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  • FIRST POST
    • Type 45
    • By Type 45 3rd Apr 18, 7:18 PM
    • 59Posts
    • 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
    • 93 Posts
    • 1,068 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
    • 335 Posts
    • 668 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.
    • ChesterDog
    • By ChesterDog 12th Apr 18, 5:21 PM
    • 874 Posts
    • 1,624 Thanks
    ChesterDog
    Same here, about ten years' worth.
    I am one of the Dogs of the Index.
    • TBC15
    • By TBC15 12th Apr 18, 5:43 PM
    • 450 Posts
    • 212 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
    • 58,210 Posts
    • 51,578 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
    • 335 Posts
    • 668 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
    • 58,210 Posts
    • 51,578 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
    • 874 Posts
    • 1,624 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
    • 4,114 Posts
    • 3,139 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
    • 335 Posts
    • 668 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
    • 93 Posts
    • 1,068 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
    • 7,704 Posts
    • 14,099 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
    • 3,929 Posts
    • 6,130 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
    • 7,704 Posts
    • 14,099 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
    • 58,210 Posts
    • 51,578 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.
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