FT Advisor podcast on VLS range

Albermarle

tranquility1 said:

Hexane said:

tranquility1 said:

Deleted_User said:

The point of raising interest rates is supposed to be to curb excessive enthusiasm, and after a long period of historically low rates, many borrowers are so used to low rates that quite a small interest rate rise will cause quite a lot of pain. Norman Lamont once said "No pain, no gain" about the use of interest rate rises to reign in the economy; but today there would be no question of raising interest rates to the levels of his day to reach to the "pain".

This idea that high-quality bonds (like those in VLS) could fall 20-40% over 3-5 years is simply implausible. Central banks have no reason to raise rates by the kind of amount that would lead to such large falls.

It just seems like more of the last decade's repeated assertions that the bull market in bonds is now over. I expect to hear the same predictions for at least another decade before it happens

Personally, I do like to hold a little cash, as well as equities and bonds, but not gold. Cash is likely to return a bit less than bonds, as is usually the case, which is why I wouldn't hold too much of it. For rebalancing alpha, long-term high-quality bonds and gold both tend to help; which is a reason that bonds have some value in addition to their stand-alone expected return. Holding a little gold is defensible - perhaps a matter of taste - but I would caution against going too far.

Also, the reason rates may be raised (and therefore crash the market, bonds, and the housing market) is runaway inflation.  And that's exactly what printing money like it's going out of fashion does.  That's where we are headed.

... yeah... although... not long after you posted this, UK CPI inflation fell to 2%. Possibly on its way back up to a wheelbarrows-full-of-cash style 4% 

https://www.bbc.co.uk/news/uk-58254000

Good luck with that.


Mountains of national debt and personal debt, can't move interest rates, printing money for fun, assets at ATHs.  What can possibly go wrong.

It is OK doomongering and  you might be proved right , or partly right anyway.

However as this is a savings and investments forum , then you should also be suggesting a sensible course of action .
Sell the house/home/investments /pension ? and buy gold , or guns ? What are we to do about this impending financial implosion that is apparently on the way ?

tebbins

Albermarle said:

tranquility1 said:

Hexane said:

tranquility1 said:

Deleted_User said:

The point of raising interest rates is supposed to be to curb excessive enthusiasm, and after a long period of historically low rates, many borrowers are so used to low rates that quite a small interest rate rise will cause quite a lot of pain. Norman Lamont once said "No pain, no gain" about the use of interest rate rises to reign in the economy; but today there would be no question of raising interest rates to the levels of his day to reach to the "pain".

This idea that high-quality bonds (like those in VLS) could fall 20-40% over 3-5 years is simply implausible. Central banks have no reason to raise rates by the kind of amount that would lead to such large falls.

It just seems like more of the last decade's repeated assertions that the bull market in bonds is now over. I expect to hear the same predictions for at least another decade before it happens

Personally, I do like to hold a little cash, as well as equities and bonds, but not gold. Cash is likely to return a bit less than bonds, as is usually the case, which is why I wouldn't hold too much of it. For rebalancing alpha, long-term high-quality bonds and gold both tend to help; which is a reason that bonds have some value in addition to their stand-alone expected return. Holding a little gold is defensible - perhaps a matter of taste - but I would caution against going too far.

Also, the reason rates may be raised (and therefore crash the market, bonds, and the housing market) is runaway inflation.  And that's exactly what printing money like it's going out of fashion does.  That's where we are headed.

... yeah... although... not long after you posted this, UK CPI inflation fell to 2%. Possibly on its way back up to a wheelbarrows-full-of-cash style 4% 

https://www.bbc.co.uk/news/uk-58254000

Good luck with that.


Mountains of national debt and personal debt, can't move interest rates, printing money for fun, assets at ATHs.  What can possibly go wrong.

It is OK doomongering and  you might be proved right , or partly right anyway.

However as this is a savings and investments forum , then you should also be suggesting a sensible course of action .
Sell the house/home/investments /pension ? and buy gold , or guns ? What are we to do about this impending financial implosion that is apparently on the way ?

Apparently bitcoin will still be accepted after the apocalypse.

tranquility1

Albermarle said:

tranquility1 said:

Hexane said:

tranquility1 said:

Deleted_User said:

The point of raising interest rates is supposed to be to curb excessive enthusiasm, and after a long period of historically low rates, many borrowers are so used to low rates that quite a small interest rate rise will cause quite a lot of pain. Norman Lamont once said "No pain, no gain" about the use of interest rate rises to reign in the economy; but today there would be no question of raising interest rates to the levels of his day to reach to the "pain".

