Bonds v Shares best bet for 2022

Albermarle

 I've got a few 'informed' friends who suggest that USA stocks could well crash or lose significant value in the next year or so.

They might be right, but on the other hand people have been saying that about the US stock market for at least 3 years.
In the last 3 years they have gone up 48% .....

tebbins

Try watching this: https://youtu.be/rf_f8GV0yYM

JohnWinder

longleggings said:

 I've got a few 'informed' friends who suggest that USA stocks could well crash or lose significant value in the next year or so.

Geniuses they may be, but the biggest ignoramus could say the same thing at any time and be right. Basically, that chatter gets one no where other than by chance. There are more productive ways to spend one's time discussing investing, insider trading aside; and your friends probably know this.

dunstonh

 I've got a few 'informed' friends who suggest that USA stocks could well crash or lose significant value in the next year or so.

Which probably suggests that they are not as informed as you think they are.

Anyone who is informed about markets knows full well that you cannot predict crashes.   People have been claiming the US is going to crash each year for the last decade.  Like a stopped clock, that is right twice a day, they will be right at some point.

tebbins

Everyone knows the US is very highly valued and has had a very strong run since the GFC, but markets can stay highly valued for a long time. Like Robert Shiller said in Irrational Exuberance, the CAPE - the least inaccurate predictor of returns - is only good at indicating the next 10-15 years' returns, it's useless at timing crashes. I expect the US will have weaker returns over that kind of timeframe, I can try and make less bad guesses about how much weaker the returns will be, and I expect that the US won't see a sideways market as they seem to love popping bubbles instead of letting them deflate gradually. So I won't be timing crashes but I may load up on equities more than usual if any such crashes occur, and perhaps adjust my home bias down if US valuations ever return to their historic average.
If you want some specific predictions from someone more entertainer than serious commentator, Peter Zeihan (search in YouTube) predicts US asset valuations (equities and bonds) will peak in 2022 as the Boomers start divesting their retirement plans.

Thrugelmir

tebbins said:

Everyone knows the US is very highly valued and has had a very strong run since the GFC, 

With hindsight very easy for events to be over simplified. As time has past , fewer and fewer companies have driven the US markets upwards. Still possible to have a decent US equity exposure without being dominated by the market capitalisation value of the FANGS.  

longleggings

Wise words guys- sound impossible to predict with any certainty
My so called 'informed' friend keeps saying the the USA market is overvalued and
that they have printed too much money. I guess i will do what feels best for me and leave the so called experts to 
chatter on.
BTW - i love this forum - lots of respectful and interested comments
L

aroominyork

Thrugelmir said:

tebbins said:

Everyone knows the US is very highly valued and has had a very strong run since the GFC, 

With hindsight very easy for events to be over simplified. As time has past , fewer and fewer companies have driven the US markets upwards. Still possible to have a decent US equity exposure without being dominated by the market capitalisation value of the FANGS.  

It is often said the US market is so highly researched that it is especially difficult for managers to beat the index, and when you look at Trustnet tables for the region that seems a credible view. So if you do not want to go active in the hope of finding the manager who lays the golden egg, what are the options? A mid-cap Russell index fund? A factor ETF (an active decision to go with a semi-passive fund)? An equal weight S&P index fund, XDWE? Is there anything else?

Thrugelmir

aroominyork said:

Thrugelmir said:

tebbins said:

Everyone knows the US is very highly valued and has had a very strong run since the GFC, 

With hindsight very easy for events to be over simplified. As time has past , fewer and fewer companies have driven the US markets upwards. Still possible to have a decent US equity exposure without being dominated by the market capitalisation value of the FANGS.  

It is often said the US market is so highly researched that it is especially difficult for managers to beat the index, 

That comment is primarily addressed at the SP500. As with all the main developed markets. The smaller the market capitalisation of the company concerned. The less research there is conducted. When you reach microcaps there's often none at all. 

aroominyork

My guess is the research reaches further down the 'size chain' in the US than in other markets. There is also less choice: on a five year Trustnet chart, there are 219 UK All Companies funds vs. 44 UK Smaller Companies; 143 North America vs. 18 North America Smaller Companies and none with the word 'micro' in them.

I recently bought a North America Smaller Companies fund (Artemis), not because I especially wanted it but as the least worst way to get some diversification from FAANGs.