Where to invest now the coronavirus has hit the markets

masonic

EdGasketTheSecond said:

tropic_of_Username019 said:

2_4 said:

Are there any funds designed specifically to try and cash in on any recovery?

I normally invest in very broad funds such as the Vanguard 100 but don’t want to expose myself to companies with a fair probability of not surviving, which I feel such a wide-ranging fund is likely to do.

Why wouldn't you want to expose yourself to companies which may not survive?

I would have thought that is pretty obvious. If the companies do not survive you lose 100% of your investment.

All companies have a non-zero risk of not surviving, at all times. Where you and tropic_of_many_usernames differ is the risk level at which you would disinvest.

kinger101

EdGasketTheSecond said:

tropic_of_Username019 said:

2_4 said:

Are there any funds designed specifically to try and cash in on any recovery?

I normally invest in very broad funds such as the Vanguard 100 but don’t want to expose myself to companies with a fair probability of not surviving, which I feel such a wide-ranging fund is likely to do.

Why wouldn't you want to expose yourself to companies which may not survive?

I would have thought that is pretty obvious. If the companies do not survive you lose 100% of your investment.

It's an absolute certainty that all companies will come to end at some point.  And there's no guarantee any will survive one's lifetime, unless the individual concerned has a very poor prognosis.  

Linton

EdGasketTheSecond said:

tropic_of_Username019 said:

2_4 said:

Are there any funds designed specifically to try and cash in on any recovery?

I normally invest in very broad funds such as the Vanguard 100 but don’t want to expose myself to companies with a fair probability of not surviving, which I feel such a wide-ranging fund is likely to do.

Why wouldn't you want to expose yourself to companies which may not survive?

I would have thought that is pretty obvious. If the companies do not survive you lose 100% of your investment.

But you do not know which ones will survive and which ones wont.  The only way of guaranteeing that you do not invest in any company that will fail is to not invest at all.   Best to invest in a wide range of companies and expect that in a recovery the ones that survive, especially the ones that people did not expect would survive, will make up for the ones that fail.

tropic_of_Username019

Linton said:

EdGasketTheSecond said:

I would have thought that is pretty obvious. If the companies do not survive you lose 100% of your investment.

But you do not know which ones will survive and which ones wont.  The only way of guaranteeing that you do not invest in any company that will fail is to not invest at all.   Best to invest in a wide range of companies and expect that in a recovery the ones that survive, especially the ones that people did not expect would survive, will make up for the ones that fail.

Exactly. I wasn't advocating concentrating investment on companies which are more likely to go bust. Though some investors might want to do that, as a high risk / high potential reward play. But 100% of companies will fail eventually. And one cannot be sure which will fail in the short term. Is that a reason to avoid investing in any companies? No, but it's a reason to be well diversified across many companies.

It's similar to the argument that 100% of currencies will fail in the long run. Except that it's much easier to name a few that won't fail in the short run. Including ours.

One might also observe that 100% of physical gold will be stolen in the long run. And 100% of insurance companies (who might insure gold against theft) will fail in the long run. And 100% of custodians of ETFs/ETCs which hold physical gold will fail in the long run. And so on. After all, all these are companies. As is the FSCS. Paranoia can be used against gold as well as for it, you see

Eco_Miser

tropic_of_Username019 said:

But 100% of companies will fail eventually. .

No, some will be sold at vast profits to other companies, and formally wound up after transferring all activities to the new owner. That's not failing.

tropic_of_Username019 said:

It's similar to the argument that 100% of currencies will fail in the long run.

Once again many currencies no longer with us, like the European currencies that got swapped for the Euro, didn't fail.
However 100% of humans will die in the long run, possibly when the sun becomes a red giant.

Thrugelmir

Eco_Miser said:

tropic_of_Username019 said:

But 100% of companies will fail eventually. .

No, some will be sold at vast profits to other companies, and formally wound up after transferring all activities to the new owner. That's not failing.

tropic_of_Username019 said:

It's similar to the argument that 100% of currencies will fail in the long run.

Once again many currencies no longer with us, like the European currencies that got swapped for the Euro, didn't fail.
However 100% of humans will die in the long run, possibly when the sun becomes a red giant.

Kodak was once a great company to own. 

2_4

tropic_of_Username019 said:

2_4 said:

Are there any funds designed specifically to try and cash in on any recovery?

I normally invest in very broad funds such as the Vanguard 100 but don’t want to expose myself to companies with a fair probability of not surviving, which I feel such a wide-ranging fund is likely to do.

Why wouldn't you want to expose yourself to companies which may not survive? Their prices have been marked down (further than the market as a whole) to reflect the risk that they won't survive. Some won't survive, and will lose shareholder's money; but others will, and their prices will bounce back more strongly when it turns out they're pulling through after all.