This idea that high-quality bonds (like those in VLS) could fall 20-40% over 3-5 years is simply implausible. Central banks have no reason to raise rates by the kind of amount that would lead to such large falls.

It just seems like more of the last decade's repeated assertions that the bull market in bonds is now over. I expect to hear the same predictions for at least another decade before it happens

Personally, I do like to hold a little cash, as well as equities and bonds, but not gold. Cash is likely to return a bit less than bonds, as is usually the case, which is why I wouldn't hold too much of it. For rebalancing alpha, long-term high-quality bonds and gold both tend to help; which is a reason that bonds have some value in addition to their stand-alone expected return. Holding a little gold is defensible - perhaps a matter of taste - but I would caution against going too far.

Also, the reason rates may be raised (and therefore crash the market, bonds, and the housing market) is runaway inflation.  And that's exactly what printing money like it's going out of fashion does.  That's where we are headed.

... yeah... although... not long after you posted this, UK CPI inflation fell to 2%. Possibly on its way back up to a wheelbarrows-full-of-cash style 4% 

https://www.bbc.co.uk/news/uk-58254000

Good luck with that.


Mountains of national debt and personal debt, can't move interest rates, printing money for fun, assets at ATHs.  What can possibly go wrong.

It is OK doomongering and  you might be proved right , or partly right anyway.

However as this is a savings and investments forum , then you should also be suggesting a sensible course of action .
Sell the house/home/investments /pension ? and buy gold , or guns ? What are we to do about this impending financial implosion that is apparently on the way ?

Precious metals, and stock up on all of your essentials and medication etc.

Houses are assets you can touch, so they are keepers.  The stock market will obviously take a massive hit (and therefore pensions), but they will recover, I would guess/hope.  Perhaps quickly, perhaps very slowly.  I still have a sizeable amount of my portfolio in equities, but that's because I have no plans/need for it anytime soon and I'm going to ride whatever the roller-coaster throws my way.  I don't want to miss any potential upsides and I don't want to not be in the market just in case it defies logic.

tebbins

tranquility1 said:

Albermarle said:

tranquility1 said:

Hexane said:

tranquility1 said:

Deleted_User said:

The point of raising interest rates is supposed to be to curb excessive enthusiasm, and after a long period of historically low rates, many borrowers are so used to low rates that quite a small interest rate rise will cause quite a lot of pain. Norman Lamont once said "No pain, no gain" about the use of interest rate rises to reign in the economy; but today there would be no question of raising interest rates to the levels of his day to reach to the "pain".

This idea that high-quality bonds (like those in VLS) could fall 20-40% over 3-5 years is simply implausible. Central banks have no reason to raise rates by the kind of amount that would lead to such large falls.

It just seems like more of the last decade's repeated assertions that the bull market in bonds is now over. I expect to hear the same predictions for at least another decade before it happens

Personally, I do like to hold a little cash, as well as equities and bonds, but not gold. Cash is likely to return a bit less than bonds, as is usually the case, which is why I wouldn't hold too much of it. For rebalancing alpha, long-term high-quality bonds and gold both tend to help; which is a reason that bonds have some value in addition to their stand-alone expected return. Holding a little gold is defensible - perhaps a matter of taste - but I would caution against going too far.

Also, the reason rates may be raised (and therefore crash the market, bonds, and the housing market) is runaway inflation.  And that's exactly what printing money like it's going out of fashion does.  That's where we are headed.

... yeah... although... not long after you posted this, UK CPI inflation fell to 2%. Possibly on its way back up to a wheelbarrows-full-of-cash style 4% 

https://www.bbc.co.uk/news/uk-58254000

Good luck with that.


Mountains of national debt and personal debt, can't move interest rates, printing money for fun, assets at ATHs.  What can possibly go wrong.

It is OK doomongering and  you might be proved right , or partly right anyway.

However as this is a savings and investments forum , then you should also be suggesting a sensible course of action .
Sell the house/home/investments /pension ? and buy gold , or guns ? What are we to do about this impending financial implosion that is apparently on the way ?

Precious metals, and stock up on all of your essentials and medication etc.

Houses are assets you can touch, so they are keepers.  The stock market will obviously take a massive hit (and therefore pensions), but they will recover, I would guess/hope.  Perhaps quickly, perhaps very slowly.  I still have a sizeable amount of my portfolio in equities, but that's because I have no plans/need for it anytime soon and I'm going to ride whatever the roller-coaster throws my way.  I don't want to miss any potential upsides and I don't want to not be in the market just in case it defies logic.

