Liquidate entire portfolio until virus is over?

bowlhead99

Alexland said:

I am starting to wonder if I will ever get around to reinvesting the children's JISA money. With adverse exchange rate movements some of my favourite global trackers are now only down around 20% which seems to underestimate the cashflow business value destruction even under the best case recovery scenarios. Bizarrely even though the market is down it seems to be offering UK based investors less forward value too. 

If you are concerned that the GBP strengthening has reduced the impact of the fall on global trackers so that they haven't gone down in sterling terms as much as you would like, you could look at GBP-hedged funds.

Obviously hedging for the long long term has limited value and not cost effective, but if you believe it to be short term issue where GBP will rebound once 'flight to safety' dollar and euro is over - which is the reason you don't want to buy in at a price where GBP investors have been insulated from the underlying dollar and euro falls - then hedged funds or ETFs may be what you are looking for. 

Alexland

bowlhead99 said:

If you are concerned that the GBP strengthening has reduced the impact of the fall on global trackers so that they haven't gone down in sterling terms as much as you would like, you could look at GBP-hedged funds.

Obviously hedging for the long long term has limited value and not cost effective, but if you believe it to be short term issue where GBP will rebound once 'flight to safety' dollar and euro is over - which is the reason you don't want to buy in at a price where GBP investors have been insulated from the underlying dollar and euro falls - then hedged funds or ETFs may be what you are looking for. 

Good point I had overlooked yes SWDA's hedged & distributing brother IWDG has taken a better hammering down a further 8% at 27% loss YTD. Hmm..... yes hedging for a while until GBP recovers is more attractive. These JISAs are only about 1% of our family net worth but it's so hard to decide when such good cash rates are available.

worldtraveller

CLOSING NUMBERS FROM YESTERDAY:

FTSE 100 @ 5,191 - DOWN 32% FROM PEAK

FTSE 250 @ 13,593 - DOWN 38% FROM PEAK

FTSE ALL SHARE @ 2,837 - DOWN 33% FROM PEAK

DOW JONES @ 19,174 - DOWN 35% FROM PEAK

NASDAQ @ 6,880 - DOWN 30% FROM PEAK

darkidoe

Alexland said:

I am starting to wonder if I will ever get around to reinvesting the children's JISA money. With adverse exchange rate movements some of my favourite global trackers are now only down around 20% which seems to underestimate the cashflow business value destruction even under the best case recovery scenarios. Bizarrely even though the market is down it seems to be offering UK based investors less forward value too. At this rate I'll be transfering back to the nice safe 3%+ cash accounts having not invested the money.

I didn't quite understand 'cashflow business value destruction'. Do you mind trying to explain it in layman's terms. 
How do you know forward value of investments might be less for UK investors? Because of the exchange rate?

Alexland

darkidoe said:

I didn't quite understand 'cashflow business value destruction'. Do you mind trying to explain it in layman's terms. 
How do you know forward value of investments might be less for UK investors? Because of the exchange rate?

Although governments are providing some support while businesses are in hibernation they are continuing to burn cash incurring cost with no revenues. Once spent this cash is gone from the value of their business and if they run short they will need others to provide cash into the business (eg issuing bonds or new shares) so would end up owning a less profitable business or a smaller proportion of the business.

For a UK based global investor they are buying mostly US based investments and the weak pound hampers their buying power so they end up paying a bit more (via the exchange rate) for things that are now lower cost (but less valuable).

worldtraveller

CLOSING NUMBERS FROM YESTERDAY:

FTSE 100 @ 4,994 - DOWN 35% FROM PEAK

FTSE 250 @ 13,078 - DOWN 41% FROM PEAK

FTSE ALL SHARE @ 2,728 - DOWN 36% FROM PEAK

DOW JONES @ 18,592 - DOWN 37% FROM PEAK

NASDAQ @ 6,861 - DOWN 30% FROM PEAK

DoctorStrange

Thrugelmir said:

worldtraveller said:

worldtraveller said:

I'm certain that we'll see the Bank of England introducing a new quantitative easing programme (ie. extend current £435 billion) very soon, in a similar way to that which the Fed introduced on Sunday.

It didn't take long!

The BOE has introduced a new quantitative easing programme today to add £200 billion extra bond purchasing.

No market appetite for the debt issuance that's coming. 

It's not debt issuance, it's debt buying.

The bonds are already trading in the market, the BOE just buys them from the sellers with made up money.

Thrugelmir

DoctorStrange said:

Thrugelmir said:

worldtraveller said:

worldtraveller said:

I'm certain that we'll see the Bank of England introducing a new quantitative easing programme (ie. extend current £435 billion) very soon, in a similar way to that which the Fed introduced on Sunday.

It didn't take long!

The BOE has introduced a new quantitative easing programme today to add £200 billion extra bond purchasing.

No market appetite for the debt issuance that's coming. 

It's not debt issuance, it's debt buying.

The bonds are already trading in the market, the BOE just buys them from the sellers with made up money.

BOE can buy when the DMO has an auction. 

Alexland

Alexland said:

is it really worth damaging the economy into a depression for the next generations?

Oh dear looks like Trump has been catching up with this thread and might reopen US regardless. Markets love it, but can humanity really do this to each other? Sacrifice many for the good of the rest...

Thrugelmir

Alexland said:

Alexland said:

is it really worth damaging the economy into a depression for the next generations?

Oh dear looks like Trump has been catching up with this thread and might reopen US regardless. Markets love it, but can humanity really do this to each other? Sacrifice many for the good of the rest...

The weathiest nation on this planet is probably the least well equipped to cope with this pandemic.