Next recession, trade wars, up to 50% portfolio losses

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  • AnotherJoe
    AnotherJoe Posts: 19,622
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    If you think that there will be a serious downturn in the markets, why would you just stand there and watch your personal investments go the same way.

    Because statistics and back testing clearly show that staying invested is the optimum strategy for long term growth. Indeed a simple thought experiment shows this to be true for you. Are you a multi mega millionaire whose made millions through your astute market timing, abilty to buy at the bottom, sell at the top, predict the price of gold and dip in and out between them all ?
    If the answer is "no" then why do you think you suddenly have gained that abilty ?

    For short to medium term needs getting out may be the better plan but that should be done irrespective of your guess as to the markets.
  • Bravepants
    Bravepants Posts: 1,487
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    "FTSE 100 skyrockets by 1.27%"...


    Sorry, just thought I'd get there before the BBC does.
    If you want to be rich, live like you're poor; if you want to be poor, live like you're rich.
  • I was literally just about to post this. Shall we get some 'i survived the great financial crash of 2018' t shirts printed . we'll clean up:D
  • Bravepants
    Bravepants Posts: 1,487
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    I was literally just about to post this. Shall we get some 'i survived the great financial crash of 2018' t shirts printed . we'll clean up:D



    Better yet, we could form a T-shirt printing company and offer shares.
    If you want to be rich, live like you're poor; if you want to be poor, live like you're rich.
  • jamei305
    jamei305 Posts: 635
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    Bravepants wrote: »
    "FTSE 100 skyrockets by 1.27%"...


    Sorry, just thought I'd get there before the BBC does.

    If it plunges and skyrockets in the same day they just change their initial headline to "markets volatile" :tongue:
  • slapmatt
    slapmatt Posts: 104 Forumite
    If you think that there will be a serious downturn in the markets, why would you just stand there and watch your personal investments go the same way.

    For me, it is the lack of a worthy alternative. If cash was earning >3% then I could just about stomach it, however with interest rates so low, bonds looking overpriced and metals not offering great returns, I think I'd rather sit it out.

    Saying that, silver looks as if it has some room to increase. 10 year high of £27.94, currently £11.
  • Bravepants wrote: »
    Better yet, we could form a T-shirt printing company and offer shares.
    T shirt coin ico? Its the in vogue thing i hear
  • MM2002
    MM2002 Posts: 157
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    Blimey, Ive just put 40K(wife and my allowance) into a vanguard cash isa, to give me time to decide which LS% to go with.
    Was cosidering quite high risk, 80, or even 100 or split between both.
    We would not be looking to touch it until hopefully retirement in about 20 years, but want to tiem it right.

    I was concerned with the markets 10% down I was losing daily being in the cash earning 0% but maybe not.

    What factors do you guys look at when deciding what product to invest your lifetime savings in?
  • ValiantSon
    ValiantSon Posts: 2,586 Forumite
    Yes I was concerned.

    I have, in the last few days, moved out of investments completely and moved into cash. When I have time to catch my breath I will also move some cash into precious metals.

    Why do you think you are better off buying commodities than equities? Why do you think precious metals commodities are better than cash?
    I may be wrong and the coming crash will not be for a few years, if ever. After all, unlike markets before, this already long, bull run could just keep on going. If I am wrong I will have missed out on any future increases in the market.

    There will be another market correction, and there will be another crash at some point too. We just don't know when this will happen.
    However, if I am right then my cash giving me only a little more than 1% interest easily beats a downturn of 5% in the markets.

    A 5% downturn is a relatively minor correction.

    With any market correction, you haven't actually lost anything unless you sell at that point. You only have a paper loss, which will recover over time and, most likely, exceed its previous value (given historic market trends). If you sell when your investments are down, however, then you will make a loss. By contrast, any money you have in savings, that is earning less than inflation in interest, is losing real value over time.
    If you think that there will be a serious downturn in the markets, why would you just stand there and watch your personal investments go the same way.

    Because you haven't actually lost anything and all historical data shows that the investments will recover, and most likely exceed their previous values.
  • ValiantSon
    ValiantSon Posts: 2,586 Forumite
    MM2002 wrote: »
    Blimey, Ive just put 40K(wife and my allowance) into a vanguard cash isa, to give me time to decide which LS% to go with.
    Was cosidering quite high risk, 80, or even 100 or split between both.
    We would not be looking to touch it until hopefully retirement in about 20 years, but want to tiem it right.

    I was concerned with the markets 10% down I was losing daily being in the cash earning 0% but maybe not.

    What factors do you guys look at when deciding what product to invest your lifetime savings in?

    I assume that you have other money saved. If you only have the £40,000 then you shouldn't invest it all. It's generally advisable to have 3-6 months worth of expenditure held in cash to protect you from the financial impact of nasty surprises, like being made unemployed.

    As you are just getting in you have already missed the 10% correction, so you are buying at a cheaper price than you would have done two to three months ago. This is a positive, as your money now buys you more! Of course, the markets could fall further over the coming months, but the long term perspective is necessary.

    If a 10% fall has spooked you a bit, then I would suggest that VLS80 and VLS100 might be a bit too volatile for you. Perhaps you should look at VLS60 instead. If, however, you think that really you are quite sanguine about it all (although the tone of your post suggests otherwise) then an investment in VLS80 would be reasonable at this time. You do, however, need to consider how you plan to de-risk the portfolio as you approach your target date. I wouldn't necessarily recommend remaining invested in high risk funds all the way.
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