Credit deflation and the reflation cycle to come (part 8)

[Harley]

45 minutes ago, Mandalorian said:

He won't see this because I'm the 'dividend loon' - result.  I won't have to argue with him. 

Dissenting opinion backed by research and real time share price movements obviously are not welcome here.

 

But as for a 60/40 fund.  Personally, I wouldn't have a bond given to me.

I never understood 60:40.  OK equity:bonds, but after that, in more detail?  Meaningless. 

[Frank Hovis]

1 minute ago, Harley said:

I never understood 60:40.  OK equity:bonds, but after that, in more detail?  Meaningless. 

 

I think asset allocation is a useful tool when it comes to reviewing your holdings each year.

You start with your existing investments and then think whether that would be what you would buy next week if you were currently entirely in cash.

I tend to make this decision when I have cash built up in an ISA or SIPP and then use that cash to adjust the asset mix.

I wouldn't however use an off the shelf allocation because what you use depends upon your willingness to accept risk, your time horizon for when you might want to realise some cash, and the extent to which you might want instant access to cash without selling at a loss or incurring tax liabilities.

I do read people's asset allocation with interest for new ideas and to maybe update my own thinking, but I wouldn't slavishly follow them.

[Mandalorian]

16 minutes ago, Harley said:

I never understood 60:40.  OK equity:bonds, but after that, in more detail?  Meaningless. 

Bonds are less volatile.  Or something.

[janch]

1 hour ago, montecristo said:

I like the fire and forget aspect to it all rather than spending time researching stocks and worrying about individual companies.

But where's the fun in that?

Personally I like a bit of risk taking which is why I started this investing malarky otherwise everything would be in my cash ISA now rates have gone up. 

I suppose it depends how much time you have and I only started after I retired as I certainly didn't have the headspace before that.  I also feel I've learnt quite a lot from the experience which I find enjoyable.  I've had a few winners and a few losers and my present policy is I'm hanging on to the ones which are underwater rather than selling at a loss which I was doing before.  It's all a bit of an experiment really and I'm not playing with megabucks so I'm not too hung up on the outcome. 

Basically I'm doing it for fun rather than making a lot of dough although that would be nice too. At the end of the day it's only money and a love of money is the root of all evil someone famous once said.

[janch]

double post

Edited March 30 by janch
posted twice for some reason

[Jesus Wept]

2 hours ago, montecristo said:

I only buy a global tracker now which is doing very well.  I tend to use my £20k ISA allowance on the 1st day of the tax year when the allowance resets.  Is buying every month better than buying at the earliest opportunity?

 

2 hours ago, montecristo said:

I will stick to buying the £20k on the 8th (monday) April.   My SIPP is also monthly. 

I like the fire and forget aspect to it all rather than spending time researching stocks and worrying about individual companies.

 

1 hour ago, Bobthebuilder said:

Agree with all of that Frank, I also was buying funds every year since the ISA was introduced (Jupiter was the one back in the day), but still bought monthly when the yearly limit was £3000, I wouldn't want to be sticking £20,000 into any one fund on the 8th of April every year.

 

1 hour ago, Mandalorian said:

Me neither.  I usually split into two or three funds.

Is this the basis of the maxim:

 

Basically a load of people allocate their £20k ISA allowance / Tax allowance at (or a good portion of it) at the beginning  of the financial year and you get an uplift in April ?

Any truth in the “sell in May” guidance? 
 

 

Edited March 30 by Jesus Wept

[montecristo]

43 minutes ago, janch said:

But where's the fun in that?

Personally I like a bit of risk taking which is why I started this investing malarky otherwise everything would be in my cash ISA now rates have gone up. 

I suppose it depends how much time you have and I only started after I retired as I certainly didn't have the headspace before that.  I also feel I've learnt quite a lot from the experience which I find enjoyable.  I've had a few winners and a few losers and my present policy is I'm hanging on to the ones which are underwater rather than selling at a loss which I was doing before.  It's all a bit of an experiment really and I'm not playing with megabucks so I'm not too hung up on the outcome. 