Wanting to avoid such companies is contradictory to wanting to cash in on any recovery. Because it's the worst hit companies that have the potential to let you cash in on a recovery, if things get better sooner or faster than the market is currently allowing for. They also have the potential to do worse than the market, if things turn out worse than current market prices imply.

In short, I see no reason to move away from very wide-ranging funds (such as VLS 100) in the current situation. Such funds include exposure to a broad range of both companies which are worse affected by the current crisis (but with greater recovery potential) and companies which are less affected (but with less recovery potential).

I'm happy to expose myself to companies that MIGHT fail but if I say buy an all-share tracker I'll automatically be buying some companies that are likely to fail. A managed fund should have a better chance of avoiding these... that's my thinking.

But I suppose maybe that's always the case though, in theory, but in reality even if a recovery fund thinks Share A is safe, Share B is a loser and Share C is very risk with a huge upside, they could get it wrong. Hmm, ok, so I suppose it's no different now to normal...is that what you and others are saying?

jamesmorgan

2_4 said:

tropic_of_Username019 said:

2_4 said:

Are there any funds designed specifically to try and cash in on any recovery?

I normally invest in very broad funds such as the Vanguard 100 but don’t want to expose myself to companies with a fair probability of not surviving, which I feel such a wide-ranging fund is likely to do.

Why wouldn't you want to expose yourself to companies which may not survive? Their prices have been marked down (further than the market as a whole) to reflect the risk that they won't survive. Some won't survive, and will lose shareholder's money; but others will, and their prices will bounce back more strongly when it turns out they're pulling through after all.

Wanting to avoid such companies is contradictory to wanting to cash in on any recovery. Because it's the worst hit companies that have the potential to let you cash in on a recovery, if things get better sooner or faster than the market is currently allowing for. They also have the potential to do worse than the market, if things turn out worse than current market prices imply.

In short, I see no reason to move away from very wide-ranging funds (such as VLS 100) in the current situation. Such funds include exposure to a broad range of both companies which are worse affected by the current crisis (but with greater recovery potential) and companies which are less affected (but with less recovery potential).

I'm happy to expose myself to companies that MIGHT fail but if I say buy an all-share tracker I'll automatically be buying some companies that are likely to fail. A managed fund should have a better chance of avoiding these... that's my thinking.

But I suppose maybe that's always the case though, in theory, but in reality even if a recovery fund thinks Share A is safe, Share B is a loser and Share C is very risk with a huge upside, they could get it wrong. Hmm, ok, so I suppose it's no different now to normal...is that what you and others are saying?

It could be argued that it is already priced in.  Imagine two companies whose normal price is £100/share.  If one company has a 90% chance of failing it may have a new price of £10/share.  Alternatively the other company has a 10% chance of failing and has a new share price of £90/share.  Which is the better buy?  Unless you have insider information, both companies are equally good purchases.  If you were going to bet the farm on one share you would choose the second one, but both have their place in a balanced portfolio.

Vet

This is as good a time as any

masonic

2_4 said:

tropic_of_Username019 said:

2_4 said:

Are there any funds designed specifically to try and cash in on any recovery?

I normally invest in very broad funds such as the Vanguard 100 but don’t want to expose myself to companies with a fair probability of not surviving, which I feel such a wide-ranging fund is likely to do.

Why wouldn't you want to expose yourself to companies which may not survive? Their prices have been marked down (further than the market as a whole) to reflect the risk that they won't survive. Some won't survive, and will lose shareholder's money; but others will, and their prices will bounce back more strongly when it turns out they're pulling through after all.

Wanting to avoid such companies is contradictory to wanting to cash in on any recovery. Because it's the worst hit companies that have the potential to let you cash in on a recovery, if things get better sooner or faster than the market is currently allowing for. They also have the potential to do worse than the market, if things turn out worse than current market prices imply.

In short, I see no reason to move away from very wide-ranging funds (such as VLS 100) in the current situation. Such funds include exposure to a broad range of both companies which are worse affected by the current crisis (but with greater recovery potential) and companies which are less affected (but with less recovery potential).

I'm happy to expose myself to companies that MIGHT fail but if I say buy an all-share tracker I'll automatically be buying some companies that are likely to fail. A managed fund should have a better chance of avoiding these... that's my thinking.

But I suppose maybe that's always the case though, in theory, but in reality even if a recovery fund thinks Share A is safe, Share B is a loser and Share C is very risk with a huge upside, they could get it wrong. Hmm, ok, so I suppose it's no different now to normal...is that what you and others are saying?

As per previous comments, in a cap-weighted index, companies known to be likely to fail will make up very little of the index. Companies unknown to be likely to fail can't reliably be avoided.