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  • FIRST POST
    • Type 45
    • By Type 45 3rd Apr 18, 7:18 PM
    • 107Posts
    • 8Thanks
    Type 45
    Next recession, trade wars, up to 50% portfolio losses
    • #1
    • 3rd Apr 18, 7:18 PM
    Next recession, trade wars, up to 50% portfolio losses 3rd Apr 18 at 7:18 PM
    Anyone concerned?
Page 8
    • Lungboy
    • By Lungboy 12th Apr 18, 10:12 AM
    • 1,615 Posts
    • 1,624 Thanks
    Lungboy
    Historically, what have wars done to stock markets?

    e: Not an awful lot by the looks of it
    • stoozie1
    • By stoozie1 12th Apr 18, 10:13 AM
    • 613 Posts
    • 571 Thanks
    stoozie1
    So... what are people using to hedge against a potential drop in the stock market?
    Originally posted by slapmatt
    I'd be interested to know if anyone is holding cash as a hedge.
    Save 12 k in 2018 challenge member #79
    Target 2018: 24k Jan 2018- 560 April 2670
    • Filo25
    • By Filo25 12th Apr 18, 10:24 AM
    • 1,801 Posts
    • 2,633 Thanks
    Filo25
    I'd be interested to know if anyone is holding cash as a hedge.
    Originally posted by stoozie1
    Was asking the same question last night on the cash thread, I am getting very tempted to sell my bond funds and hold cash as my de-risking asset instead (in my SIPP), but really not sure if I am missing something.
    • Filo25
    • By Filo25 12th Apr 18, 10:29 AM
    • 1,801 Posts
    • 2,633 Thanks
    Filo25
    So Maybot is about to put our 3 nuclear powers up against the might of Russia.

    Anyone now still feel a stock market crash is not iminent.

    As before I am keeping my pension pot in cash right now.

    What do the DUP think? If they are against war, vote of no confidence = Jeremy as PM. That might be good for keeping us out of a war but I still see that crash.
    Originally posted by ProDave
    Don't hold your breath on the DUP voting in any way to help Corbyn potentially get into power, it is hard to overstate just how much they despise him and McDonnell.

    Equally while there may be some posturing and limited action around Syria, nobody on either side has any real interest in getting into a real escalating violent conflict between the West and Russia.
    • ProDave
    • By ProDave 12th Apr 18, 10:38 AM
    • 1,126 Posts
    • 1,367 Thanks
    ProDave
    Don't hold your breath on the DUP voting in any way to help Corbyn potentially get into power, it is hard to overstate just how much they despise him and McDonnell.

    Equally while there may be some posturing and limited action around Syria, nobody on either side has any real interest in getting into a real escalating violent conflict between the West and Russia.
    Originally posted by Filo25
    If Obama was still president, I would agree with that. But Trump?
    • Filo25
    • By Filo25 12th Apr 18, 10:41 AM
    • 1,801 Posts
    • 2,633 Thanks
    Filo25
    If Obama was still president, I would agree with that. But Trump?
    Originally posted by ProDave
    Just means even more posturing, especially as he no doubt tries to prove he isn't in Russia's back pocket. But no doubt as before Russia will be forewarned of any limited military action in Syria, so that they don't get caught in the crossfire.

    Russia has actually gotten away with a lot in recent years with relatively little serious reaction from the West in general
    • Sue58
    • By Sue58 12th Apr 18, 11:01 AM
    • 155 Posts
    • 49 Thanks
    Sue58
    Was asking the same question last night on the cash thread, I am getting very tempted to sell my bond funds and hold cash as my de-risking asset instead (in my SIPP), but really not sure if I am missing something.
    Originally posted by Filo25
    I suppose it really depends on individual circumstances mainly people's age group. If you're an investor ranging from 20-45 then you're more likely to just stay in the market with your own asset allocation/risk profile that suits your needs. My husband is 60 this year and has always had a portfolio of 100% equities in both ISA and SIPP so now he is thinking of moving his SIPP into cash because he wants to drawdown the maximum that he can tax free until his state pension in 6 years time. Fortunately, at the moment he doesn't need the money (I'm still working), so the money he draws down each year will be to put into our S&S ISA allowances but in wealth preservation IT's or funds.

