A good time to invest in UK equities?

Prism

Morningstar tells me that I have 17% in the UK so I guess that makes me overweight. It has certainly been a bit of a drag these past few months - my main UK fund is down 20% over the last 3. I hope it recovers at some point soon but I am leaving it alone, as I have done all year.

aroominyork

Voyager2002 wrote: »

It is important to distinguish between companies that earn globally and companies that rely on the UK market for most of their earnings. And of course to be aware of which borders their supply chains cross. Your belief about how Brexit will turn out should have a major impact on your expectations of whether they will continue to earn.

Yes, I should have said I was thinking about large caps (I hold Lindsell Train UK) rather than small/mid caps. Large caps is where I think the long term impact of Brexit is creating some value.

Voyager2002 wrote: »

On India, Modi has spouted a lot of pro-business rhetoric but has not actually done anything positive, so his difficulties are not a problem. My main consideration is that the trade war between China and the USA creates a lot of opportunities for Indian business, while such businesses are relatively well insulated from the rises that we all expect in US interest rates.

I don't see India picking up more than a few crumbs from the US-China spat, though the data coming through on the impact on China is starting to look interesting.

tacpot12

The cyclically adjusted price-to-earnings (CAPE) ratio for UK equities is a lot lower than for US equities, and is still falling, so I'm inclined to think that now is a good time to be buying.

Thrugelmir

Alexland wrote: »

S&P500 companies also issue junk rated corporate bonds so perhaps these hopeless opportunities are everywhere.

The fall in the tech stocks has revealed the general weakness that has been prevalent for some time. Easy to get carried when just a few stocks are driving the indices upwards.

aroominyork

Thrugelmir wrote: »

The fall in the tech stocks has revealed the general weakness that has been prevalent for some time. Easy to get carried when just a few stocks are driving the indices upwards.

Which makes Fundsmith's continued strong performance all the more impressive.

Voyager2002

tacpot12 wrote: »

The cyclically adjusted price-to-earnings (CAPE) ratio for UK equities is a lot lower than for US equities, and is still falling, so I'm inclined to think that now is a good time to be buying.

Beware:CAPE relates today's price to yesterday's earnings. What really matters is tomorrow's earnings, which none of us can know, but an upheaval such as Brexit makes it highly unlikely that there will be much resemblance between earnings yesterday and earnings tomorrow.

tacpot12

Voyager2002 wrote: »

Beware:CAPE relates today's price to yesterday's earnings. What really matters is tomorrow's earnings, which none of us can know, but an upheaval such as Brexit makes it highly unlikely that there will be much resemblance between earnings yesterday and earnings tomorrow.

While CAPE does indeed look at todays price vs previous earnings, it is looking at the previous ten years of earnings which means that it is looking at average returns over quite a long period. As you rightly say, what really matters if future earning, but no-one can know this, so in the absence of a crystal ball, I am prepared to put some faith in historical returns. I'm not sure I agree with an assertion that "Brexit" makes future earnings any less related to previous earnings, because disruptive influences occur regularly over the economic cycles. If it's not Brexit, it's China, or a Financial Crisis or Deregulation, or 9/11, etc.

Novice_investor101

My S&S ISA holds about 10% UK - split 50/50 between FTSE all share & FTSE 250 funds. Rest is in l&g international index tracker. My pension is 8% UK, total across a couple of global funds that are not ex-UK, & a UK tracker that receives 5% of my contributions.
My LISA has whatever UK split the vanguard global all cap gives it.

I'm just carrying on making the same regular payments as usual. Not really worried enough to change anything.

But then, I haven't got tens of thousands invested. Maybe in the future, when I have, I'd be more concerned.

parking_question_chap

Its uncertain times at the moment.

Investing now could return gains in the event of a brexit deal, but losses in the event of a no deal.

Imo

Pays your money take your chance etc.

dividendhero

I've often heard the line that the Brexit fall in the pound will put wind in the sails of UK companies with overseas exposure, there are 2 aspects to this.

(1) UK companies with overseas operations will undoubtedly benefit from a falling pound as their earnings in Euros, dollars etc will translate into more £'s.

(2) I'm less convinced about UK exporters. On the surface their exports should become more profitable, but despite the waffle from Maybot about "frictionless trade", friction there will be. This is not only to the EU, but to dozens of other countries that have FTA's with the EU that'll be lost