USA - the next decade

Prism

mrlegend123 said:

I said last week that I was not selling existing and was not buying new us holdings using some cash to park in the money markets. Some posters on here slated me.... mad to invest in the US with the highest Cape since the dot com bubble. 

I don't think anyone slated you - your comments were a bit confusing thats all. Staying invested in US markets and yet saying its mad to invest in US markets. I agree that the price is high. I have actively sold out of some funds because of it.

coastline

This is what some investors don't like but others just set the asset allocation and buy and hold.
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Trailing P/E
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Forward P/E and despite the market rising earnings are also improving as shown by the last six months on the chart.
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Short term over extended which is why commentators say a correction is needed.
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A bit short this as it only goes to 2016 but the result is the same. Next ten years who knows ?
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[Deleted User]

I reckon the outlook for the USA is good not only for the next ten years but the rest of the 21st C. Sure, China is set to overtake in terms of GDP in c twenty years but won’t surpass America per capita in the foreseeable future. 
As they have been saying in Silicon Valley for many years, “There are no have nots, only have laters.” So, while the relative share of GDP drops, the shop windows of America and Europe are more important than ever.
Politically and militarily, the USA is pre eminent.
When the next world crisis hits, the same thing will happen as in March 2020, money flies to the dollar.

You’re right, American stocks have done very well for ten years or more and, as Thrugelmir says, the star performers have been staring everyone in the face. That has left me overweight US by most measures but, the way I look at it, anyone living here is unavoidably overweight in sterling denominated assets (house/salary/pension) so, for me, it’s not something about which to be concerned.

bostonerimus

mrlegend123 said:

it is guaranteed that investors around the world are thinking the same about the US markets and the threat of inflation due to money printing.

The smart money has props already left the US markets..... 

OMG, I'm still heavily invested in US equities...Most investors are not thinking about inflation due to "printing money" or trillion dollar stimulus packages and if they are in the market for the long term and have a well diversified portfolio I don't think they should be thinking about it.

whatstheplan

Deleted_User said:

... If you don't have a target percentage for US equities within your equities (or indeed, a target percentage for equities within your portfolio), then try setting some targets! That makes more sense than thinking in terms of "this £10k goes into this" and "that £20k goes into that". Once you have targets, you can rebalance every so often (e.g. once a year) back to your targets. Or you can do it by investing new money in a split calculated to make your whole portfolio (including both old and new purchases) match your targets ...

Valid point. Although it perhaps didn't come across in my opening post, I am increasingly looking at targets/weightings.  I was happy to make a start on my investment journey with LS100, however I now realise its UK bias is possibly on the heavy side (unless that's what you're looking for) and I've also taken on board comments here suggesting it's not the best Vanguard product.  Tbh I will always ultimately do what I want, so if I felt LS100 was the best place to leave my first £20k I'd do so.  However I no longer hold that view. 

Thrugelmir

Purely as an observation. The FTSE All Share has outperformed the MSCI Global Developed World Index (in GDP) since the start of the year.  

Bobziz

Deleted_User said:

10 years ago, if you'd been picking the best market to invest in over the next 10 years, by looking at which had done best over the previous 10 years, you wouldn't have picked the USA, so ...

I sold some US equities last month, as part of rebalancing, to take my portoflio back to the target percentages for equities generally and US equitities specifically. I sold more (proportionately) of my US equities than of most other equities because the US had gone up more over the year (Pacific ex-Japan had also done well, and so was also trimmed back more).

If you don't have a target percentage for US equities within your equities (or indeed, a target percentage for equities within your portfolio), then try setting some targets! That makes more sense than thinking in terms of "this £10k goes into this" and "that £20k goes into that". Once you have targets, you can rebalance every so often (e.g. once a year) back to your targets. Or you can do it by investing new money in a split calculated to make your whole portfolio (including both old and new purchases) match your targets.

(For people who want to fiddle less with their investments, there is no need to get into target weightings wihtin equities. You can either use a global equities tracker, or let the managers of one of the multi-asset funds pick weightings for you.)

On what basis do you set your target percentages ? Thanks.

Bobziz

Deleted_User said:

Bobziz said:

On what basis do you set your target percentages ? Thanks.

Within equities? Start with the percentages of world regions in a global index (e.g. FTSE Global All Cap), and adjust it for various reasons (some of which you may well disagree with ):

- add some home bias

- keep any 1 region well under 50%

- reduce, without eliminating, any region that I'm a bit sceptical about as an investment

- aim for a vague balance between the 3 super-regions (Americas, Europe, Asia Pacific)

I should perhaps mention that I'm not just combining trackers from different regions. I also have separate holdings for mid/small cap, etc. It's possible to make it as complicated - or as simple! - as you like.

Thanks. I'm invested along similar lines. It's the reasons that I'm interested in and  everyone will have slightly different reasons which they're comfortable with, so no right and wrong. 

I'm guessing for most people their target allocations will be what 'feels' right from a risk reward standpoint rather than the result of any specific detailed calculation ?

dunstonh

Whilst the US has been the (collective) stand out performer in the last decade, it is worth remembering that it was one of the worst performers in the previous cycle.  It is very often the case that the worst in one period is the best in the next.  Partly due to catching up and partly due to policies that can stimulate the market.   It is rare of the country/region that is best in one cycle to be the best in the next.

bostonerimus

dunstonh said:

Whilst the US has been the (collective) stand out performer in the last decade, it is worth remembering that it was one of the worst performers in the previous cycle.  It is very often the case that the worst in one period is the best in the next.  Partly due to catching up and partly due to policies that can stimulate the market.   It is rare of the country/region that is best in one cycle to be the best in the next.

The unknowns are the best argument for diversity and a long term approach.