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  • FIRST POST
    • bcfclee27
    • By bcfclee27 11th Oct 18, 1:17 PM
    • 211Posts
    • 51Thanks
    bcfclee27
    Like the February Correction ?
    • #1
    • 11th Oct 18, 1:17 PM
    Like the February Correction ? 11th Oct 18 at 1:17 PM
    Or the start of a big crash ?

    What's your opinion ?

    Personally I think it's similar to what happened in February and should recover over the coming months.

    Just wondered others opinions on this and whether anyone thinks this will be the big crash that some have been predicting........
Page 5
    • HarryGray
    • By HarryGray 12th Oct 18, 9:48 AM
    • 35 Posts
    • 3 Thanks
    HarryGray
    I have a question about asset allocation. So my asset allocation broadly follows the world index:

    - 50% US Equity Index
    - 14% Europe ex UK
    - 8.5% Japan
    - 16.5% EM
    - 12% UK ( I know this is too much and I'm not selling down but concentrating it by buying other indexes)
    -1% cash

    Can you criticise this? I invested in Jan 17 and have been investing more heavily this year. My portfolio was up 2,200 this time last month, its now down 500. I only invest in index funds (iShares mainly and a couple Vanguard funds). I am not panicking at all but now is probably the best time to get my asset allocation right considering I'm a young investor and I'm looking to invest for 25+ years.

    Thanks
    • Voyager2002
    • By Voyager2002 12th Oct 18, 10:09 AM
    • 12,433 Posts
    • 8,483 Thanks
    Voyager2002
    I have a question about asset allocation. So my asset allocation broadly follows the world index:

    - 50% US Equity Index
    - 14% Europe ex UK
    - 8.5% Japan
    - 16.5% EM
    - 12% UK ( I know this is too much and I'm not selling down but concentrating it by buying other indexes)
    -1% cash

    Can you criticise this? I invested in Jan 17 and have been investing more heavily this year. My portfolio was up 2,200 this time last month, its now down 500. I only invest in index funds (iShares mainly and a couple Vanguard funds). I am not panicking at all but now is probably the best time to get my asset allocation right considering I'm a young investor and I'm looking to invest for 25+ years.

    Thanks
    Originally posted by HarryGray

    Perhaps you should start a new thread.


    My immediate comment is that Emerging Markets include some very different areas: think of Russia; India; Southeast Asia; Brazil... each presenting very different risks and opportunities. In some of these situations, active management might prove far more rewarding than passive.


    And there is no law that allocation has to be based on geography: some people swear by Energy; Technology; Pharmaceuticals.
    • Malthusian
    • By Malthusian 12th Oct 18, 10:28 AM
    • 4,821 Posts
    • 7,737 Thanks
    Malthusian
    Wasn't that caused by the poor management decisions in their own business to centralise debt collection?
    Originally posted by Alexland
    So it turned out.

    I think I'll ignore comments on the Telegraph from now on....
    Originally posted by DennisTenus
    Telegraph comments make housepricecrash.co.uk look like, well, here.

    They are largely populated by people who lost all their money in HBOS shares or the likes of London Capital & Finance ten years ago and since then have told everyone who will listen that the stockmarket is a con.

    70% Stock Market Crash to Strike November 1, Economist Warns

    permission granted
    Originally posted by stehouk
    I googled this and was amused to see that the blog article has a headline "Stock Market Crash to Strike November 1" but the URL is 70-stock-market-crash-to-strike-august-1-economist-warns/

    So it's like the cult leader who predicts that we will all be beamed up by UFOs in 2012, then when nothing happens they announce that they got their calculations slightly wrong and it will actually happen in 2020.

    The blog is a blatant scam so I will not link to it.
    • Carrieanne
    • By Carrieanne 12th Oct 18, 10:59 AM
    • 95 Posts
    • 101 Thanks
    Carrieanne
    Am surprised the Nikkei 225 finished today's session in green territory because it almost always slavishly follows Wall Street's lead. Shanghai was up too. FTSE is currently trading up 0.8% and, well, suddenly all is well with the stock market world again.
    • Malthusian
    • By Malthusian 12th Oct 18, 11:08 AM
    • 4,821 Posts
    • 7,737 Thanks
    Malthusian
    Can you criticise this?
    Originally posted by HarryGray
    50% in any one country is too much IMO, due to lost decade risk, although some might say that given its multinational reach, the notion of a lost decade in the US stockmarket is fanciful.

    Why have you avoided the developed Pacific? (South Korea, Australia, Hong Kong etc.)

    You have no commercial property or bonds. 100% equities means you should ask yourself how you'd feel about a 40% fall, and then how you'd feel if it was even worse than that. How would you feel if you opened your online account and saw that you'd "lost" 2,500?

