Will recent "events" cause a rethink of DC pensions?

GazzaBloom

As always, when the stock market drops into a correction or worse, peoples views on what comes next stems from their personal outlook - pessimist or optimist.

Everyone can find historical events, data and facts, and point to current indicators to reinforce either their pessimistic or optimistic outlook.

The media thrives on reporting bad news so it's easy to get swept up in a doom loop of misery thinking the world is going to end if you take too much of it onboard, especially if you are a naturally pessimistic and cautious person.

No-one likes to see the current selling price of the assets they hold decline but those prices will recover, in time and you don't have to sell at the offered price if you don't want to.

I am confident that anyone shrewd enough to keep buying or are buying more of a low cost broad base of US or Global equities, while the prices have dipped 10-15%, will reap great benefits from these purchases in 5-10 years or so.

For those who are no longer accumulating, and drawing down from their portfolio then rebalancing or avoiding selling down equities for a while should see you through.

Hoenir

k6chris said:

Hoenir said:

Universidad said:

MetaPhysical said:

 It will eventually amount to nothing more than a blip.  

Eventually everything amounts to that.

It would still be nice if my bit of the blip worked out for me. 

In the GFC there were 7 blips before the bottom was reached...........

Nothing has imploded in the financial markets yet, as it did in the 2007 crash.  I fear we are waiting for the law of unintended consequences to give us all a good kick in the pods.....

Markets didn't crash in 2007.  They peaked in the July then started their jagged downward path.  Investors brushed aside the early warning signs at BNP Paribas,  the nationalisation of Northern Rock along with the Bradford and Braford and Bingley.  Even RBS launched a £12 billion rights issue in July 2008 at £12 a share to fund the acquisition of ABN Amro. Then Lehman Bros was allowed to go under in September 2008. One weekend in October 2008 though. The reality finally hit home. 

Cus

How have you invested based on recent events or generally? If you feel that markets are in for a long reset period (as it seems from many comments of yours) how long have you been positioned for this?

Hoenir

Cus said:

How have you invested based on recent events or generally? If you feel that markets are in for a long reset period (as it seems from many comments of yours) how long have you been positioned for this?

Started taking an interest in matters financial a long long time ago. Made plenty of mistakes along the way when it comes to investing. . As with anything in life. Spend enough time with an open mind and the diligence to want to learn. You'll develope a style that works for you personally. Events of yesterday will influence tomorrow. Nothing is ever quite as cut and dried as it may first appear. 

RogerPensionGuy

Nice reading this thread. 

If people are quoting any ups or downs in values, I wish they would just use % over a time span, then also include a % over a time span covering 5 or more years for clearer picture.

Here in the UK we are seeing the DB schemes generally becoming historic for most and the rise of the DC schemes, so we are going through changing times. 

Plus was it 2006ish we saw pension freedoms and big changes and was it more changes in 2015 reference annuities and drawdowns. 

So in comment to the the title of this thread, DC pensions look here to stay and yes they will change and our society will become more used of them. 

Reference stock markets being a bit bumpy these last few months, this is nothing new, stock markets are and will be bumpy ongoing and that's why they work. 

I think here in the UK people with full or high % equity portfolios have seen maybe 5 years of nice upslopes watching portfolio values ramp up and during market dips in 2022 were a bit isolated from valuation dips as the pound sunk in value. 

So many of us in the UK have possibly had a picnic in the park for 5 years watching portfolio values doing very nicely thank you very much. 

But now the markets are a tad choppy/sinking a bit and unlike in 2022 when the sinking pound made us feel happy, the dollar has sunk at this time and the effect on our portfolios just gets another weight applied to it. 

I think we need to all remember how recency bias works and look at markers over 10, 15, 20 or more years. 

Talking of recency bias, sequencing and sequence risks are worth a little review at this time. 

Time to stay calm and carry on. 

***

https://www.scribbr.co.uk/bias-in-research/the-recency-bias/#:~:text=Recency bias is the tendency,how the future will unfold.

***

https://www.investopedia.com/terms/s/sequence-risk.asp

Cus

Hoenir said:

Cus said:

How have you invested based on recent events or generally? If you feel that markets are in for a long reset period (as it seems from many comments of yours) how long have you been positioned for this?

Started taking an interest in matters financial a long long time ago. Made plenty of mistakes along the way when it comes to investing. . As with anything in life. Spend enough time with an open mind and the diligence to want to learn. You'll develope a style that works for you personally. Events of yesterday will influence tomorrow. Nothing is ever quite as cut and dried as it may first appear. 

Was actually interested in factually what/how you are positioned investment wise, regional weightings, individual shares versus funds etc etc. but it's ok not to want to share

Hoenir

Cus said:

Hoenir said:

Cus said:

How have you invested based on recent events or generally? If you feel that markets are in for a long reset period (as it seems from many comments of yours) how long have you been positioned for this?

Started taking an interest in matters financial a long long time ago. Made plenty of mistakes along the way when it comes to investing. . As with anything in life. Spend enough time with an open mind and the diligence to want to learn. You'll develope a style that works for you personally. Events of yesterday will influence tomorrow. Nothing is ever quite as cut and dried as it may first appear. 

Was actually interested in factually what/how you are positioned investment wise, regional weightings, individual shares versus funds etc etc. but it's ok not to want to share

As I'm not a fund manager just a small retail investor. I'm totally flexible and tend not to spend a huge amount of time analysing my portfolio to the nth degree. Needless to say it's always well diversified. Moves like the tide. Currently apportioned approximately 30% Government Bonds, 30% Alternatives, 40% Equities (Investment Companies).  No individual company shares. 

Cobbler_tone

QrizB said:

Cobbler_tone said:

That is what I was alluding to yesterday afternoon. My prediction is that we will see gains next week and we will back to where we were before the tariff announcement.

Just so we're all clear in what you're predicting, you think the S&P 500 will be back above 5600 by the end of trading on the 18th?

If not, could you make a clear statement of what your prediction is?

No, it took a couple of weeks. 

QrizB

Cobbler_tone said:

QrizB said:

Cobbler_tone said:

That is what I was alluding to yesterday afternoon. My prediction is that we will see gains next week and we will back to where we were before the tariff announcement.

Just so we're all clear in what you're predicting, you think the S&P 500 will be back above 5600 by the end of trading on the 18th?

If not, could you make a clear statement of what your prediction is?

No, it took a couple of weeks. 

I'd forgotten all about that

Cobbler_tone

The latest uncertainty around the US trade block. Difficult to do business if you don't know whether the tariffs are going to exist or not.

Anyway, I assume people are generally feeling a bit more optimistic than a few weeks back?