion. If you've got a 10 year+ horizon then just get your money in and forget about the short term noise.

Good summary, thanks @MaxiRobriguez.

Personally I can see much more Brexit uncertainty going forwards so maybe best to avoid investing any further in UK equities at the moment, or at least hold off until previous investments are back to zero, taking into account dividends. Then perhaps drip feed so as to try and avoid too much negative territory.


Worldwide, well I am still undecided. What with widespread quantitive tightening along with Trump and his trade wars, I don't see things looking too rosey in general but there are always exceptions, Brazil for example.

As for the period of investment, there is no defined time limit. Intention is to invest an adequate quantity to provide enough income to live on. That way I can continue my unpaid research work without the inconvienence of having to find work. That doesn't mean that I actually need Income funds which deliver cash, just that I will only plan to spend investment profit less a bit for inflation.

Prism

RomfordNavy wrote: »

As for the period of investment, there is no defined time limit. Intention is to invest an adequate quantity to provide enough income to live on. That way I can continue my unpaid research work without the inconvienence of having to find work. That doesn't mean that I actually need Income funds which deliver cash, just that I will only plan to spend investment profit less a bit for inflation.

Just remember that unless you are very wealthy and it really doesn't matter you should never use equities in any sort of plan to live off in the near future. What happens if the value halves next year and doesn't recover for 5 more? How do you live then?

Those that do live of their savings often have a blend of fixed income (cash and bonds) for when equities stuggle and only use equity gains in the good times

Audaxer

Prism wrote: »

Just remember that unless you are very wealthy and it really doesn't matter you should never use equities in any sort of plan to live off in the near future. What happens if the value halves next year and doesn't recover for 5 more? How do you live then?

I agree you shouldn't plan to live off equities in the near future if you are still accumulating, but many retired people who do not have a DB pension, will have to live off income from investments (usually equity and fixed interest) as soon as they retire, either in the form of dividends or capital growth. If values half and/or dividend income is reduced, that is when having a cash buffer comes in handy.