    So IMO it's pointless trying to time the market, however, you have to make your decision based upon your own personal circumstances. As an example on trying to time the market, after the Brexit result I decided to move my S&S ISA investments into cash whereas my husband stayed in the market, I went back into the market 6/7 months later and I am now quite a bit behind my husband on our total returns even though we have invested the same amounts and in the same funds over the years. So lessons have been learned from me panicking.
    • Filo25
    • By Filo25 12th Apr 18, 11:11 AM
    • 1,801 Posts
    • 2,633 Thanks
    Filo25
    I suppose it really depends on individual circumstances mainly people's age group. If you're an investor ranging from 20-45 then you're more likely to just stay in the market with your own asset allocation/risk profile that suits your needs. My husband is 60 this year and has always had a portfolio of 100% equities in both ISA and SIPP so now he is thinking of moving his SIPP into cash because he wants to drawdown the maximum that he can tax free until his state pension in 6 years time. Fortunately, at the moment he doesn't need the money (I'm still working), so the money he draws down each year will be to put into our S&S ISA allowances but in wealth preservation IT's or funds.

    So IMO it's pointless trying to time the market, however, you have to make your decision based upon your own personal circumstances. As an example on trying to time the market, after the Brexit result I decided to move my S&S ISA investments into cash whereas my husband stayed in the market, I went back into the market 6/7 months later and I am now quite a bit behind my husband on our total returns even though we have invested the same amounts and in the same funds over the years. So lessons have been learned from me panicking.
    Originally posted by Sue58
    Just to be clear here I'm not talking about changing my equities proportion here, just considering whether it makes sense to move from bonds into cash for my risk reduction asset, so moving from 65% Equities:35% bonds to 65% Equities:35% cash.

    My logic being that currently as market volatility has increased in recent months, most bond funds have not done well, it doesn't look like we have that traditional relationship at present where bonds are likely to do well in an equity downturn. (not altogether unsurprising as bond valuations look stretched by QE as well)

    Obviously you would probably be insulated from that if you moved your bond funds into short dated gilts/AAA rated bonds, but with rates this low I would think those remain uneconomical to hold after allowing for management and platform fees.

    I'm a relative noob at investing so I'm sure I am missing factors here, but interested to hear other opinions on that one.
    • ArchBair
    • By ArchBair 12th Apr 18, 11:43 AM
    • 117 Posts
    • 51 Thanks
    ArchBair
    I'd be interested to know if anyone is holding cash as a hedge.
    Originally posted by stoozie1
    I have a couple of friends that have recently moved their SIPP investments into cash, but they are retired and around 60, so maybe they are happy to just take the profits and go into drawdown as cash. I myself, although in the same age bracket intend to stay in the market for the time being even though I will be going into drawdown next year.
    • Zola.
    • By Zola. 12th Apr 18, 12:30 PM
    • 1,355 Posts
    • 586 Thanks
    Zola.
    A typical stockmarket crash is around 20-25%. We are currently down around 10%. So, you are pulling out after half a typical crash.

    Lets say we do get to crash territory. When will you go back in again? it wont be at bottom as you wont know when that is. There is usually a quick bounce from the bottom (or a double dip). So, you will probably go back in after it has recovered half its loss.