I got a nice chuckle reading that.

Shocking_Blue

tranquility1 said:

Albermarle said:

tranquility1 said:

Hexane said:

tranquility1 said:

Deleted_User said:

The point of raising interest rates is supposed to be to curb excessive enthusiasm, and after a long period of historically low rates, many borrowers are so used to low rates that quite a small interest rate rise will cause quite a lot of pain. Norman Lamont once said "No pain, no gain" about the use of interest rate rises to reign in the economy; but today there would be no question of raising interest rates to the levels of his day to reach to the "pain".

This idea that high-quality bonds (like those in VLS) could fall 20-40% over 3-5 years is simply implausible. Central banks have no reason to raise rates by the kind of amount that would lead to such large falls.

It just seems like more of the last decade's repeated assertions that the bull market in bonds is now over. I expect to hear the same predictions for at least another decade before it happens

Personally, I do like to hold a little cash, as well as equities and bonds, but not gold. Cash is likely to return a bit less than bonds, as is usually the case, which is why I wouldn't hold too much of it. For rebalancing alpha, long-term high-quality bonds and gold both tend to help; which is a reason that bonds have some value in addition to their stand-alone expected return. Holding a little gold is defensible - perhaps a matter of taste - but I would caution against going too far.

Also, the reason rates may be raised (and therefore crash the market, bonds, and the housing market) is runaway inflation.  And that's exactly what printing money like it's going out of fashion does.  That's where we are headed.

... yeah... although... not long after you posted this, UK CPI inflation fell to 2%. Possibly on its way back up to a wheelbarrows-full-of-cash style 4% 

https://www.bbc.co.uk/news/uk-58254000

Good luck with that.


Mountains of national debt and personal debt, can't move interest rates, printing money for fun, assets at ATHs.  What can possibly go wrong.

It is OK doomongering and  you might be proved right , or partly right anyway.

However as this is a savings and investments forum , then you should also be suggesting a sensible course of action .
Sell the house/home/investments /pension ? and buy gold , or guns ? What are we to do about this impending financial implosion that is apparently on the way ?

Precious metals, and stock up on all of your essentials and medication etc.

Houses are assets you can touch, so they are keepers.  The stock market will obviously take a massive hit (and therefore pensions), but they will recover, I would guess/hope.  Perhaps quickly, perhaps very slowly.  I still have a sizeable amount of my portfolio in equities, but that's because I have no plans/need for it anytime soon and I'm going to ride whatever the roller-coaster throws my way.  I don't want to miss any potential upsides and I don't want to not be in the market just in case it defies logic.

Just as a post-newbie reading this, as above, I'm assuming that moving from riskier holdings into Capital Gearing and the like, topping up on Premium Bonds, and perhaps looking at managed (rather than passive) mutli-asset funds is in some way a sensible way to mitigate the effects of such a market crash.

Otherwise..?

The comment on the impact on pensions is interesting. Being perhaps 5 or 6 years from planned retirement I'm already 'de-risking' holdings a bit, but I just wondered what, if anything, can be done to protect pensions. My work pension has an 'investment' side to it, so there is the option to move from risker to less risky in terms of the fund they offer for that. Presumably that's the only measure I could take?

Thanks.

masonic

Shocking_Blue said:

The comment on the impact on pensions is interesting. Being perhaps 5 or 6 years from planned retirement I'm already 'de-risking' holdings a bit, but I just wondered what, if anything, can be done to protect pensions. My work pension has an 'investment' side to it, so there is the option to move from risker to less risky in terms of the fund they offer for that. Presumably that's the only measure I could take?

If you plan to use your pension to buy an annuity in 5-6 years time then it would be very sensible to de-risk. There aren't really any satisfactory low risk options for holding in a pension over the long term, so if you plan to keep it invested then it may just need to be tweaked to allow for drawing it down when the time comes. It may be possible to partially transfer your pension to a provider offering a full range of investment options, in which case you can manage as you would your other investments.

tranquility1

Shocking_Blue said:

tranquility1 said:

Albermarle said:

tranquility1 said:

Hexane said:

tranquility1 said:

Deleted_User said:

The point of raising interest rates is supposed to be to curb excessive enthusiasm, and after a long period of historically low rates, many borrowers are so used to low rates that quite a small interest rate rise will cause quite a lot of pain. Norman Lamont once said "No pain, no gain" about the use of interest rate rises to reign in the economy; but today there would be no question of raising interest rates to the levels of his day to reach to the "pain".

