Pension Reset - what your asset/geographic allocation be?

HAYDAN2002

as said above...you are doing really well having that much already. Only you can be the judge of how much risk you have an appetite for...you might have got an idea of this last March. But time is in your side.
If you were going 100% equities spread it out either by going worldwide funds or choose your different countries / sectors . If unsure just spread it out and when you are more familiar with what you are in you can always change the ratios. I know some pension guys who spread it across 20 funds...whereas others just go for a couple.

[Deleted User]

eskbanker said:

ZingPowZing said:
I'm really keen to learn what diversification really is, particularly the model of diversification that acts like a brick dropped in a tank and raises the overall level of the collective investment. [...] But I suspect that Dr Strange, like me, would swap all that good advice for the version of diversification that performs alchemy and increases the aggregate value of its component parts. I'm all ears anyway.

You're not all ears though, that's the issue - you accepted earlier in the thread that the primary rationale for diversification isn't value growth ("diversification isn't necessarily about maximising performance but managing risk...."; "Agreed again. [So long as managing risk is the main concern of the OP.]") but continue to cling to the trite soundbite about a zero-sum game as if it's meaningful or relevant.  It could just as easily be asserted that investing itself is a zero-sum game and choose to interpret that as meaning that nobody should invest....

No, that would be more nearly the opposite: 
if the value of investments rise over time (as they should) then an individual can expect to see gains from investment. So the result of investing, broadly, is increase. Diversification does not result in increase. 

Respondents have said (sic) We know that, but my sense is that they don’t really accept the premise. My sense is that people who follow conventional wisdom  (even if they notionally accept that the purpose is not increase) believe that through diversification they are entitled, or deserving, of a better outcome than those who don’t. Same way as a sensible driver will economise on fuel and count a tangible benefit, or a sensible regime of exercise will result in better health, adherents of diversification believe that it will produce a better result. But, however large the sample and whatever the allocations, overall, there is no beneficial return. The aggregate effect is zero.

Alexland

DoctorStrange - do you regret starting this thread yet?

My reply is that if you are liable to neglect the investment again for a few years you might do well with just a simple all-world or all-cap global tracker or multi asset fund but if you are wanting to be more active with geographical allocations then based on current valuations I would slightly underweight US and overweight UK which would also help keep the portfolio reasonably style neutral.

eskbanker

ZingPowZing said:
Respondents have said (sic) We know that, but my sense is that they don’t really accept the premise. My sense is that people who follow conventional wisdom  (even if they notionally accept that the purpose is not increase) believe that through diversification they are entitled, or deserving, of a better outcome than those who don’t. 

This is all getting very circular - a couple of pages ago you were asked to substantiate this assertion about what others believe but deflected away from doing so.

ZingPowZing said:
adherents of diversification believe that it will produce a better result

Of course, but it's only in your strawman that this is equated to a higher absolute investment value - a better result for many will be lower volatility, more predictable outcomes, etc, but again, at the risk of repetition, there will be those for whom it's not the best approach (i.e. those who are confident enough in their knowledge and abilities not to be asking on here).

[Deleted User]

Well, I'm happy to be wrong about what others believe, particularly since nobody is contesting the assertion that diversification - regardless of other benefit - does nothing to raise investment value overall. If everyone already agrees that - neither of us know - so much the better.

Prism

ZingPowZing said:

Well, I'm happy to be wrong about what others believe, particularly since nobody is contesting the assertion that diversification - regardless of other benefit - does nothing to raise investment value overall. If everyone already agrees that - neither of us know - so much the better.

No but it might stop you losing as much money. Have a read of this article by Terry Smith about the chance of actually selecting a good stock. This is the problem with only selecting a handful - the chances are they will not return much at all.
Financial Times - Busting the myths of investment: Do equities outperform bonds? (fundsmith.co.uk)

eskbanker

ZingPowZing said:

Well, I'm happy to be wrong about what others believe, particularly since nobody is contesting the assertion that diversification - regardless of other benefit - does nothing to raise investment value overall. If everyone already agrees that - neither of us know - so much the better.

You're just rephrasing your extensively-debated 'diversification is a zero-sum game' there, but even if it was accepted that there's some validity in that viewpoint, that still doesn't mean that it's a bad idea when viewed from the perspective of an individual investor.  However, there's no point in taking a dogmatic position about it, as it's clearly not a binary black-and-white issue and, as highlighted already, will be more suitable for some than others....

[Deleted User]

I’ll take a look but don’t you think the dangers of investing in individual stocks overplayed, Prism?
Decently performing stocks have been front and centre for a long time now. I don’t have a penny in Tesla or Amazon but others -particularly those involved in buybacks - have done very well without “shooting the lights out” or exposing their investors to risk of “ruin.” I see more danger in cowboy fund managers.

And then it is so much easier to cope with volatility if gains are in the bank : converging on the average is not the only form of risk management.

[Deleted User]

eskbanker said:

ZingPowZing said:

Well, I'm happy to be wrong about what others believe, particularly since nobody is contesting the assertion that diversification - regardless of other benefit - does nothing to raise investment value overall. If everyone already agrees that - neither of us know - so much the better.

You're just rephrasing your extensively-debated 'diversification is a zero-sum game' there, but even if it was accepted that there's some validity in that viewpoint, that still doesn't mean that it's a bad idea when viewed from the perspective of an individual investor.  However, there's no point in taking a dogmatic position about it, as it's clearly not a binary black-and-white issue and, as highlighted already, will be more suitable for some than others....

Maybe I misunderstand you, eskbanker. Are you saying that you DON’T accept that zero is the difference to the value for any sample of investments regardless of its diversification through any number of investors overall? Do you believe diversification changes the total value?
Because if diversification can change the size of the cake by one crumb, I’d pay a handsome reward for the formula.

eskbanker

ZingPowZing said:

eskbanker said:

ZingPowZing said:

Well, I'm happy to be wrong about what others believe, particularly since nobody is contesting the assertion that diversification - regardless of other benefit - does nothing to raise investment value overall. If everyone already agrees that - neither of us know - so much the better.

You're just rephrasing your extensively-debated 'diversification is a zero-sum game' there, but even if it was accepted that there's some validity in that viewpoint, that still doesn't mean that it's a bad idea when viewed from the perspective of an individual investor.  However, there's no point in taking a dogmatic position about it, as it's clearly not a binary black-and-white issue and, as highlighted already, will be more suitable for some than others....

Maybe I misunderstand you, eskbanker. Are you saying that you DON’T accept that zero is the difference to the value for any sample of investments regardless of its diversification through any number of investors overall? Do you believe diversification changes the total value?
Because if diversification can change the size of the cake by one crumb, I’d pay a handsome reward for the formula.

I'm saying that, from the position of an individual investor, the overall size of the cake is unlikely to be relevant to their decision about their investment approach....