    Punching through it usually results in better returns than trying to guess the market. There has been a crash coming since 2012. We had one in 2015 but it recovered quickly. Crashes are always coming and you cant time them. So, whats the point of pulling out and getting it wrong most of the time?
    Originally posted by dunstonh
    Was it Bogle who said it that in these times that it's not

    "Don't stand there, do something!"

    its

    "Don't do something, stand there!"
    • ProDave
    • By ProDave 12th Apr 18, 12:59 PM
    • 1,126 Posts
    • 1,367 Thanks
    ProDave
    Don't hold your breath on the DUP voting in any way to help Corbyn potentially get into power, it is hard to overstate just how much they despise him and McDonnell.

    Equally while there may be some posturing and limited action around Syria, nobody on either side has any real interest in getting into a real escalating violent conflict between the West and Russia.
    Originally posted by Filo25
    Historically, what have wars done to stock markets?

    e: Not an awful lot by the looks of it
    Originally posted by Lungboy
    The 2003 invasion of Iraq killed the housing marked dead for a while due to the uncertainty. I had just put my house on the market and it was something like 6 months before we had the first viewing and nearly a year to sell.
    • slapmatt
    • By slapmatt 12th Apr 18, 1:07 PM
    • 101 Posts
    • 1,072 Thanks
    slapmatt
    Gold and Silver for me.

    I am also looking at some alternative investments, such as green power producers, but I am not sure what is the best way to get them into my SIPP.

    I think the next 12-months will give a much better picture of how equities will perform in the medium terms. Overall the stock markets look overheated and that is without Trump, Brexit, Syria etc.
    • slapmatt
    • By slapmatt 12th Apr 18, 1:14 PM
    • 101 Posts
    • 1,072 Thanks
    slapmatt
    Was it Bogle who said it that in these times that it's not

    "Don't stand there, do something!"

    its

    "Don't do something, stand there!"
    Originally posted by Zola.
    The FTSE 100 recently reached record highs. The previous high was in late 1999.

    One of the reason so many people have such crappy pensions is because the market goes in cycles but without actually making any meaningful long terms gains.

    Now, I appreciate that foreign markets have performed much better in the long term, but given that UK investments have historically been very UK-centric (and I assume most people's holding are the same), doesn't that prove that timing is everything?
    • ewaste
    • By ewaste 12th Apr 18, 1:20 PM
    • 63 Posts
    • 40 Thanks
    ewaste
    The FTSE 100 recently reached record highs. The previous high was in late 1999.

    One of the reason so many people have such crappy pensions is because the market goes in cycles but without actually making any meaningful long terms gains.

    Now, I appreciate that foreign markets have performed much better in the long term, but given that UK investments have historically been very UK-centric (and I assume most people's holding are the same), doesn't that prove that timing is everything?
    Originally posted by slapmatt
    So does dividend re-investment just not exist then? it's the coupling of compounded dividends and growth that really helps.

    Sure if your extremely lucky you'll 'time' the market to some benefit however with more up periods than down then the chance is greater you'll lose out by being out of the market.

    Most people have crap pensions becuase they don't pay in nearly enough and early enough to make a real difference long term and often their expectations are too high. How many people in their 30's or even 40's take an interest in their pension never mind the odd person in their 20's who takes an interest early enough that it might have a major impact. There is also the problem of people spending longer in retirement and in better health before then being alive longer thanks to modern medicine which can also increase their living costs due to care, illness or disability costs.
    Last edited by ewaste; 12-04-2018 at 1:27 PM.
    • Zola.
    • By Zola. 12th Apr 18, 1:22 PM
    • 1,355 Posts
    • 586 Thanks
    Zola.
    The FTSE 100 recently reached record highs. The previous high was in late 1999.

    One of the reason so many people have such crappy pensions is because the market goes in cycles but without actually making any meaningful long terms gains.

    Now, I appreciate that foreign markets have performed much better in the long term, but given that UK investments have historically been very UK-centric (and I assume most people's holding are the same), doesn't that prove that timing is everything?
    Originally posted by slapmatt
    If you are tunnel visioned into only investing in the FTSE, you probably don't deserve good rewards.
    • slapmatt
    • By slapmatt 12th Apr 18, 1:28 PM
    • 101 Posts
    • 1,072 Thanks
    slapmatt
    So does dividend re-investment just not exist then? it's the coupling of compounded dividends and growth that really helps.
    Originally posted by ewaste
    It does, but if you invested during any of the downward moves you'd do well to break even.

