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Jeremy Grantham’s Bubble Predictions
ChilliBob
Posts: 2,201 Forumite
I'm wondering what you guys make of these articles from Jeremy Grantham regarding a bubble..
https://www.theguardian.com/business/nils-pratley-on-finance/2021/jan/06/veteran-investor-stock-market-jeremy-grantham-epic-bubble-wall-street
https://www.theguardian.com/business/2021/jan/06/ftse-100-stock-market-bubble-risk
I haven't invested anything yet but I had intended to start fairly soon, and probably with a fairly large lump sum. I'm aware that 'timing the market' isn't exactly easy, and that if you view (as I do) investing as long term horizon then you need to be prepared for this sort of thing.... However, is waiting a few weeks/months before ploughing several hundred thousand or something into a few index funds likely to be a better plan?
To those with existing big portfolios, do you just ride out things like this as you know (hope) that longer term it'll always increase (e.g. index fund, not something like an individual company share) or do you see this as a warning to alter your portfolio? - e.g. if you feel this is mostly a US thing do you change your exposure to the US by moving into different index funds for a while etc?
Just curious really.
https://www.theguardian.com/business/nils-pratley-on-finance/2021/jan/06/veteran-investor-stock-market-jeremy-grantham-epic-bubble-wall-street
https://www.theguardian.com/business/2021/jan/06/ftse-100-stock-market-bubble-risk
I haven't invested anything yet but I had intended to start fairly soon, and probably with a fairly large lump sum. I'm aware that 'timing the market' isn't exactly easy, and that if you view (as I do) investing as long term horizon then you need to be prepared for this sort of thing.... However, is waiting a few weeks/months before ploughing several hundred thousand or something into a few index funds likely to be a better plan?
To those with existing big portfolios, do you just ride out things like this as you know (hope) that longer term it'll always increase (e.g. index fund, not something like an individual company share) or do you see this as a warning to alter your portfolio? - e.g. if you feel this is mostly a US thing do you change your exposure to the US by moving into different index funds for a while etc?
Just curious really.
3
Comments
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I find GMO's outlooks interesting to read and to listen to. Well respected outfit.
Sounds as if a multi asset fund that is rebalanced occasionally would suit you best. Managing ones own investments isn't for the faint hearted. Markets can be irrational places. Drip feed funds in if you feel uncomfortable initially. That will help smooth out the volatility.
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I don't have a crystal ball, neither does Grantham and neither do the analysts at JP Morgan predicting a 25% increase in the S&P500 this year.
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I'd intended to dip my toes into equities via a global tracker, still with some research to do first mind, so not next week. I guess this sort of thing just made me think if:
1. That was the right choice, or if I should choose something different
2. If I should hold off for a few weeks before doing so really
Also if people agreed with it or not really! - Clearly nobody knows, but I feel something like this has to carry some weight vs some random columnist, as you say, well respected outfit0 -
Diversify broader than just a global equity fund. If you've a large sum to invest. That will only cover a small segment of the entire markets.0
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Oh for sure, I will. I haven't decided asset allocation or anything yet, I just know equities wise that my starting point would be a Global fund based on the reading I have done so far. Beyond that equities wise I'm less sure, I'd need to do more research, once I have a decent idea I'll probably post on here for people's thoughts.0
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I guess this does raise the more general question about when to just sit tight and when to do something as regards portfolio allocation. I'm keen to know the views of experienced people on here. I know from reading the idea of long term (mostly passive) investing isn't to take stuff out at the slightest blip etc but curious as to what signs/signals people on here use to make those decisions. Obviously everyone is different and the number of factors are incredibly broad but curious really!
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Asset allocation comes after assessing appetite for risk.
Lars Kroijer has a good set of videos which accompany his Investing Demystified book at Lars Kroijer. I revisit these videos whenever I start to think I know what I'm doing to remind myself I don't - especially after a good year like 2020.
I don't think most people would go far wrong by buying a global equity fund and doing nothing else other than offsetting the risk with cash or cash like investments at a level appropriate to the risk they're willing to take.5 -
Sailtheworld said:Asset allocation comes after assessing appetite for risk.
Lars Kroijer has a good set of videos which accompany his Investing Demystified book at Lars Kroijer. I revisit these videos whenever I start to think I know what I'm doing to remind myself I don't - especially after a good year like 2020.
I don't think most people would go far wrong by buying a global equity fund and doing nothing else other than offsetting the risk with cash or cash like investments at a level appropriate to the risk they're willing to take.
I'm hoping it'll help me understand the void between cash and equities... Except for bonds..0 -
I think you would still do fine over the long term with a global tracker but a few weeks ago before the brexit deal was announced I moved to having some home value bias due to concerns over unattractive valuations of some US growth companies compared to the relative cheapness and style diversity being offered by the UK market. I also expect to see the pound continuing to creep up against the dollar this year.
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I am sure he is right that the values of many US stocks are excessive. The problem is that a correction might occur tomorrow, or in five years time in which case pulling out now means you lose five years gains. Many years before the 2008 crash people said that the markets had irrational exuberance. In my view the sensible approach is to have some exposure to the US markets, but not too large an amount unless you are prepared to take high risks and have a long outlook. There are many who say just buy a global fund and you'll be fine, but those typically have 60-70% US exposure.
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