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  • FIRST POST
    • C_Mababejive
    • By C_Mababejive 13th Feb 18, 6:57 PM
    • 10,461Posts
    • 9,429Thanks
    C_Mababejive
    De-risking equity portfolio..?
    • #1
    • 13th Feb 18, 6:57 PM
    De-risking equity portfolio..? 13th Feb 18 at 6:57 PM
    Hi all,
    I have quite a lot of money invested in shares and think i should start to slowly de-risk by selling at opportune moments and then buying into something else. The problem is, what should i be looking to buy into?
    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..
Page 1
    • fun4everyone
    • By fun4everyone 13th Feb 18, 7:11 PM
    • 995 Posts
    • 1,529 Thanks
    fun4everyone
    • #2
    • 13th Feb 18, 7:11 PM
    • #2
    • 13th Feb 18, 7:11 PM
    You could consider looking at the various types of bonds, direct property, current accounts+regular savers paying more than inflation, p2p lending and absolute return funds for starters.

    All of them apart from the cash accounts carry some sort of risk but all are worth investigating imo.
    • Thrugelmir
    • By Thrugelmir 13th Feb 18, 7:21 PM
    • 58,946 Posts
    • 52,274 Thanks
    Thrugelmir
    • #3
    • 13th Feb 18, 7:21 PM
    • #3
    • 13th Feb 18, 7:21 PM
    If you find an answer. Then you'll answer a conundrum that's been on the horizon for some time. Perhaps just good old fashioned cash for a period. Might be depleted by inflation. However won't suffer a serious correction in price. Taking profits and sitting on the sidelines isn't always a bad idea.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • capital0ne
    • By capital0ne 13th Feb 18, 7:23 PM
    • 524 Posts
    • 254 Thanks
    capital0ne
    • #4
    • 13th Feb 18, 7:23 PM
    • #4
    • 13th Feb 18, 7:23 PM
    Doing anything to a balanced portfolio just because you expect a crash/correction is idiocy.
    You'll miss out on the up-turn massiveley.

    Remain invested in the fashion that suits you.

    Only sell out to cash if you need it in the next year or so.
    • Audaxer
    • By Audaxer 13th Feb 18, 7:34 PM
    • 1,081 Posts
    • 635 Thanks
    Audaxer
    • #5
    • 13th Feb 18, 7:34 PM
    • #5
    • 13th Feb 18, 7:34 PM
    If you are currently 100% equities I would de-risk by cashing in some gains, but only after they recovered from the recent correction.
    • Alexland
    • By Alexland 13th Feb 18, 7:35 PM
    • 2,580 Posts
    • 1,958 Thanks
    Alexland
    • #6
    • 13th Feb 18, 7:35 PM
    • #6
    • 13th Feb 18, 7:35 PM
    If you find an answer. Then you'll answer a conundrum that's been on the horizon for some time. Perhaps just good old fashioned cash for a period. Might be depleted by inflation. However won't suffer a serious correction in price. Taking profits and sitting on the sidelines isn't always a bad idea.
    Originally posted by Thrugelmir
    I agree. In the next 10 years we are expecting a period of low investment returns caused by the high p/es but we don't know how it will look. It might just be a nice straight wobbly line or it might be another crash like the GFC followed by a lumpy recovery. It makes sense to hold some cash and possibly funds with equity hedging while asset prices are high.