    (I'm making a very vague stab at the potential pounds and pence loss as you didn't say how much you actually have invested, and I have to make a vague guess based on your current "loss" and the recent fall.)

    I completely believe you when you say you're intending to hold the funds for 25 years. But hundreds of thousands of investors every year panic, dump their investments in a correction or crash and lose money, and none of them invested with the intention of "I'm looking to hold my funds for 1 year and then dump them all in the next crash." All of them would have said pretty much what you did about their intention. Obviously you know you're not going to be one of them. Why do you know what you know?
    • seacaitch
    • By seacaitch 12th Oct 18, 11:35 AM
    • 125 Posts
    • 227 Thanks
    seacaitch
    best thing for you would be a decline and low prices for a few years. So there should be no "frustration"
    Originally posted by AnotherJoe
    This cannot be emphasised enough.

    For the vast majority of investors, (ie. those with sensible investment horizons), low asset valuations for years and years ahead are to their benefit*.

    Plenty don't see it like this, hence the sort of stuff we've seen posted here these past few days.

    I live off my portfolio, don't have other income from a job, and so am "all-in"# to a greater extent than most posting here, yet I welcome (long for!) volatility, corrections, crashes and lower valuations for assets generally. The lower the better. A huge panic that took valuations to once-in-a-lifetime lows? Probably never see it, but would be great.

    A/the primary driver of future returns are the valuations of assets at the point when you invest. Lower current valuations are the driver of higher future returns. Low valuations throughout the entire time you invested (even if decades), would be optimal. Perhaps this should be tattooed in mirror writing on investors' foreheads?

    Those early in their investment careers, like many posting here, should be praying for prolonged low valuations of equities and other investment assets, not hoping valuations will recover in a few days, weeks or months.

    It seems some posters would benefit from "rewiring" their thinking: shifting away from an unhelpful focus on the current balance of their brokerage account or SIPP, which is irrelevant or even illusory, and thinking instead about what is beneficial to achieving their long term investment goals. Their current thinking is rather faulty and may stand them in poor stead in the future, particularly if they get to see a serious crash, where they will be at risk of doing the wrong thing in response to it.

    --
    *Low prices don't just help those following lengthy regular investment programmes, such as via pension contributions, over years or decades (as many here will be following), they also help anyone who's reinvesting investment income (such as dividends, bond coupons or maturity proceeds), and they benefit listed businesses themselves, as they are able to reinvest their own profits at higher rates of return, such as when they acquire other businesses at lower valuation multiples, increasing ROI.

    --
    #I do have a 'sensible' asset allocation so would not become a forced seller of low-priced assets for a long time.
    • dunstonh
    • By dunstonh 12th Oct 18, 11:39 AM
    • 95,423 Posts
    • 63,073 Thanks
    dunstonh
    Am surprised the Nikkei 225 finished today's session in green territory because it almost always slavishly follows Wall Street's lead. Shanghai was up too. FTSE is currently trading up 0.8% and, well, suddenly all is well with the stock market world again.
    Originally posted by Carrieanne
    Not really that surprised. US equity has grown faster than global equities. So, the fallback would be higher as well.

    The US really needs a correction whereas global equities are not quite in the same position (caveats apply)
    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.
    • seacaitch
    • By seacaitch 12th Oct 18, 11:56 AM
    • 125 Posts
    • 227 Thanks
    seacaitch
    Not really that surprised. US equity has grown faster than global equities. So, the fallback would be higher as well.

    The US really needs a correction whereas global equities are not quite in the same position (caveats apply)
    Originally posted by dunstonh

    Further to this point, for anyone interested I'd suggest taking a look at the Morningstar Asset Class Returns table in this note from RiverFront, published last week, which emphasises:

    (i) the persistently strong relative performance of US equities vs. other asset classes for quite a number of years now;
    (ii) RiverFront's observation that, historically, outperformance like this has always mean-reverted.

    Link will download a PDF:
    https://marketing.riverfrontig.com/acton/ct/4685/s-0522-1810/Bct/l-001b/l-001b:1b90/ct3_0/1?sid=TV2%3AkPnxPbsZ2
    • HarryGray
    • By HarryGray 12th Oct 18, 11:57 AM
    • 35 Posts
    • 3 Thanks
    HarryGray
    50% in any one country is too much IMO, due to lost decade risk, although some might say that given its multinational reach, the notion of a lost decade in the US stockmarket is fanciful.

    Why have you avoided the developed Pacific? (South Korea, Australia, Hong Kong etc.)

    You have no commercial property or bonds. 100% equities means you should ask yourself how you'd feel about a 40% fall, and then how you'd feel if it was even worse than that. How would you feel if you opened your online account and saw that you'd "lost" 2,500?

