Portfolio advice

InvesterJones

GeoffTF said:

InvesterJones said:

chiang_mai said:

GeoffTF said:

chiang_mai said:

Lastly, all the major investment banks publish their asset allocation schedules for the coming quarter, along with their rationale for change in any sector. I particularly like the JPM allocation report. It's very clear from reading those reports that professional investors and investment banks, adjust their asset allocations, based on current events and their perception of future events, if they can make those adjustments, shouldn't less experienced investors do the same.

They can, but, on average, they fail to beat the market before costs. Some will beat the market, but you have no way of knowing which ones will do so in advance. Why do you believe that you can do better?

In case I wasn't clear in  my explanation, I was merely suggesting that investors should adjust their asset allocations, in response to known extraordinary events, such as the one taking place currently across the pond.....no more than that. Once again, it's tactical risk reduction.

I think a better way of thinking about it is investors should adjust their portfolio risk as and when they discover their assumptions of their own risk tolerance change.

Lots of people panic when other people panic, and sell riskier assets as a result. That is a common way of underperforming the market. Whatever you sell, someone else buys. The investors who buy whenever Trump throws a wobbly may well be the ones who win here.

You're right - I should have said 'as, but perhaps not when' - ideally one should have considered this when times were good.

Linton

GeoffTF said:

InvesterJones said:

chiang_mai said:

GeoffTF said:

chiang_mai said:

Lastly, all the major investment banks publish their asset allocation schedules for the coming quarter, along with their rationale for change in any sector. I particularly like the JPM allocation report. It's very clear from reading those reports that professional investors and investment banks, adjust their asset allocations, based on current events and their perception of future events, if they can make those adjustments, shouldn't less experienced investors do the same.

They can, but, on average, they fail to beat the market before costs. Some will beat the market, but you have no way of knowing which ones will do so in advance. Why do you believe that you can do better?

In case I wasn't clear in  my explanation, I was merely suggesting that investors should adjust their asset allocations, in response to known extraordinary events, such as the one taking place currently across the pond.....no more than that. Once again, it's tactical risk reduction.

I think a better way of thinking about it is investors should adjust their portfolio risk as and when they discover their assumptions of their own risk tolerance change.

Lots of people panic when other people panic, and sell riskier assets as a result. That is a common way of underperforming the market. Whatever you sell, someone else buys. The investors who buy whenever Trump throws a wobbly may well be the ones who win here.

That is fine if you have spare cash and want to buy.  Deciding whether to sell is perhaps rather more difficult.

Hoenir

coyrls said:

Hoenir said:

coyrls said:

Hoenir said:

Linton said:

chiang_mai said:

Linton said:

chiang_mai said:

Linton said:

nick1234 said:

Linton said:

I am confused.  You talk about a large amount in FTSE AllShare and S&P 500 trackers   but your "current portfolio" shows neither.

In my view...

Your current portfolio is far more complex than it needs to be.  Investing significant amounts in say Vietnam or Turkey seems eccentric and investing small amounts pointless given you are also holding general trackers.

In my portfolio I have a general policy that holdings of less than 5% are not worth the management effort.  That would also rule out individual stocks.  You can cover the whole world in say 10 or fewer well chosen funds with sufficient flexibility to make your own choice of allocations to major country and company size. 

5-20 years is not long term.  5 years is short term, 10years medium term and 15-20 or more is long term. If you may be selling significant capital in 5 years time it would be sensible to derisk it now.

Why invest in something else - why not just put more into the investments you all ready hold?

Thanks you are right i assumed 50% being in an all world tracker being a large percentage of the developed world and thus US.   Do you think something like TDGB or VHYL which is global but less US heavy would be a good hedge as it doesnt hold the large tech firms?  

Otherwise i will add to FWRG - all world.  I realise the portfolio has become slightly complex but its just due to stocks i have historically bought and have all gone 100%+ much more than my ETF’s.  I am slowly selling down these and the single country ETF’s

My time horizon is longer i don’t need this cash for at least 10 years or longer based on current situation

The US is about 65% of a typical global tracker.  But if the tracker is only 50% of your portfolio that puts yuour US at 32% which is unusually low.  I aim for 40% US though currently its down to about 36%.

