Covid, Market Highs and Investment Strategies

Thrugelmir

michaels said:

Investing rule number 1: Don't try to time the market
Investing rules nos 2 -10: Re read rule 1

Rule 1 "Never lose money"
Rule 2 "Never forget rule no 1"

There are many markets. The art of investing is to be in the right ones. 

OldMusicGuy

michaels said:

Is anyone basing their portfolios on the current macro situation?

No, with a bit of yes. I have just retired, so my portfolio is set up to minimize volatility and avoid sequence of returns risk. And it's performed as I hoped it would over the last 12 months. Overall my view of the macro situation was already one of increased uncertainty prior to COVID. The world is going through a major shift away from fossil fuels, a new generation of tech is coming through that will have a big impact on the world in the next 5 to 10 years, and the global balance of power is shifting to China. IMO COVID is a blip that is just accelerating some of these trends (WFH, the role of cloud and tech, focus on pharma/biotech etc). So it has no impact on my investing strategy.

If you can tell me what the impact of all of this will be in 10 years when I will have to make some major decisions about retirement funding, I'd like to know......
 

cfw1994

OldMusicGuy said:

michaels said:

Is anyone basing their portfolios on the current macro situation?

No, with a bit of yes. I have just retired, so my portfolio is set up to minimize volatility and avoid sequence of returns risk. And it's performed as I hoped it would over the last 12 months. Overall my view of the macro situation was already one of increased uncertainty prior to COVID. The world is going through a major shift away from fossil fuels, a new generation of tech is coming through that will have a big impact on the world in the next 5 to 10 years, and the global balance of power is shifting to China. IMO COVID is a blip that is just accelerating some of these trends (WFH, the role of cloud and tech, focus on pharma/biotech etc). So it has no impact on my investing strategy.

If you can tell me what the impact of all of this will be in 10 years when I will have to make some major decisions about retirement funding, I'd like to know......

Well, the world has changed rapidly over the past 10 years in terms of the cloud/tech/bio/pharma areas you mention.....& my prediction, FWIW, is that acceleration in those areas will only increase over the coming decade.   That's where my 'bets' are....you asked!
Can't see inflation going crazy, although with the need to 'pay off' the Covid debt, who knows....that will be a multi-decade thing.....

SouthCoastBoy

IMO the free market has been manipulated since the 2008 crash, interest rates are artificially low and have been for over 10 years, inflation has run riot in certain sectors (i.e. housing) and is not considered in the CPI. There is the CPIH figure which considers housing costs, but the overall affordability of housing is the issue especially when interest rates start rising. Assets prices in certain financial markets definitely look like a bubble (e.g. Amazon, Tesla etc.). At some point interest rates will rise, when they do affordability comes into question, and who knows what will happen, there could very well be a correction in many different asset classes. We are in an interesting phase of the cycle. I am not trying to second guess any market, but by the same token any spare cash I have accumulated recently isn't being invested, I am in a wait and see position. My monthly company pension contributions are still being invested.

OldMusicGuy

SouthCoastBoy said:

IMO the free market has been manipulated since the 2008 crash

Just since 2008....? What about the Gold Standard and the Bretton Woods agreement? There's nothing new in macroeconomic "manipulation". Markets have come through all of that and capitalism has plodded along pretty much consistently for investors, provided you play a diversified long game (see chart above). Obviously a lot to be made or lost if you speculate on short term movements.  

DT2001

SouthCoastBoy said:

IMO the free market has been manipulated since the 2008 crash, interest rates are artificially low and have been for over 10 years, inflation has run riot in certain sectors (i.e. housing) and is not considered in the CPI. 

Depends where you live. Here in the SW prices, apart from the odd hot spot, are below RPI  for the last 10 years. Who knows where they’ll go now, will we see a move away from London and the South East as Covid has shown some the ability to work from home.

michaels

Thinks - why did I follow investing rule 1?

Thrugelmir

michaels said:

Thinks - why did I follow investing rule 1?

No one ever went broke by banking a profit. Don't confuse that with timing the market.  There's many markets to invest in. They don't move in unison. More often or not , it's converse.