Global Equities - still the best place for core holding?

RomfordNavy
RomfordNavy Posts: 682 Forumite
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in Savings & investments
Now that there appears to be a tightening of Quantitive policy around the world and we appear to be entering what I suspect is a sustained period of Quantitive Tightening what are your thoughts regaring global equities?

Is a mixture of various global equities still a good core holding or do the new quantitive policies make that less of a good idea for the future.
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Comments

  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
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    I suspect that (almost?) all financial assets are grossly overvalued. Maybe cash is less at risk than global equities but that leaves open the question of which currencies to hold your cash in.

    It may be that sovereign bonds will suffer less than equities in a great crash - except for those bonds that governments renege on, either by simple default, or by inflation, or by other nefarious mechanisms.

    And if enough governments respond to calamity by running inflations then your cash might not be safe either.
    Free the dunston one next time too.
  • Alexland
    Alexland Posts: 9,653 Forumite
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    Global equities are still fine for the long term but as always carry the risk that they might not be the highest performer in the short to medium term which is why people increasingly diversify into different and less volatile asset types as they get closer to withdrawal.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    RomfordNavy wrote: »
    Now that there appears to be a tightening of Quantitive policy around the world

    Behind the curve I would suggest. The Fed has been raising interest rates for nearly 2 years. Likewise commenced QE reversal in Oct 17. BOE ceased it's QE policy over 2 years ago. Subtle changes have been apparent for a while.

    With the ECB programme ceasing at the end of this year. The ship is most certainly sailing into uncharted waters.

    One iceberg is Japan whose QE programme has dwarfed everyone elses. How it is going to extricate itself from the position it finds itself in will be interesting to watch.
  • C_Mababejive
    C_Mababejive Posts: 11,654 Forumite
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    So the answer is to buy tangible assets but what ? Housing is a bubble as are gold and silver. I know,use your money to leverage more personal debt at cheap rates...

    Or buy other peoples debts via corporate bond funds. Unless big companies fail,debt will always be repaid.
    Feudal Britain needs land reform. 70% of the land is "owned" by 1 % of the population and at least 50% is unregistered (inherited by landed gentry). Thats why your slave box costs so much..
  • _CC_
    _CC_ Posts: 362 Forumite
    C_Mababejive wrote: »
    So the answer is to buy tangible assets but what ? Housing is a bubble as are gold and silver. I know,use your money to leverage more personal debt at cheap rates...

    Or buy other peoples debts via corporate bond funds. Unless big companies fail,debt will always be repaid.


    Businesses are tangible and tend to have the greatest earning power to boot.
  • Filo25
    Filo25 Posts: 2,131 Forumite
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    Thrugelmir wrote: »
    Behind the curve I would suggest. The Fed has been raising interest rates for nearly 2 years. Likewise commenced QE reversal in Oct 17. BOE ceased it's QE policy over 2 years ago. Subtle changes have been apparent for a while.

    With the ECB programme ceasing at the end of this year. The ship is most certainly sailing into uncharted waters.

    One iceberg is Japan whose QE programme has dwarfed everyone elses. How it is going to extricate itself from the position it finds itself in will be interesting to watch.

    To be fair does Japan actually need to reverse the policy?

    It doesn't look like an economy that is going to be overwhelmed by inflationary pressures anytime soon
  • Malthusian
    Malthusian Posts: 10,936 Forumite
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    The evidence from past data (which is all we have) shows that even people who invest in equities at the worst possible moment (e.g. middle of 2007) will beat cash if they hold their nerve. Those who invested at the worst possible moment in the middle of 2007 had beaten cash by 2013, and the gap has become wider every year.

    Other alternatives to a globally diversified portfolio of equties generally involve either

    a) things that will follow similar crash and return paths to equities (e.g. bonds and commercial property), albeit to different degrees and sometimes at different times, so much the same argument applies
    b) or bonkers ideas like investing in shiny metal or neo-With-Profits or corporate loans to dodgy property developers with minimal due diligence (P2P).
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    Filo25 wrote: »
    To be fair does Japan actually need to reverse the policy?

    It doesn't look like an economy that is going to be overwhelmed by inflationary pressures anytime soon

    BOJ - QE 79% of GDP
    ECB - 41%
    US FED - 21%

    Telling figures as to the level of central bank support.
  • talexuser
    talexuser Posts: 3,499 Forumite
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    Presumably that was part of what they called "Abeonomics". Ditching free markets and much more government intervention to stimulate growth and inflation? To simplify a complicated policy.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
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    Malthusian wrote: »
    The evidence from past data ... shows that even people who invest in equities at the worst possible moment will beat cash if they hold their nerve.

    Only if (i) you select the country you look at with some care, and (ii) the investor lives for a very long time.

    It's not even clear to me that it's true of the UK. Have shares really beaten cash since the end of 1999? I wouldn't be surprised if it's close enough that you can get whatever answer you want by making different assumptions about tax and charges.
    Free the dunston one next time too.
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