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US Markets Risk
Comments
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They're all privately owned companies anyway so much limited in transparency compared to public ones. But I guess also not as much of a concern to S&P500 or global index tracker holders.
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"Anyone who is sensible and spreads the risk can make their own decisions".
Your quote above is the entire point of the thread. We have seen repeatedly in this forum where posters have said they are all in on the US market and/or invest in the top 500 US companies, and that is all. And as others have said repeatedly in this thread, a sole global tracker that comprises 70% US is not exactly spreadiing the risk. The message is, to those investors who are heavily concentrated in the US market, reduce your risk and diversify more.
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One thing is for sure, If I was targeting, or needed a consistent 15% annual return going forward regardless of asset class or location, as I think the OP has suggested he is looking for in previous posts, I think I would have 2 hopes: Bob Hope and No Hope.
Diversifying away from US allocations may help in the short term but the next decade is going to be tricksy I reckon
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It's interesting to note that I am 9.6 months into my financial year and I have beaten my 12% target by 3% and I've only deployed 48% into equities, and I did similar last year. I don't know what other people do or how they do it but I invest across all regions/sectors and in several asset classes. I also target over performers and the best FM's I can find, this year, five of my equities funds haver returned over 45% each. Next year I could fall flat on my face and make a loss but we'll cross that bridge when we come to it. I prioritise risk management and have strict rules for selling funds that don't perform, I do not buy a fund intending to hold it for very long periods.
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I recently saw that the mag7 index had dropped noticeably more than the s&p index ytd. What we might be seeing is a rotation from the mega caps into other constituents of the S&P index rather than solely withdrawals. If you were a US investor who invests only in the US then maybe they don't see any other asset class as attractive or don't know of alternatives so they just cycle, so the S&P index stays reasonably ok whilst we get press stories of how AI investing is in a bubble.
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The problem appears to be that for many investors, the US is too easy so they don't bother looking elsewhere, plus people seem to think that it must be safe, because it's so large and after all, it is the US. But other regions have also performed well, EM has done splendidly over the past year, as has Japan and the UK so it's not as though there aren't other options available. I also have seen the news about the rotation out of mega caps and the sell off in the Tech Sector. Great, as long as it's orderly, that's the best thing that could happen because it will return some normalcy to the US index. The risk of course is that it isn't orderly, especially once the retail herd starts to sell, that will be the point at which many will regret holding US only assets. I think what we might be seeing now is that the performance of the S&P is reverting to that of the equal weight US Index and that future growth will be more "normal".
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The key take away is that US markets are running hot and that international diversification is now important. Those investors who "all in" or nearly so, in the US, take note.
Which seems fair enough. All in on any one market is risky. Diversifying away from the US is obvious, as is away from the broader stock market. I'll admit I've not read the article just the OP.
To extrapolate that to loads of posters are suggesting or endorsing that isn't the way I see it but, I concur other ideas could be considered. and as for 'now important?' always has been. Perhaps that's an American centric view. That successful investor fella Buffett suggested portfolio should he predecease his wife's only had US stocks and US government debt.
I used to be happy using just the largest UK shares with the idea that FTSE100 blue chips like HSBC, Shell, Rio Tinto, Astra Zeneca, Rolls Royce and so on are global multi nationals so I am investing in the world. Investment Trusts and later ETFs opened my eyes to alternatives.
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Out of interest, since 4 April 2025, the HSBC FTSE All world index (acc) has increased by just over 28%, so a 50% holding would have contributed about 14% to the portfolio growth. Assuming the other half of the portfolio was in a MMF, e.g., the Royal London STMMF which has increased by about 3.6% over the same time period, the MMF would have contributed 1.8% to a 50/50 portfolio making a total return of 14+1.8=15.8%. In other words, even a fairly simple portfolio consisting of one index fund and a MMF (which is low cost, but not an index fund) would have satisfactorily beaten your target of 12% over the last 9 months.
FWIW, I am happy to diversify away from US equity market risk by investing in fixed income (including cash) and a small allocation of gold rather than trying to predict what might happen in equity markets over the next few months or years.
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Indeed, except I reached my target level after only 7 months. Your point however that 15% per year is not difficult to achieve, is not widely understood. I think it's very important to have a realistic target in mind before you even begin, otherwise you wont understand when the race has been won.
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A recent Facebook question from Martin Lewis asked whether people thought it wise to overpay on mortgages or put the money in savings. Several people advised investing in a S&S ISA instead and a few of those suggested S&P 500 tracker as the preferred fund. I tried to point out that S&S generally and especially S&P 500 is not the place to put money that you might want to access in the short-medium term.
Seems to be plenty of people who are relying on recent growth and returns to guide future plans but with no view of the risks.
loose does not rhyme with choose but lose does and is the word you meant to write.2
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