I suggest these are unusual times. I have reduced my US equities holdings from 50%, down to 25%, which is 15% of my total portfolio, on par with my EU holdings. Even experienced professionals appear to be struggling with asset allocation at present it must be nightmarish for a beginner. 

I believe asset allocation is for the long term and one should not adjust it to deal with short term events.  Cutting US now is buying high and selling low which is not a recommended strategy.

Investing rules change with age and I think this might be one of them, What you say makes complete sense when there is still decades  left to run on the investing time horizon, but less so for investors aged over, say 70 years. The ratio of equites in a portfolio is meant to reduce with age, I think that the usefulness of index trackers also reduces. Simply put, if there is no time for recovery, the advantages of these things is minimised,  The case for maintaining a stable asset allocation, throughout an extended geopolitical downturn, just for the sake of it, fits into this same classification....I think.

 If Trump is causing you palpitations then you were poorly invested in the first place.

The UK media gave scant coverage to what Trump said during his pre-election campaign.

Really????

Between July 2024 and February 2025 the SP500 rose around 9% in $ terms. No one expected what the Trump Administration has subsequently unleashed. 

My point was about UK media coverage of Trump's pre-election campaign, which you said was "scant", I remember it being extensive.

I suspect that despite the extensive coverage now. That's much going under many investor's radar. 

chiang_mai

GeoffTF said:

chiang_mai said:

GeoffTF said:

chiang_mai said:

Lastly, all the major investment banks publish their asset allocation schedules for the coming quarter, along with their rationale for change in any sector. I particularly like the JPM allocation report. It's very clear from reading those reports that professional investors and investment banks, adjust their asset allocations, based on current events and their perception of future events, if they can make those adjustments, shouldn't less experienced investors do the same.

They can, but, on average, they fail to beat the market before costs. Some will beat the market, but you have no way of knowing which ones will do so in advance. Why do you believe that you can do better?

In case I wasn't clear in  my explanation, I was merely suggesting that investors should adjust their asset allocations, in response to known extraordinary events, such as the one taking place currently across the pond.....no more than that. Once again, it's tactical risk reduction.

If tactical risk reduction worked, active fund managers would use it to beat the market in risk adjusted terms. They clearly cannot do that with any more than a chance rate of success. What skill do you have that they lack?

It is a fact that investment banks and others, frequently change their portfolio holdings, based on events. Such change can fairly be described as tactical risk reduction, I think. I'm sure that JPM, for example, has a far greater tolerance for risk than I do, along with far greater information on which to assess those risks and their probability. So really this is not about having greater skills, it's about an individual appetite or tolerance for risk. Some may view current events across the pond as business as usual and do nothing. Others, such as me, may take a different view and think the risk is too great, and as a consequence, adjust their holdings. Whether or not one approach is better  or more rewarding approach than the other, remains unclear to me.

Hoenir

If one had an appropriate portfolio risk then events like those across the pond (which are not actually extraordinary) are already factored in.

Never experienced anything of this magnitude in my investing lifetime. Where the President of the USA rewrites global trading rules on a whim every few days. Who'd want to run a business in such an environment. Corporate world requires stability to operate to the best of it's ability.  

Hoenir

chiang_mai said:

Other approximate guides that exist suggest the US investment market represents 42% of the global market hence global trackers often contain between 50% and 70% allocation to US equities. 

In terms of GDP the allocation should be nearer 25% - 30%.  Public markets only tell part of the macro story. 

Also remember that in 2 years the US printed as many $'s as in the past 150 years. That money had to go somewhere. Asset prices didn't magically inflate without a tailwind. 

InvesterJones

Hoenir said:

If one had an appropriate portfolio risk then events like those across the pond (which are not actually extraordinary) are already factored in.

Never experienced anything of this magnitude in my investing lifetime. Where the President of the USA rewrites global trading rules on a whim every few days. Who'd want to run a business in such an environment. Corporate world requires stability to operate to the best of it's ability.  

