Next recession, trade wars, up to 50% portfolio losses
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Would anybody consider investing in an ETF which shorts the market?
I wouldn't, because:
1) developed stockmarkets go up more often than they go down - making a short ETF a near-guaranteed loser in the long term
2) Market timing, i.e. betting that the market will fall in the short term, doesn't work - making a short ETF an expected loser in the short-term
3) For hedging purposes, going short is a very expensive way of doing nothing, the investment equivalent of mindfulness. Retail investors can reduce their exposure to the market by holding cash in loss-leader savings accounts. Loss-leader savings accounts aren't available to institutions or traders, which makes short ETFs potentially attractive as a way to hedge. But nobody taking part in this discussion is a trader (not an on-duty one at any rate).0 -
Malthusian wrote: »I wouldn't, because:.
Yes, I agree with most of that. I don't recommend people start building heir own short etf portfolio as it is far from straightforward to review the products and as mentioned the mechanics of a short etf do not make it a simple tool to work with as a long term product, only a short term one really. I am more of a "do as I say, rather than do as I do" sort of person.
As an observation, people do have money locked away in "institutional" account types that can't access loss leader savings though - when they use pension or large values of ISAs for example. Meaning that although they're a tool for traders and institutions, in some scenarios you might consider yourself to be an institution in terms of product choice. Still doesn't excuse people believing they know better than the market though. But derivatives are just one of the many asset types that exist, with different properties to traditional investment that aren't derivatives.0 -
OldMusicGuy wrote: »Not sure if that is directed at me but my sentiment is not contributing to any of this.
Not at all. My comments are of a generic nature. Without differing views there'd be no markets worth investing in.0 -
Good afternoon all.
I have sold the VLS60 in my ISA for the time being.
There are a few reasons for this:
1) I recently read an article by Vanguard in which they are saying we should only expect gains on 3-5% going forward. The good times are over for the time being. Is a 3-5% upside really worth a 30% loss risk should a crash happen? Surely it's better to have 1% upside from a savings account with 0% loss risk.
2) I read on Twitter a bloke saying that major investers (in the hundreds of millions of £s) are moving away from equities. This is surely a sign of what is to come.
3) We live in unstable times. Trump/China/tariffs/long time since the last recession... it could all go t*ts up at any time.
So, I am moving to cash for the time being. Utilising my 3% Tesco accounts, and possibly an NS&I saver account for the rest.0 -
1) I recently read an article by Vanguard in which they are saying we should only expect gains on 3-5% going forward. The good times are over for the time being. Is a 3-5% upside really worth a 30% loss risk should a crash happen? Surely it's better to have 1% upside from a savings account with 0% loss risk.
Which VLS fund were they referring to?
VLS60 losing 30% would be a generational size loss of a level greater than both the credit crunch and dot.com period losses.2) I read on Twitter a bloke saying that major investers (in the hundreds of millions of £s) are moving away from equities. This is surely a sign of what is to come.
Twitter. oh boy3) We live in unstable times. Trump/China/tariffs/long time since the last recession... it could all go t*ts up at any time.
That sounds like the mindset of a millennial who thinks that only negative things happen since they were born. Goodness knows how people invested during the 20th century when things were more unstable.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Which VLS fund were they referring to?
VLS60 losing 30% would be a generational size loss of a level greater than both the credit crunch and dot.com period losses.
Twitter. oh boy
That sounds like the mindset of a millennial who thinks that only negative things happen since they were born. Goodness knows how people invested during the 20th century when things were more unstable.
They weren't referring to VLS funds per se. They were referring to equities generally.
A 30% loss would be "generational"? The Dot.com happened around 2000. The Credit Crunch happened in 2008. We are due another right about now. These aren't generational, unless by that you mean every 10 years.0 -
A bloke said on Twitter that England were going to win the World Cup! Maybe the same bloke?0
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This didn't age well did it?If we didn't all have faith in the stock market growing none of us would be on this forum.
Of course it will grow over the long term. We know that for a fact. We just hope it doesn't cost us in the short to mid term.
I hope everyone's investments do well. This is not a Zero Sum Game. If the world's economy keeps growing (which it will, in the long term at least) it will lift all ships and we will all be winners.0 -
They weren't referring to VLS funds per se. They were referring to equities generally.
Meaningless. Returns depend on the investment mix.A 30% loss would be "generational"? The Dot.com happened around 2000. The Credit Crunch happened in 2008. We are due another right about now. These aren't generational, unless by that you mean every 10 years.
Read it again. Dunstonh said that 30% losses on VLS60 would be a generational size loss, and compared it to the lower losses seen in both the dot.com bubble and with the credit crunch.
Feel free to abandon your investments based on a not wholly understood article from Vanguard (I read the same one, and you have misintepreted it); a lack of understanding about how the market works; and what some bloke on Twitter said. I'll pass, however.0 -
They weren't referring to VLS funds per se. They were referring to equities generally.
So, you had a fund that was only invested 60% in equities. So, a 30% loss wouldn't see your fund lose 30%.A 30% loss would be "generational"? The Dot.com happened around 2000. The Credit Crunch happened in 2008. We are due another right about now. These aren't generational, unless by that you mean every 10 years.
I was referring to a 30% loss potential on your particular investment. That is what matters after all. Not some hypothetical spread that you dont have.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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