Doom scrolling and the next financial crash!

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/82115090#Comment_82115090

In 1992 I was working on one of the Sun pizza boxes…I think it was a SPARCstation 2. Funny how you can be nostalgic about silicon.

tigerspill

I am now at the point of moving to a more defensive portfolio. At Christmas and new year, I moved around 10% of my portfolio into ILGs. Yesterday, I moved another 5% into nominal gilts for the shorter term.

If I am honest, this was always my plan, but was a bit lazy; however this thread has pushed me to sort things out. I am now at 15% cash; 25% Bonds (80% of which are in Gilts) and 60% in global equities.

My next steps are to move some more equities into gilts; sell my Vanguard VLS funds and rationalise my equity holdings into a single (or maybe 2/3) funds - I haven't decided on this yet. I am probably not going to invest in other bonds as I don't think I need them. So my plan is Cash very short term; Nominal gilts short term; ILGs for medium term and equities for longer term (>15 years).

AlanP_2

We've dialled back our overall exposure to large US / Tech equities over the last 6-12 months, not dramatically but just easing off a bit as things started to look a bit out of kilter to my eye.

We've won the game so don't need to keep playing in the hope of getting "just a bit more"

We are now:

Equities @ 48.5% (UK/9, Euro ex-Uk/6, Nth America/24, Jpn/2, Asia ex-Jpn/2 and EM/5)

Bonds @ 14%

MM@ 6%

Property @ 4%

Infrastructure ITs @ 4%

Renewables ITs @ 2.5%

Private Equity ITs @ 3.5%

Commodities @ 2.5%

Uninvested Cah @ 15%

Our essential and most of the optional expenses are easily covered by DBs & SPs so most of the above is for larger, one off costs (new car and solar install over last 12 months). In reality we will probabaly never spend much of it and it will pass on to children and grand-children (long term care costs could blow that out of the water obviously).

Baldytyke88

"The governor of the Bank of England has warned G20 finance ministers that artificial intelligence could cause a global economic downturn and pose a significant cyber security risk to financial systems.

Andrew Bailey said any collapse of growth in the AI sector could lead to a "future market correction" that spreads worldwide."

I am hoping it does not affect global shares, but Andrew Bailey thinks there is a risk of an AI- and a banking-sector correction. The FTSE AIM 100 is down 2.1% at the moment.

https://www.bbc.co.uk/news/articles/c99dym3prl1o

eskbanker

I am hoping it does not affect global shares, but Andrew Bailey thinks there is a risk of an AI- and a banking-sector correction.

Not quite sure what you mean by 'it' here?

It seems inevitable that any meaningful correction in the AI sector will have significant wider consequences (maybe not at dot com collapse levels), or are you just hoping that Bailey's comments themselves don't have ramifications?

Baldytyke88

https://forums.moneysavingexpert.com/discussion/comment/82121857#Comment_82121857

I was hoping the UK would be unaffected by any substantial downturn.

AI - "The UK stock market is generally not considered overpriced, as most British shares continue to trade at a significant discount compared to international peers like the US."

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82121878#Comment_82121878

Oh right, you said 'global shares' before - I'd expect the US dominance of global markets to mean that corrections there would be followed elsewhere in short order, but if UK equities really are undervalued then the effect may not be as severe here I suppose, although 'unaffected' may be optimistic!

UpDownLeftRight

Tech companies stocks are in the trillions any major market reset that causes the tech companies stock to fall sharply will impact every sector as the economy is tech dependent.

In the financial crisis some banks had to be bailed out by governments. I expect tech companies will receive a bailout to keep the economy running. Both banks and tech companies are too big to fail. We depend on these companies too much in day to day life.

Middle_of_the_Road

https://forums.moneysavingexpert.com/discussion/comment/82121903#Comment_82121903

I don't "depend' on Artificial Intelligence companies in my day to day life 🤔

UpDownLeftRight

https://forums.moneysavingexpert.com/discussion/comment/82121910#Comment_82121910

Major tech companies are investing heavily in AI technology and AI tech companies are using the data centres of major tech companies to power AI.

If AI falls the money invested falls, major tech companies suffer both losses in data centre demand and losses of investment and without demand from data centres hardware losses become greater.

In the last decade alone tech companies are the biggest dependency of the economy for everything including financial services.

Monzo bank depends on major tech companies to survive.

Major tech companies looking at AI as a dependency on their products. AI companies are investing heavily to influence companies to use AI. If AI breaks it will affect everyone.