This idea that high-quality bonds (like those in VLS) could fall 20-40% over 3-5 years is simply implausible. Central banks have no reason to raise rates by the kind of amount that would lead to such large falls.

It just seems like more of the last decade's repeated assertions that the bull market in bonds is now over. I expect to hear the same predictions for at least another decade before it happens

Personally, I do like to hold a little cash, as well as equities and bonds, but not gold. Cash is likely to return a bit less than bonds, as is usually the case, which is why I wouldn't hold too much of it. For rebalancing alpha, long-term high-quality bonds and gold both tend to help; which is a reason that bonds have some value in addition to their stand-alone expected return. Holding a little gold is defensible - perhaps a matter of taste - but I would caution against going too far.

Also, the reason rates may be raised (and therefore crash the market, bonds, and the housing market) is runaway inflation.  And that's exactly what printing money like it's going out of fashion does.  That's where we are headed.

... yeah... although... not long after you posted this, UK CPI inflation fell to 2%. Possibly on its way back up to a wheelbarrows-full-of-cash style 4% 

https://www.bbc.co.uk/news/uk-58254000

Good luck with that.


Mountains of national debt and personal debt, can't move interest rates, printing money for fun, assets at ATHs.  What can possibly go wrong.

It is OK doomongering and  you might be proved right , or partly right anyway.

However as this is a savings and investments forum , then you should also be suggesting a sensible course of action .
Sell the house/home/investments /pension ? and buy gold , or guns ? What are we to do about this impending financial implosion that is apparently on the way ?

Precious metals, and stock up on all of your essentials and medication etc.

Houses are assets you can touch, so they are keepers.  The stock market will obviously take a massive hit (and therefore pensions), but they will recover, I would guess/hope.  Perhaps quickly, perhaps very slowly.  I still have a sizeable amount of my portfolio in equities, but that's because I have no plans/need for it anytime soon and I'm going to ride whatever the roller-coaster throws my way.  I don't want to miss any potential upsides and I don't want to not be in the market just in case it defies logic.

Just as a post-newbie reading this, as above, I'm assuming that moving from riskier holdings into Capital Gearing and the like, topping up on Premium Bonds, and perhaps looking at managed (rather than passive) mutli-asset funds is in some way a sensible way to mitigate the effects of such a market crash.

Otherwise..?

The comment on the impact on pensions is interesting. Being perhaps 5 or 6 years from planned retirement I'm already 'de-risking' holdings a bit, but I just wondered what, if anything, can be done to protect pensions. My work pension has an 'investment' side to it, so there is the option to move from risker to less risky in terms of the fund they offer for that. Presumably that's the only measure I could take?

Thanks.

I don't have the knowledge to answer your questions, sorry.

All I'm saying is that there are a lot of very knowledgeable people on this forum who really know their stuff. And I just can't fathom why they can't see what's coming.

I guess such an event will be called a Black Swan? 

Shocking_Blue

masonic said:

Shocking_Blue said:

The comment on the impact on pensions is interesting. Being perhaps 5 or 6 years from planned retirement I'm already 'de-risking' holdings a bit, but I just wondered what, if anything, can be done to protect pensions. My work pension has an 'investment' side to it, so there is the option to move from risker to less risky in terms of the fund they offer for that. Presumably that's the only measure I could take?

If you plan to use your pension to buy an annuity in 5-6 years time then it would be very sensible to de-risk. There aren't really any satisfactory low risk options for holding in a pension over the long term, so if you plan to keep it invested then it may just need to be tweaked to allow for drawing it down when the time comes. It may be possible to partially transfer your pension to a provider offering a full range of investment options, in which case you can manage as you would your other investments.

Thanks.

Yep, at the moment it is in a 100% equities fund on the investment side of the pension, which has been doing very well, but the provider also offers other funds (cautious, moderate etc), so might take a look.

I think nowadays the 'do it yourself' nature of investing, together with the actual speed at which you can make changes to investments (few mouse clicks), puts people in a better position to be able to react (referring to funds rather than individual co shares), so all this talk about market crash has folk believing they'd have time to avoid major losses, I suspect.

Shocking_Blue

tranquility1 said:

Shocking_Blue said:

tranquility1 said:

Albermarle said:

tranquility1 said:

Hexane said:

tranquility1 said:

Deleted_User said:

The point of raising interest rates is supposed to be to curb excessive enthusiasm, and after a long period of historically low rates, many borrowers are so used to low rates that quite a small interest rate rise will cause quite a lot of pain. Norman Lamont once said "No pain, no gain" about the use of interest rate rises to reign in the economy; but today there would be no question of raising interest rates to the levels of his day to reach to the "pain".