Basically I'm doing it for fun rather than making a lot of dough although that would be nice too. At the end of the day it's only money and a love of money is the root of all evil someone famous once said.

I also do crypto.

Edited March 30 by montecristo

[Bobthebuilder]

19 minutes ago, Jesus Wept said:

Basically I load of people allocate their £20k ISA allowance / Tax allowance at the beginning  of the financial year and you get an uplift in April ?

Any truth in the “sell in May” guidance? 

Last year was pretty much like that, a rise across the board until April then flat for the rest of the year. This current up lift does feel similar.

[JMD]

20 hours ago, MrXxxx said:

I found this article interesting:

https://www.msn.com/en-gb/money/other/the-uk-equity-death-spiral-a-drain-on-the-lifeblood-of-british-business/ar-BB1kKoAz

...especially this QUOTE

"Comparatively, pension funds in countries like Australia and Canada hold a much larger portion of their assets in domestic equities. It’s very telling when even the pension fund for Britain's MPs and Ministers invests a mere 1.7% in UK-listed companies, which appears to indicate they do not have confidence in UK equities and companies."

...says it all really doesn't it?!...especially when:

QUOTE: "The combined ownership of UK quoted equities by insurance and pension funds has dramatically fallen from 45.7% in 1997 to just 4.2% in 2022, marking the lowest level ever recorded. This shift poses a grave risk to the UK economy's stability and sustainability."

This chart is interesting, particularly the country differences in property and equity asset %s. (Unfortunately the article didn't quote the chart source, so some details are  not clear, though i believe TW is Taiwan.)

Edited March 30 by JMD

[Long time lurking]

 

[Mandalorian]

1 hour ago, janch said:

But where's the fun in that?

Personally I like a bit of risk taking which is why I started this investing malarky otherwise everything would be in my cash ISA now rates have gone up. 

I suppose it depends how much time you have and I only started after I retired as I certainly didn't have the headspace before that.  I also feel I've learnt quite a lot from the experience which I find enjoyable.  I've had a few winners and a few losers and my present policy is I'm hanging on to the ones which are underwater rather than selling at a loss which I was doing before.  It's all a bit of an experiment really and I'm not playing with megabucks so I'm not too hung up on the outcome. 

Basically I'm doing it for fun rather than making a lot of dough although that would be nice too. At the end of the day it's only money and a love of money is the root of all evil someone famous once said.

This is why some have two portfolios.

Their big main portfolio for steady growth for retirement etc and a second one for playing about money.

[Mandalorian]

41 minutes ago, Jesus Wept said:

 

 

 

Is this the basis of the maxim:

 

Basically a load of people allocate their £20k ISA allowance / Tax allowance at (or a good portion of it) at the beginning  of the financial year and you get an uplift in April ?

Any truth in the “sell in May” guidance? 
 

 

Mixed from what I remember reading in Investor's Chronicle.

[Mandalorian]

21 minutes ago, JMD said:

This chart is interesting, particularly the country differences in property and equity asset %s. (Unfortunately the article didn't quote the chart source, so some details are  not clear, though i believe TW is Taiwan.)

The big difference between us and the US.

Here: 'My house is my pension'.

There:  'My pension is my pension'. 

The S&P 500 being the investment of choice in the USA. As opposed to a load of unproductive bricks here.

 

(Yes. I know the mid blue section of the graph is 'pension' but people save outside the pension wrapper for their pension.  Try sticking your house in your SIPP.  Can be done but it's a bugger of a thing to do)

Edited March 30 by Mandalorian

[Harley]

2 hours ago, Frank Hovis said:

 

I think asset allocation is a useful tool when it comes to reviewing your holdings each year.

You start with your existing investments and then think whether that would be what you would buy next week if you were currently entirely in cash.

