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  • FIRST POST
    • Type 45
    • By Type 45 3rd Apr 18, 7:18 PM
    • 67Posts
    • 6Thanks
    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 9
    • slapmatt
    • By slapmatt 12th Apr 18, 3:34 PM
    • 101 Posts
    • 1,072 Thanks
    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.
    Originally posted by Voyager2002
    Thanks, I will definitely have a look at those.
    • OldMusicGuy
    • By OldMusicGuy 12th Apr 18, 5:03 PM
    • 449 Posts
    • 896 Thanks
    OldMusicGuy
    I'd be interested to know if anyone is holding cash as a hedge.
    Originally posted by stoozie1
    See post #31. I am holding enough cash/near cash to last us at least 10 years.
    • TBC15
    • By TBC15 12th Apr 18, 5:43 PM
    • 510 Posts
    • 259 Thanks
    TBC15
    A lot of the people here seem to be contributing to the result they fear.
    • Thrugelmir
    • By Thrugelmir 12th Apr 18, 5:57 PM
    • 59,273 Posts
    • 52,643 Thanks
    Thrugelmir
    Investment wise. Currently very low cash balance. As have identified a couple of long term opportunities that offer reasonable value. Not that they are exciting. However should outperform cash in the medium term. Nothing to suggest that the world markets en masse are going to come crashing down anytime soon. It's the large cap stocks that hurt the indices. Leaving many little changed.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • OldMusicGuy
    • By OldMusicGuy 12th Apr 18, 6:47 PM
    • 449 Posts
    • 896 Thanks
    OldMusicGuy
    A lot of the people here seem to be contributing to the result they fear.
    Originally posted by TBC15
    Which means?
    • Thrugelmir
    • By Thrugelmir 12th Apr 18, 7:11 PM
    • 59,273 Posts
    • 52,643 Thanks
    Thrugelmir
    Which means?
    Originally posted by OldMusicGuy
    Sentiment drives markets.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • ChesterDog
    • By ChesterDog 12th Apr 18, 7:30 PM
    • 885 Posts
    • 1,654 Thanks
    ChesterDog
    A lot of the people here seem to be contributing to the result they fear.
    Originally posted by TBC15
    I always hold a lot of cash - it's not a reaction to current conditions per se. Well, perhpaps in the sense that I am holding much of that sum in place of bonds.
    I am one of the Dogs of the Index.
    • Glen Clark
    • By Glen Clark 13th Apr 18, 7:20 AM
    • 4,188 Posts
    • 3,196 Thanks
    Glen Clark
    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
    Why do people think the pound sterling would hold its value better than a world tracker fund in a crisis?
    Last edited by Glen Clark; 13-04-2018 at 7:23 AM.
    It is difficult to get a man to understand something, when his salary depends on his not understanding it. --Upton Sinclair
    • OldMusicGuy
    • By OldMusicGuy 13th Apr 18, 10:15 AM
    • 449 Posts
    • 896 Thanks
    OldMusicGuy
    Sentiment drives markets.
    Originally posted by Thrugelmir
    Not sure if that is directed at me but my sentiment is not contributing to any of this. Yes, I hold a lot of cash but I have far more invested in markets for the long run. I have actually reduced my cash balance and invested more in the markets than I had at the beginning of this year. And that was unfortunate for me, because I moved 100K from cash into trackers 2 days before the market correction in February (and that's still down 3.16% as of yesterday). But it's invested for 10 to 15 years so I know I will be ok over that timeframe.

    That's also why I won't be moving anything out of cash in the short term, because I have just retired and do not want to suffer more pound cost ravaging. Instead, I will take advantage of rising interest rates to set up a bond ladder with a lot of the cash. But I will not be selling any of the significant amount I have in the markets for the long term.

