Panorama 21/10/19

thickasabrick

For someone with limited knowledge of investing or understanding of how the "the market" works, VLS60, to quote from "The Top 4 Portfolios to Recession-Proof Your Investments" article, allows me to "Build a well-rounded portfolio specifically designed to grow and protect your money no matter what happens in the larger economy, and you’ll never have to worry about a recession"
https://portfoliocharts.com/2019/08/20/the-top-4-portfolios-to-recession-proof-your-investments/

VLS 60 is simple enough to understand and follow for someone like myself.

Bonds, unfortunately, are still a black hole in terms of understanding for me, although I get the impression "strange things" are happening.

Even if there may be more optimum holdings which match some of the portfolios mentioned in the article, I'm not in a position to make an informed decision yet so I'll stick with VLS 60 as a close approximation.

itwasntme001 wrote: »

Why would you want to own any bonds at current yields over a 30 year time horizon?


Your strategy at this point in time seems a bit gung-ho tbh. Record low yields and a stock market that is at its highs with projections for forward returns forecast to be very low. Just does not feel right to be invested like this at this stage.

Thrugelmir

Malthusian wrote: »

A list of 50 funds is not a recommendation.

HL have a dedicated team that spend 25,000 hours a year in deciding which funds should be add to the list (subject to the Fund Manager agreeing to HL's terms).

To the uninformed. I read that list as recommendations if I received a newsletter in the post. Seems as if the hardwork has been done for you to narrow down the options.

Thrugelmir

thickasabrick wrote: »

VLS 60 is simple enough to understand and follow for someone like myself.

Bonds, unfortunately, are still a black hole in terms of understanding for me, although I get the impression "strange things" are happening.

Your statements appear to contradict themselves. Given the weighting to bonds in VLS60.

Intrigued to know what you consider to be "strange things". When bonds are some of the most transparent instruments one can invest in.

itwasntme001

Sailtheworld wrote: »

It's the first time I've seem VLS60 referred to as 'gung ho' investing.

What feels right to you at this stage?

Its just my opinion. Investing fresh capital now into it feels gung-ho given where yields are and stocks at near all time highs.


I am not sure where it makes sense to invest right now but i do know is that now is probably not a good idea to take excessive risk. I could have said the same back in 2017, 2016, 2014 etc etc. But i am willing to take some risk in timing things more then before. Just my personal strategy/opinion.

Sailtheworld

thickasabrick wrote: »

Bonds, unfortunately, are still a black hole in terms of understanding for me, although I get the impression "strange things" are happening.

Bonds are just government debt and usually considered minimal risk (not zero risk). Yields are rubbish and, these days, for minimal risk you should expect minimal reward.

They function in VLS60 to offset some of the risk of the other 60% depending on what total risk you're willing to take.

Something to be aware of is that a good chunk of the bonds in VLS60 are non-UK government issued so some additional currency risk is being taken on. Fine if there are rewards for the risk but it does mean they can't really be considered minimal risk.

itwasntme001

I should add that personally derisking my portfolio (sold a third of my stock holdings) was in part also due to the uncertainty regarding sterling and having seen sterling price more and more a hard Brexit, i thought it was opportune time to sell.


I just think those who have been invested for a number of years and have seen gains can afford to take some chances in timing things but of course emotions etc come into play so not everyone should do it.

Sailtheworld

itwasntme001 wrote: »

Its just my opinion. Investing fresh capital now into it feels gung-ho given where yields are and stocks at near all time highs.

I am not sure where it makes sense to invest right now but i do know is that now is probably not a good idea to take excessive risk. I could have said the same back in 2017, 2016, 2014 etc etc. But i am willing to take some risk in timing things more then before. Just my personal strategy/opinion.

I think I have the same sort of gut feel but I've had it for ever. I could've easily stuck with cash but I would've missed out on the best 10 years of my investing life.

Sailtheworld

Thrugelmir wrote: »

Intrigued to know what you consider to be "strange things". When bonds are some of the most transparent instruments one can invest in.

I get where they're coming from. Bonds are really simple but made as complicated as possible. Even the language is complicated i.e. bonds are government debt but UK government bonds are gilts. The bonds in VLS60 aren't all UK denominated so there's a currency risk. They're also hedged and for the life of me I can't work out if this is a good thing or bad thing.

Cynically I suspect it's because there's an attempt to create a sales margin where one shouldn't exist and it pushes people towards taking too much risk because stocks are easier to understand.

Thrugelmir

Sailtheworld wrote: »

I think I have the same sort of gut feel but I've had it for ever. I could've easily stuck with cash but I would've missed out on the best 10 years of my investing life.

Understanding why you have had the best 10 years in your investing life. Will put the current "rubbish" rates on Government bonds into perspective. Are you banking gains (into cash) or still sitting on paper profits.

itwasntme001

Sailtheworld wrote: »

I think I have the same sort of gut feel but I've had it for ever. I could've easily stuck with cash but I would've missed out on the best 10 years of my investing life.

At some point with a buy and hold strategy you will experience a bad drawdown. People have gotten used to gains for 10 years now and many are complacent of the risks. I think as long as you configure your portfolio to suit your objectives without taking excessive risk and you stick to it long term, then you should be fine.


I was heavily in stocks which is another reason i sold some. I am in my mid-30s so have time on my side to ride things out but at the same time i like to think i am opportunistic with these things.