I tend to make this decision when I have cash built up in an ISA or SIPP and then use that cash to adjust the asset mix.

I wouldn't however use an off the shelf allocation because what you use depends upon your willingness to accept risk, your time horizon for when you might want to realise some cash, and the extent to which you might want instant access to cash without selling at a loss or incurring tax liabilities.

I do read people's asset allocation with interest for new ideas and to maybe update my own thinking, but I wouldn't slavishly follow them.

You're an accountant.   From a top premier body may I say!    You know all about discounted cash flow techniques, cash flow modelling, and all the rest.  It seems crazy to me that the investment world seems happy to say things like x minus your age and a 4% withdrawal rate as a standard.  They could all do so much better, like an accountant could.  The person is a project, so financially plan it like one!  We need a relatively low rate of return to meet our estimated cash flows.  We can construct various portfolio models, complete with sensitivity bounds, to deliver that and select the subset with minimumised risk.  We can be even smarter and have separate models (with different risk profiles) to deliver our "need" versus "want" flows.  Maybe all roads lead to 4%, etc but I'd certainly want to do the due diligence.

Edited March 30 by Harley

[Harley]

1 hour ago, Mandalorian said:

Bonds are less volatile.  Or something.

Indeed, a lot has change.  Everyone has an allocation until they get punched in the face! 

All this superficial talk of 60:40, so I can put 60% in Ecora for the equity slug can I?

So if 60:40 was up for discussion, wait until the real discussion starts......

Life is only easy for a Financial Services salesman!

Edited March 30 by Harley

[Harley]

55 minutes ago, Bobthebuilder said:

Last year was pretty much like that, a rise across the board until April then flat for the rest of the year. This current up lift does feel similar.

Indeed.  All this heavy stuff and we often forget how it really is:  The big guy with the cigar goes on hol "season" with his fresh stash (Med, Cowes, Wimbledon, Glynbourne,......) and like feck he's going to let little Jonny left in the office get clever!

[Jay]

4 hours ago, Mandalorian said:

You're trying to time the market in other words.

Don't bother.

The average market participant should buy a global tracker, in a tax shelter, like clockwork, every month through thick and thin.

The average market participant should not attempt to stock-pick, not try to judge whether the market is over/undervalued.

Just buy your chosen fund and leave it alone.

You are correct on all your points except one..I am not the average investor..yet maybe..

4 hours ago, Mandalorian said:

You're trying to time the market in other words.

Don't bother.

The average market participant should buy a global tracker, in a tax shelter, like clockwork, every month through thick and thin.

The average market participant should not attempt to stock-pick, not try to judge whether the market is over/undervalued.

Just buy your chosen fund and leave it alone.

You are correct on all your points except one..I am not the average investor..yet maybe..

[Frank Hovis]

28 minutes ago, Harley said:

You're an accountant.   From a top premier body may I say!    You know all about discounted cash flow techniques, cash flow modelling, and all the rest.  It seems crazy to me that the investment world seems happy to say things like x minus your age and a 4% withdrawal rate as a standard.  They could all do so much better, like an accountant could.  The person is a project, so financially plan it like one!  We need a relatively low rate of return to meet our estimated cash flows.  We can construct various portfolio models, complete with sensitivity bounds, to deliver that and select the subset with minimum risk.  We can be even smarter and have separate models (with different risk profiles) to deliver our "need" versus "want" flows.  Maybe all roads lead to 4%, etc but I'd certainly want to do the due diligence.

 

It does surprise me how little effort people put into their finances.

The ready buying of annuities from DC pots is financial lunacy but a whole industry is based upon it.

[Pip321]

Some interesting reflections on the thread today….

This is all about personal objectives/circumstances and I guess that is how IFAs manage to screw so much money out of the public, because there isn’t one answer to fit us all.

Some on here (like me) just want to protect against inflation….indeed if I could buy a savings account that went up with true inflation each year I would buy that with 100% of my whole assets.