    I think we have been lucky in that the FTSE has gone steadily upwards since 2010, however when I look back further the cycles scare me!
    • slapmatt
    • By slapmatt 12th Apr 18, 1:31 PM
    • 101 Posts
    • 1,072 Thanks
    slapmatt
    If you are tunnel visioned into only investing in the FTSE, you probably don't deserve good rewards.
    Originally posted by Zola.
    My investments are very diverse, in fact I have deliberately moved away from the UK as I think we will do a lot worse than pretty much everywhere else over the next few years.

    However, historically pensions have been invested heavily in UK funds and equities, whereas a lot of the perceived wisdom comes form the US where the S&P has had a strong upwards trajectory since 2000.
    • ewaste
    • By ewaste 12th Apr 18, 1:43 PM
    • 63 Posts
    • 40 Thanks
    ewaste
    It does, but if you invested during any of the downward moves you'd do well to break even.

    I think we have been lucky in that the FTSE has gone steadily upwards since 2010, however when I look back further the cycles scare me!
    Originally posted by slapmatt
    You'd basically needed to have invested on the way down and then panicked or have been forced to sell to have lost out, obviously you know the reason that investing is a long term game is to even out the boom and bust. I don't disagree that there is maybe more timing involved for the active investor and I would imagine quite a few people do make some active decisions regarding timing. (Edit:- Doubtless someone will be along shortly with some statistics to make me look like a muppet)

    I personally certainly keep an eye on current affairs and make some trades aka punts on individual stocks depending on whats happening, I recently jumped on Microfocus which has been rather profitable. My punts obviously have a habit of going tits up every so often but it's small beer and risk in comparison to trying to time large chunks e.g. pensions.
    • JohnRo
    • By JohnRo 12th Apr 18, 2:04 PM
    • 2,665 Posts
    • 2,487 Thanks
    JohnRo
    You're either a long term buy and hold equity investor, or you're not. If you're not in it for the long term then you arguably shouldn't be invested in equity markets anyway, unless simply gambling on a favourable outcome in the short term. If you're just fearful of the downside then that's an exposure issue.

    Everyone knows a crash is going to happen, noone knows when a crash is going to happen, some guess right, some keep guessing until they're right. I understand the temptation to try and dodge a bullet, to get out of the way, wait and then try to steal a march on everyone else. It all sounds so simple but the chances of success are quite slim.

    In reality getting out of the market in the short term is just as likely to damage returns as it is to prevent losses, longer term it's unlikely to matter. I know from experience that I'm a heck of a lot more comfortable being in the equity market, toppy or not, than out of it and that when the next crash happens it will at least provide a few, perhaps brief and limited, rebalance and reduced cost opportunities, before starting a recovery, which could well be rapid.

    Wiser to focus energy on portfolio diversification, global coverage, suitability and risk tolerance rather than plotting a perfect market timing path.

    I just don't see the point in trying to second guess equity markets and an inevitable crash when the potential for a disasterous timing decision in either direction is so pronounced.

    Good luck to those that do, they'll need it.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
    • Voyager2002
    • By Voyager2002 12th Apr 18, 3:08 PM
    • 12,609 Posts
    • 8,614 Thanks
    Voyager2002

    I am also looking at some alternative investments, such as green power producers, but I am not sure what is the best way to get them into my SIPP
    Originally posted by slapmatt
    Several easy ways. There are a couple of Investment Trusts that I hold (Greencare and The Renewable Infrastructure Group) with dividend yields of around 5 per cent and low volatility. And there are any number of ETFs: a big one, from iShares, has very reasonable fees.

    I am not sure that there are any better options.
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