    (I'm making a very vague stab at the potential pounds and pence loss as you didn't say how much you actually have invested, and I have to make a vague guess based on your current "loss" and the recent fall.)

    I completely believe you when you say you're intending to hold the funds for 25 years. But hundreds of thousands of investors every year panic, dump their investments in a correction or crash and lose money, and none of them invested with the intention of "I'm looking to hold my funds for 1 year and then dump them all in the next crash." All of them would have said pretty much what you did about their intention. Obviously you know you're not going to be one of them. Why do you know what you know?
    Originally posted by Malthusian
    Thanks for this help :-). Honestly I am happy with volatility and really don't mind the falls as I have quite a high capacity for loss and I'm in the industry and have studied the field for years. I only struggle with asset allocation - but holding out and the psychology of investing I'm fine with. Perhaps property is an area I can look into with a REIT in my portfolio. I will also look at the developing world, although my EM index funds second largest holding is South Korea so I'm not sure if that's needed. The reason I have 50% in USA is because their global market cap is 54%, but I should perhaps try and cut this to 45%. Thanks for the advice!
    • talexuser
    • By talexuser 12th Oct 18, 12:08 PM
    • 2,490 Posts
    • 1,979 Thanks
    talexuser
    I had well over 500 of dividends arrived yesterday and just decided to reinvest in the fund that had fallen the most. More interesting is going to be Trumps' excuse since has taken credit for the boom so far, presumably the fall will be the democrats fault.
    • Titas
    • By Titas 12th Oct 18, 12:12 PM
    • 3 Posts
    • 1 Thanks
    Titas
    As with any investments be in for the long term
    Some of the quality investmen trusts look very attractive but which expert can call the bottom of anything
    Those with nerve can look at emerging markets and look forward to Trump claiming to have reached the most awesome fantastic of all deals with his great friend President She of China
    • moneyfoolish
    • By moneyfoolish 12th Oct 18, 12:27 PM
    • 511 Posts
    • 303 Thanks
    moneyfoolish
    I had well over 500 of dividends arrived yesterday and just decided to reinvest in the fund that had fallen the most. More interesting is going to be Trumps' excuse since has taken credit for the boom so far, presumably the fall will be the democrats fault.
    Originally posted by talexuser
    No. It's the Fed's fault for interest rate rises. He's got that one in already! Never slow to claim credit or blame something or somebody else! However, IMO, you can't expect much else from a neurotic narcissist.
    • Peanut8472
    • By Peanut8472 12th Oct 18, 12:36 PM
    • 78 Posts
    • 16 Thanks
    Peanut8472
    This is why i asked the forum about a safe SIPP
    • Thrugelmir
    • By Thrugelmir 12th Oct 18, 1:01 PM
    • 60,259 Posts
    • 53,592 Thanks
    Thrugelmir
    suddenly all is well with the stock market world again.
    Originally posted by Carrieanne
    What's happened in the real world though to change perceptions. Yesterdays problems exist today.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • Audaxer
    • By Audaxer 12th Oct 18, 1:18 PM
    • 1,349 Posts
    • 811 Thanks
    Audaxer
    I live off my portfolio, don't have other income from a job, and so am "all-in"# to a greater extent than most posting here, yet I welcome (long for!) volatility, corrections, crashes and lower valuations for assets generally. The lower the better. A huge panic that took valuations to once-in-a-lifetime lows? Probably never see it, but would be great.
    Originally posted by seacaitch
    seacaitch, I understand low valuations being good for those in the accumulation mode, and even good for me as a retiree as I'm not yet fully invested. As you are living off your portfolio I assume you are fully invested, so I'm interested to know why low valuations are good for you?
    • MK62
    • By MK62 12th Oct 18, 2:36 PM
    • 294 Posts
    • 207 Thanks
    MK62
    seacaitch, I understand low valuations being good for those in the accumulation mode, and even good for me as a retiree as I'm not yet fully invested. As you are living off your portfolio I assume you are fully invested, so I'm interested to know why low valuations are good for you?
    Originally posted by Audaxer

    Yeah, does seem a bit of a strange notion.....
    • ffacoffipawb
    • By ffacoffipawb 12th Oct 18, 4:13 PM
    • 2,516 Posts
    • 1,676 Thanks
    ffacoffipawb
    Yeah, does seem a bit of a strange notion.....
    Originally posted by MK62
    Perhaps he is reinvesting some of his dividends?
    • seacaitch
    • By seacaitch 12th Oct 18, 4:48 PM
    • 125 Posts
    • 227 Thanks
    seacaitch
    I understand low valuations being good for those in the accumulation mode, and even good for me as a retiree as I'm not yet fully invested. As you are living off your portfolio I assume you are fully invested, so I'm interested to know why low valuations are good for you?
    Originally posted by Audaxer

    1. As I mentioned up-thread, my investee companies will benefit from lower valuations when they (a) make acquisitions of other businesses or (b) repurchase their own shares. Many of my shareholdings are regularly doing both of these things, which over time will compound value if they can do these purchases at lower prices rather than at higher prices.