Others need to build and grow wealth

Like Harley though…for large sums I am being drawn to funds. I think Durham borns ability to sit large amounts in a single company is much much cheaper and can be much more effective……but requires conviction and perhaps easier when sitting on gains over the years that have proved you can do it. 

The main thing the thread gives me though is an understanding of what is happening…..and where to lean assets bias to. So if I favour commods, PMs and EMs and I only do as well as someone in a tracker I am ok with that.

My individual share dealing have been ‘a bit mixed’ but my funds slanted by this thread have done well verses the generic fund I was in. It allows me to be more in control and manage the risk I am prepared to take. 😉

 

[Harley]

1 hour ago, Mandalorian said:

This is why some have two portfolios.

Their big main portfolio for steady growth for retirement etc and a second one for playing about money.

This.  A lower return:risk one to meet needs (we call that core) and if necessary/desired another higher return:risk for wants.  And maybe a third we don't tell the other half about because we've got biguns!

Edited March 30 by Harley

[A tremendous # on the lung]

1 hour ago, Pip321 said:

Some interesting reflections on the thread today….

This is all about personal objectives/circumstances and I guess that is how IFAs manage to screw so much money out of the public, because there isn’t one answer to fit us all.

Some on here (like me) just want to protect against inflation….indeed if I could buy a savings account that went up with true inflation each year I would buy that with 100% of my whole assets.

Others need to build and grow wealth

Like Harley though…for large sums I am being drawn to funds. I think Durham borns ability to sit large amounts in a single company is much much cheaper and can be much more effective……but requires conviction and perhaps easier when sitting on gains over the years that have proved you can do it. 

The main thing the thread gives me though is an understanding of what is happening…..and where to lean assets bias to. So if I favour commods, PMs and EMs and I only do as well as someone in a tracker I am ok with that.

My individual share dealing have been ‘a bit mixed’ but my funds slanted by this thread have done well verses the generic fund I was in. It allows me to be more in control and manage the risk I am prepared to take. 😉

 

Funds or investment trusts? Or both?

[goldbug9999]

1 hour ago, Frank Hovis said:

 

It does surprise me how little effort people put into their finances.

The ready buying of annuities from DC pots is financial lunacy but a whole industry is based upon it.

Your not going to live forever so whats the point of managing your pension pot like you are.

[leonardratso]

10 minutes ago, goldbug9999 said:

Your not going to live forever so whats the point of managing your pension pot like you are.

who says

[wherebee]

7 hours ago, Mandalorian said:

You're trying to time the market in other words.

Don't bother.

The average market participant should buy a global tracker, in a tax shelter, like clockwork, every month through thick and thin.

The average market participant should not attempt to stock-pick, not try to judge whether the market is over/undervalued.

Just buy your chosen fund and leave it alone.

I agree in a world in which the market and businesses reflect reality.  

We don't have that now.  We have a economy in which huge proportions of business and investment activity are based on religion, not facts (climate change, ESG, mass immigration, etc).  For the first time in my life I feel that active investing is worthwhile because to win you don't need insider trading tips, or luck, you just need to discuss reality.  Reality such as 'oil, gas, and coal are NOT going away and will go up in price in the market due to undersupply and underinvestment, no matter what the greenie cunts say' - that means that you are buying assets which almost the entire market undervalues, sometimes because that have been TOLD by government not to invest in it!

Reality such as 'fiat money printing and energy policy means inflation is coming back' - this means you can arrange your debt to be less exposed, and buy inflation proof assets whilst cheap, whilst the market thinks it's a back to ZIRP world..

This is a once in a generation chance, in my view, to take the shirt of the establishment investors.

[Pip321]

1 hour ago, A tremendous # on the lung said:

Funds or investment trusts? Or both?

A mix but not for any reason other than a need of convenience rather than technical analysis. I have access to funds in my Pru Pension and the AJBell and Hargreaves SIPPs plus the S&S ISA give me access to EFTs….

Everything is tax wrapped.😉