This idea that high-quality bonds (like those in VLS) could fall 20-40% over 3-5 years is simply implausible. Central banks have no reason to raise rates by the kind of amount that would lead to such large falls.

It just seems like more of the last decade's repeated assertions that the bull market in bonds is now over. I expect to hear the same predictions for at least another decade before it happens

Personally, I do like to hold a little cash, as well as equities and bonds, but not gold. Cash is likely to return a bit less than bonds, as is usually the case, which is why I wouldn't hold too much of it. For rebalancing alpha, long-term high-quality bonds and gold both tend to help; which is a reason that bonds have some value in addition to their stand-alone expected return. Holding a little gold is defensible - perhaps a matter of taste - but I would caution against going too far.

Also, the reason rates may be raised (and therefore crash the market, bonds, and the housing market) is runaway inflation.  And that's exactly what printing money like it's going out of fashion does.  That's where we are headed.

... yeah... although... not long after you posted this, UK CPI inflation fell to 2%. Possibly on its way back up to a wheelbarrows-full-of-cash style 4% 

https://www.bbc.co.uk/news/uk-58254000

Good luck with that.


Mountains of national debt and personal debt, can't move interest rates, printing money for fun, assets at ATHs.  What can possibly go wrong.

It is OK doomongering and  you might be proved right , or partly right anyway.

However as this is a savings and investments forum , then you should also be suggesting a sensible course of action .
Sell the house/home/investments /pension ? and buy gold , or guns ? What are we to do about this impending financial implosion that is apparently on the way ?

Precious metals, and stock up on all of your essentials and medication etc.

Houses are assets you can touch, so they are keepers.  The stock market will obviously take a massive hit (and therefore pensions), but they will recover, I would guess/hope.  Perhaps quickly, perhaps very slowly.  I still have a sizeable amount of my portfolio in equities, but that's because I have no plans/need for it anytime soon and I'm going to ride whatever the roller-coaster throws my way.  I don't want to miss any potential upsides and I don't want to not be in the market just in case it defies logic.

Just as a post-newbie reading this, as above, I'm assuming that moving from riskier holdings into Capital Gearing and the like, topping up on Premium Bonds, and perhaps looking at managed (rather than passive) mutli-asset funds is in some way a sensible way to mitigate the effects of such a market crash.

Otherwise..?

The comment on the impact on pensions is interesting. Being perhaps 5 or 6 years from planned retirement I'm already 'de-risking' holdings a bit, but I just wondered what, if anything, can be done to protect pensions. My work pension has an 'investment' side to it, so there is the option to move from risker to less risky in terms of the fund they offer for that. Presumably that's the only measure I could take?

Thanks.

I don't have the knowledge to answer your questions, sorry.

All I'm saying is that there are a lot of very knowledgeable people on this forum who really know their stuff. And I just can't fathom why they can't see what's coming.

I guess such an event will be called a Black Swan? 

There's a few funds I've gotten rid of - and a couple of others I'm seriously thinking of doing the same with - because they have risen astronomically since the pandemic started. I think this makes sense.

masonic

Shocking_Blue said:

I think nowadays the 'do it yourself' nature of investing, together with the actual speed at which you can make changes to investments (few mouse clicks), puts people in a better position to be able to react (referring to funds rather than individual co shares), so all this talk about market crash has folk believing they'd have time to avoid major losses, I suspect.

No need to suspect. There was a popular thread that popped up just prior to the Covid crash with pages of posts each day from those trying to decide whether they should sell everything, how much lower markets were going to fall, how people should hold tight in the face of any apparent recovery because markets were poised to go much lower. Some had already sold at the first sign of trouble, and were then reluctant to reinvest when the market recovered. One well known (now ex-) forum member sold everything near the bottom and put everything in gold and silver. It made depressing reading. At least with an inaccessible pension, there are barriers to doing something stupid in a moment of madness/fear.

But elsewhere, a poll was running about how people were responding to the situation, and most were doing nothing / rebalancing, so it isn't all bad. If you can't ride this sort of thing out, even if it drags on for years, then you weren't invested appropriately to begin with. A crash is always coming, and nobody can time it. People who are put off completely by that are harmed more by many years of low returns than they would be by the downturns they seek to avoid.