    2. I have a "cash" bucket and a "reserves" bucket, which are both cash or cash-like, allowing me to leave the "investments" bucket alone, ie. no drawdowns, for quite a number of years (>=5) if necessary. That means all income generated from investments over that period can be reinvested, benefiting from the lower valuations on offer, the compounding of which over time will again add value.

    3. My "investments" bucket is divided between equities/equity funds and multi-asset funds. The multi-asset funds vary in nature, risk-profile and method, but all hold a range of assets across the risk spectrum and all include asset classes (eg. cash, short dated govies, short dated linkers) that can/will be rebalanced into riskier assets if/when the price of these risky assets falls and valuations improve. The more actively managed of these funds wouldn't just rebalance to a fixed equity % but could raise the equity % very considerably if prices took a caning and valuations became much more attractive. Even some of the pure equity funds carry modest cash holdings which would be deployed in the event of the manager seeing attractive valuations, although this effect would be marginal compared to the scope for the multi-asset funds to react to price falls (valuation improvements) in risky assets.

    So, plenty of irons in the fire!

    Running a significant cash/reserves buffer isn't a panacea; if markets keep going up, it can be a material "drag on returns, but it depends what your goal is. I have enough to live reasonably comfortably under a range of scenarios, and my main goal is to avoid really bad outcomes, and doing this allows me to sleep easy and remain and act rationally during periods of market stress, rather than get caught up in the mood of the (emotional) market.

    Paradoxically, the presence of that conservative safety buffer means I can just leave my investments to compound, which they've done magnificently in recent years, rather than me attempting to snatch at profits and second guess the market. And, any performance "drag" would be reduced if markets were to fall significantly, allowing the effects in points 1-3 above to come into play and begin their value compounding work. Hence me welcoming price falls.

    I am a great believer in the ability of stock markets to build significant wealth over the long term, so I want to give the market time and space to do its compounding. My approach lets me keep things sufficiently at arms' length that I can allow it to do that.
    Last edited by seacaitch; 12-10-2018 at 4:50 PM.
    • TBC15
    • By TBC15 12th Oct 18, 5:26 PM
    • 598 Posts
    • 300 Thanks
    TBC15
    This cannot be emphasised enough.

    For the vast majority of investors, (ie. those with sensible investment horizons), low asset valuations for years and years ahead are to their benefit*.

    Plenty don't see it like this, hence the sort of stuff we've seen posted here these past few days.

    I live off my portfolio, don't have other income from a job, and so am "all-in"# to a greater extent than most posting here, yet I welcome (long for!) volatility, corrections, crashes and lower valuations for assets generally. The lower the better. A huge panic that took valuations to once-in-a-lifetime lows? Probably never see it, but would be great.

    A/the primary driver of future returns are the valuations of assets at the point when you invest. Lower current valuations are the driver of higher future returns. Low valuations throughout the entire time you invested (even if decades), would be optimal. Perhaps this should be tattooed in mirror writing on investors' foreheads?

    Those early in their investment careers, like many posting here, should be praying for prolonged low valuations of equities and other investment assets, not hoping valuations will recover in a few days, weeks or months.

    It seems some posters would benefit from "rewiring" their thinking: shifting away from an unhelpful focus on the current balance of their brokerage account or SIPP, which is irrelevant or even illusory, and thinking instead about what is beneficial to achieving their long term investment goals. Their current thinking is rather faulty and may stand them in poor stead in the future, particularly if they get to see a serious crash, where they will be at risk of doing the wrong thing in response to it.

    --
    *Low prices don't just help those following lengthy regular investment programmes, such as via pension contributions, over years or decades (as many here will be following), they also help anyone who's reinvesting investment income (such as dividends, bond coupons or maturity proceeds), and they benefit listed businesses themselves, as they are able to reinvest their own profits at higher rates of return, such as when they acquire other businesses at lower valuation multiples, increasing ROI.

    --
    #I do have a 'sensible' asset allocation so would not become a forced seller of low-priced assets for a long time.
    Originally posted by seacaitch
    Hardly all in if you have a large cash reserve?
    • takesyourchances
    • By takesyourchances 12th Oct 18, 5:37 PM
    • 689 Posts
    • 451 Thanks
    takesyourchances
    Out of interest, what do people think of Robert Kiyosaki's opinion on the stock market?


    Just watched his latest video that came up on my youtube



    https://www.youtube.com/watch?v=skZZaMW4dsY


    Then on the other hand there is Warren Buffet and the stock market. I read Kiyosaki's Rich Dad book ages ago.
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