    IMO that is a sensible, risk averse strategy for someone that has just entered the decumulation phase. I think anyone can see we are entering more volatile times than we have experienced since 2008. Whether there will be a big crash or not, who knows. But I have set a strategy to protect myself from pound cost ravaging for the next 5 to 10 years, which is the crucial phase of retirement for me.
    • slapmatt
    • By slapmatt 18th Apr 18, 10:10 AM
    • 101 Posts
    • 1,072 Thanks
    slapmatt
    Would anybody consider investing in an ETF which shorts the market?

    https://www.investopedia.com/articles/etfs-mutual-funds/072816/top-3-etfs-short-ftse-100-xuks-suk2.asp
    • bowlhead99
    • By bowlhead99 18th Apr 18, 1:40 PM
    • 8,096 Posts
    • 14,756 Thanks
    bowlhead99
    Would anybody consider investing in an ETF which shorts the market?

    https://www.investopedia.com/articles/etfs-mutual-funds/072816/top-3-etfs-short-ftse-100-xuks-suk2.asp
    Originally posted by slapmatt
    Yes, my pension has some of Boost's 3x daily ftse100 short etp, and some db-xtrackers s&p500 2x inverse daily swap, which I use from time to time as a general hedge without selling off individual equity/ fund positions. I have only a few k in each at the moment.

    If you're thinking of using such a product it is worth checking the maths on how a (geared) daily inverse track will work and maybe plotting some charts of few random daily paths that the FTSE 100 could take, and what the daily inverse would look like. If the main market is choppy (a bit up, a bit down but no massive overall change) it can be quite possible to have a large (un)/favourable movement on the geared short ETP. They are not really suitable for holding over the long long term as something in your standard rebalanced portfolio- but more for capturing short term sentiment.

    If it was outside a tax wrapper I would just use spreadbets / CFDs or options on the index where your value is driven by what the index looks like on the particular day the bet/ contract is due to expire (or the overall movement since you started it) - and not the particular path it happened to take to get there. More straightforward with such products to create a broad general hedge for your long holdings, for a decent period of time (with gearing to avoid needing a massive amount of initial front money), and know what your result on the short will be for a given ending value of underlying FTSE / S&P etc.
    Last edited by bowlhead99; 18-04-2018 at 1:42 PM.
    • Malthusian
    • By Malthusian 18th Apr 18, 3:56 PM
    • 4,342 Posts
    • 6,844 Thanks
    Malthusian
    Would anybody consider investing in an ETF which shorts the market?
    Originally posted by slapmatt
    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).
    • bowlhead99
    • By bowlhead99 18th Apr 18, 4:29 PM
    • 8,096 Posts
    • 14,756 Thanks
    bowlhead99
    I wouldn't, because:.
    Originally posted by Malthusian


    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.
    • Thrugelmir
    • By Thrugelmir 18th Apr 18, 5:55 PM
    • 59,273 Posts
    • 52,643 Thanks
    Thrugelmir
    Not sure if that is directed at me but my sentiment is not contributing to any of this.
    Originally posted by OldMusicGuy
    Not at all. My comments are of a generic nature. Without differing views there'd be no markets worth investing in.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • Type 45
    • By Type 45 13th Jul 18, 3:18 PM
    • 67 Posts
    • 6 Thanks
    Type 45
    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.
    • dunstonh
    • By dunstonh 13th Jul 18, 3:26 PM
    • 93,458 Posts
    • 60,998 Thanks
    dunstonh
    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 boy

    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.
    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). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Type 45
    • By Type 45 13th Jul 18, 3:33 PM
    • 67 Posts
    • 6 Thanks
    Type 45
    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.
    Originally posted by dunstonh

    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.
    • Economic
    • By Economic 13th Jul 18, 3:40 PM
    • 269 Posts
    • 254 Thanks
    Economic
    A bloke said on Twitter that England were going to win the World Cup! Maybe the same bloke?
    • ColdIron
    • By ColdIron 13th Jul 18, 3:41 PM
    • 4,342 Posts
    • 5,526 Thanks
    ColdIron
    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.
    Originally posted by Type 45
    • ValiantSon
    • By ValiantSon 13th Jul 18, 3:42 PM
    • 2,251 Posts
    • 2,138 Thanks
    ValiantSon
    They weren't referring to VLS funds per se. They were referring to equities generally.
    Originally posted by Type 45
    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.
    Originally posted by Type 45
    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.
    Last edited by ValiantSon; 13-07-2018 at 3:45 PM. Reason: Typo
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