    Alex
    • A_T
    • By A_T 13th Feb 18, 7:51 PM
    • 442 Posts
    • 288 Thanks
    A_T
    • #7
    • 13th Feb 18, 7:51 PM
    • #7
    • 13th Feb 18, 7:51 PM
    Hi all,
    I have quite a lot of money invested in shares and think i should start to slowly de-risk by selling at opportune moments and then buying into something else. The problem is, what should i be looking to buy into?
    Originally posted by C_Mababejive
    Good luck deciding when that is.
    • C_Mababejive
    • By C_Mababejive 13th Feb 18, 7:58 PM
    • 10,461 Posts
    • 9,429 Thanks
    C_Mababejive
    • #8
    • 13th Feb 18, 7:58 PM
    • #8
    • 13th Feb 18, 7:58 PM
    I suppose if we look at the 2008 crash it recovered after maybe 2 years and the 2015 drop after maybe a year and all the while, if you had hung onto your hat,whatever you were invested in was still paying divi's and even better if re-invested.
    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..
    • Alexland
    • By Alexland 13th Feb 18, 8:16 PM
    • 2,580 Posts
    • 1,958 Thanks
    Alexland
    • #9
    • 13th Feb 18, 8:16 PM
    • #9
    • 13th Feb 18, 8:16 PM
    I suppose if we look at the 2008 crash it recovered after maybe 2 years and the 2015 drop after maybe a year and all the while, if you had hung onto your hat,whatever you were invested in was still paying divi's and even better if re-invested.
    Originally posted by C_Mababejive
    If we look at it closer we might find 2008 was not such a speedy recovery.
    • Linton
    • By Linton 13th Feb 18, 9:02 PM
    • 9,395 Posts
    • 9,529 Thanks
    Linton
    If we look at it closer we might find 2008 was not such a speedy recovery.
    Originally posted by Alexland
    The FTSE World Index with dividends reinvested exceeded its pre-crash high within 2 years. Seems reasonably quick to me.
    • Alexland
    • By Alexland 13th Feb 18, 9:06 PM
    • 2,580 Posts
    • 1,958 Thanks
    Alexland
    The FTSE World Index with dividends reinvested exceeded its pre-crash high within 2 years. Seems reasonably quick to me.
    Originally posted by Linton
    Yes but the OP was suggesting that the recovery was within two years with further upside if dividends were reinvested.
    • bostonerimus
    • By bostonerimus 13th Feb 18, 9:11 PM
    • 1,942 Posts
    • 1,281 Thanks
    bostonerimus
    Hi all,
    I have quite a lot of money invested in shares and think i should start to slowly de-risk by selling at opportune moments and then buying into something else. The problem is, what should i be looking to buy into?
    Originally posted by C_Mababejive
    This is the wrong approach to investing. You should be investing for the long term with an asset allocation that makes you comfortable. There are no magic solutions or assets.
    Misanthrope in search of similar for mutual loathing
    • Economic
    • By Economic 13th Feb 18, 9:20 PM
    • 252 Posts
    • 231 Thanks
    Economic
    According to this article in the FT, 'the best strategy is to sell when realised volatility rises':
    https://www.ft.com/content/b2add7c8-0c18-11e8-8eb7-42f857ea9f09
    • Thrugelmir
    • By Thrugelmir 13th Feb 18, 9:20 PM
    • 58,946 Posts
    • 52,274 Thanks
    Thrugelmir
    I suppose if we look at the 2008 crash it recovered after maybe 2 years
    Originally posted by C_Mababejive
    Amongst many support measures at the time. BOE base was reduced from 5.0% to 0.5% in that period. Slightly behind the Fed. Who reduced the Funds Rate from 4.25% to 0.25% in 2008 alone.

    Concern now is that companies are sitting with leveraged balanced sheets. In 2016 around 20% of US share transactions were companies buying their own shares. Cheaper to borrow money (interest being tax deductible) in the US than repatriate funds from overseas and pay high levels of tax.

    As Tesco's showed a while back. Even a company with what appears to be a simple business model isn't immune to using financial engineering.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • coastline
    • By coastline 13th Feb 18, 9:49 PM
    • 940 Posts
    • 1,083 Thanks
    coastline
    I agree. In the next 10 years we are expecting a period of low investment returns caused by the high p/es but we don't know how it will look. It might just be a nice straight wobbly line or it might be another crash like the GFC followed by a lumpy recovery. It makes sense to hold some cash and possibly funds with equity hedging while asset prices are high.

    Alex
    Originally posted by Alexland
    Trailing P/E now 21..

    https://pbs.twimg.com/media/DVywyRiW4AEkbZ1.jpg

    Forward P/E now 16..

    https://pbs.twimg.com/media/DVzFUQTW4AEiSYP.jpg

    FTSE will be even less I would think ?
    • Alexland
    • By Alexland 13th Feb 18, 9:59 PM
    • 2,580 Posts
    • 1,958 Thanks
    Alexland
    Interesting data as always coastline. I'm not sure what we would read into the FTSE100 forward P/E as so much depends on exchange rates.
    • fun4everyone
    • By fun4everyone 13th Feb 18, 10:12 PM
    • 995 Posts
    • 1,529 Thanks
    fun4everyone
    The best time to sell should be dictated by planning around personal circumstances. Not by what some newspaper/website/person with agenda/wannabe fortune teller says.
    • bostonerimus
    • By bostonerimus 13th Feb 18, 10:34 PM
    • 1,942 Posts
    • 1,281 Thanks
    bostonerimus
    According to this article in the FT, 'the best strategy is to sell when realised volatility rises':
    https://www.ft.com/content/b2add7c8-0c18-11e8-8eb7-42f857ea9f09
    Originally posted by Economic
    It would be instructive to show the results for starting at different decades......The differences would not be as pronounced between volatility management and buy and hold if we started at 1970, 1980 etc rather than 1928........
    Misanthrope in search of similar for mutual loathing
    • redux
    • By redux 13th Feb 18, 10:43 PM
    • 18,239 Posts
    • 24,131 Thanks
    redux
    The best time to sell is a week before you find out you wish you'd done it.
    • Thrugelmir
    • By Thrugelmir 13th Feb 18, 10:52 PM
    • 58,946 Posts
    • 52,274 Thanks
    Thrugelmir
    It would be instructive to show the results for starting at different decades......The differences would not be as pronounced between volatility management and buy and hold if we started at 1970, 1980 etc rather than 1928........
    Originally posted by bostonerimus
    In the 20's investors had disruptive technologies to contend with. Wireless, telephone, motor vehicles etc. Today we have Amazon, Google, UBER and Netflix. Though EU Commissioner Vestager may well be their nemesis.

    The S&P 500 now accounts for around 70% of US GDP. Top 50 companies some 20%. Average lifespan of a quoted company is now little more 15 years.

    The world is moving much much faster. Actual comparisons are meaningless.
    Last edited by Thrugelmir; 13-02-2018 at 10:55 PM.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
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