You don't think events like the global financial crisis, dot.com bust, covid pandemic, have been at least as market moving?

GeoffTF

chiang_mai said:

GeoffTF said:

chiang_mai said:

GeoffTF said:

chiang_mai said:

Lastly, all the major investment banks publish their asset allocation schedules for the coming quarter, along with their rationale for change in any sector. I particularly like the JPM allocation report. It's very clear from reading those reports that professional investors and investment banks, adjust their asset allocations, based on current events and their perception of future events, if they can make those adjustments, shouldn't less experienced investors do the same.

They can, but, on average, they fail to beat the market before costs. Some will beat the market, but you have no way of knowing which ones will do so in advance. Why do you believe that you can do better?

In case I wasn't clear in  my explanation, I was merely suggesting that investors should adjust their asset allocations, in response to known extraordinary events, such as the one taking place currently across the pond.....no more than that. Once again, it's tactical risk reduction.

If tactical risk reduction worked, active fund managers would use it to beat the market in risk adjusted terms. They clearly cannot do that with any more than a chance rate of success. What skill do you have that they lack?

It is a fact that investment banks and others, frequently change their portfolio holdings, based on events. Such change can fairly be described as tactical risk reduction, I think. I'm sure that JPM, for example, has a far greater tolerance for risk than I do, along with far greater information on which to assess those risks and their probability. So really this is not about having greater skills, it's about an individual appetite or tolerance for risk. Some may view current events across the pond as business as usual and do nothing. Others, such as me, may take a different view and think the risk is too great, and as a consequence, adjust their holdings. Whether or not one approach is better  or more rewarding approach than the other, remains unclear to me.

Ignore JPM. They do not know the future and cannot beat the market either. They are spouting rubbish in the hope of persuading fools to buy their funds. The market knows that Trump is crazy and has already priced that in. Is Trump crazier than the market thinks? He may be or he may not be. Nobody knows.

GeoffTF

Hoenir said:

If one had an appropriate portfolio risk then events like those across the pond (which are not actually extraordinary) are already factored in.

Never experienced anything of this magnitude in my investing lifetime. Where the President of the USA rewrites global trading rules on a whim every few days. Who'd want to run a business in such an environment. Corporate world requires stability to operate to the best of it's ability.  

Worse has happened and worse could happen in the future. You need to consider that before you invest. Do not risk money that you need to make money that you do not need, as Warren Buffet put it.

For what it is worth, I do not think Trump will be allowed to destroy the US economy. Being panicked out of the market is rarely a good thing. The usual advice is to sit tight, or better still buy more.

Hoenir

InvesterJones said:

Hoenir said:

If one had an appropriate portfolio risk then events like those across the pond (which are not actually extraordinary) are already factored in.

Never experienced anything of this magnitude in my investing lifetime. Where the President of the USA rewrites global trading rules on a whim every few days. Who'd want to run a business in such an environment. Corporate world requires stability to operate to the best of it's ability.  

You don't think events like the global financial crisis, dot.com bust, covid pandemic, have been at least as market moving?

Trump at a stroke has undermined the entire global trading system that has existed since the end of WW2.  At least with the GFC and Covid there was a coordinatated approach at the Global level to the fundamental issues and challenges posed. The US has benefited from the early 90's from globalisation of trade. Also in terms of the capital inflows.  The next 30 years are unlikely to see the US treated in the same manner. The one thing the Trump administration cannot control is the international bond markets. Noticiable how the flip flopping in policy comes when the 10 year Treasury Bond yield is rising. This determines the borrowing rate for Americans in their everyday lives. Scott Bessent knows how critical this is. The White House has no interest in the flutuations of the stock market. 

Markets are driven by a mixture of emotion, sentiment and money.  Hence why over many decades I've refrained from buying whole markets per se. With a background in corporate finance my gut tells me that if something is too good to be true as it probably is. Many ways to meet ones own objectives by maintaining a risk adjusted portfolio. Danger with bear markets. Isn't the immediate correction. It's how long the recovery takes to reach the previous high.