Should we safeguard the growth during this US administration

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laurcapa

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Hi all,

First post here but have been reading advice for a while.
I am looking for advice or at least to see what are other peoples guts are telling them about the current market situation and what could potentially lay ahead .
Personally I have around 200k in the pension pot with Irish life under medium risk funds(IL3- and IL4) and it seems that they perform more or less the same . Some funds are more exposed to the US market as they hold shares in "safe" stocks like S&P.
Looking at the market and the funds all the growth that had accumulated over the last 6 moths is almost wiped in a month and if the trend continues is looking grim for everyone.
I see that some big investors have moved some of their shares in cash but don't know the reason , maybe they expect something,
I am in my early 40 so still time until retirement , but wouldn't want to see market crash and me waiting while the US administration decides how to crash the market even more :)

My question is everyone on this forum thinking would be the best approach, wait it out ,move to a more EU focused shares, move in to a more safe position funds (IL2) ? Any thoughts ?

Regards
Larry
 
Timing markets is a mug's game.

My approach to my own pension is to read the annual performance summary letter that issues from the relevant provider each winter, file it away, and pay no attention to it whatsoever until the following year's report arrives 12 months later. I've found that approach has served me very very well, over 20 years.

In my book, anything else is a recipe for unproductive and probably counterproductive worry and stress.
 
I agree on the leave it alone approach. I do keep an eye every quarter on my pots as I have gathered all the log in data but am still keeping it high risk for now in my 40s. I am old enough to remember the dismal and negative returns of the bust years. I did nothing then and will continue to do nothing now. Thinking about it, how much a portion of your wealth is your pension? Would you be better served seeing what you can do otherwise that is in your control to protect or increase your wealth via budgeting, reviewing interest rates on any debt etc.
 
I agree with T McGibney, if you are in your forties you have time for the market is recover. The S&P 500 hits all time high's every few years. I think the worst decade since 1950 included 5 all time highs. Don't see now as a bad thing see it as a chance to pick up some cheap units that will benefit you in the long run.
 
As the cliché goes ... time in the market not timing the market is what matters.
I agree with the previous posters and have put my pension and non-pension money where my mouth is over the past 40 odd years and it has served me well in spite of volatility/fluctuations along the way.
I'm late 50s now and effectively retired early and my pension is still in a low charges passive all equity index tracker and I'm not planning on changing that.
 
T McGibney said:
Timing markets is a mug's game.
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This basically. It can reasonably be assumed (in my opinion, but others will tell you I'm utterly wrong) that performance will revert to the average BUT there's no way of knowing when or how— and reversion may occur because the average itself changes over time. There's also some discussion as to whether the average or the median should be the point of reference. Short term movements up or down should be ignored.
  • Dollar cost averaging into any investment means that short & medium term fluctuations are automatically mitigated. The 10 worst years for a 10 year return into the Nasdaq 100 were 1997 to 2006. And yet if in that timeframe I'd put the same amount of money into it on 1st January each year (increasing by 2.5% annually to account for inflation) for every dollar I'd put into the index I'd have $1.66 real return in 2006 ($1.745 if we're ignoring inflation). I could go on and on.
There'll always be a tradeoff between risk and potential profit/loss. Some people will tell you to put it all in bonds for certainty, while others will tell you to put everything into crypto. You're the only one who can decide what you're comfortable with, and this will depend on your personal circumstances: when do you want to retire, will you get a defined benefit pension, will you get the COAP, will you own your own home, will you be supporting anyone else financially with your income, what kind of lifestyle do you want in retirement, etc etc.
  • For example, I'll have COAP and a defined benefit pension, mortgage paid off at aged 50, my better half has their own income and pension and is significantly younger than me, and mini-me's education/slush fund is pretty much sorted already. Probably my most expensive habits are travel and DIY (which between them cost me less than cigarettes would cost me if I hadn't quit). All of this makes me comfortable with risk.
The level of risk you're comfortable with may change over time as you get closer to retirement or when you get closer to the point where you need rather than want to keep what you have.
 
laurcapa said:
Some funds are more exposed to the US market as they hold shares in "safe" stocks like S&P.
Looking at the market and the funds all the growth that had accumulated over the last 6 moths is almost wiped in a month
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There are European and international focused funds , you could re allocate to those . Something else must be going on though as on a 6 month basis stock markets are still up especially European ones?
 
Appreciate all the reply's. I do know that markets have up and downs and remining invested is probably the best you can do, it just seems that there is a lot of volatility at the moment mostly because of all the unknowns that hectic policy's in the US are bringing . Time will tell
 
laurcapa said:
I am in my early 40 so still time until retirement , but wouldn't want to see market crash and me waiting while the US administration decides how to crash the market even more :)
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I am in my 40s and think a crash would be great. It'll make the units in my pension fund cheaper to buy and I'll have a few years to enjoy the post-crash growth before I'll be retiring
 
laurcapa said:
it just seems that there is a lot of volatility at the moment
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There's always a lot of volatility. It's how the world works.

But usually you don't have to deal with seeing or hearing "Trump, Trump, Trump, Trump, Trump, Trump, Trump, Trump, Trump, Trump, Trump, TRUMP!!!!" every time you do anything except hide in your room. Ukraine? Trump. Gaza? Trump. Technology? Trump. The weather? Trump. St Patrick's Day? Trump. On the Irish Times opinion pages right now 8 out of 16 articles are about how dangerous Trump is. It's ridiculous.

In real life, US presidential elections have basically been one continuation candidate after another since at least 1980. The only substantive changes have been in the branding. The current administration just occupies more bandwidth than most. Deliberately it would seem, apparently it's called flooding the zone.

So your perception of increased volatility is largely because you're being bombarded left, right, and centre by the Trump advertising machine. Mostly at zero cost to Trump. He's not the first; remember Ryanair's plan to charge for the use of airplane toilets?

There's probably an app or a Chrome extension to block out the noise. I've been meaning to look into that.
  • EDIT: I've just realised the irony of posting the name of a certain person 20 times in a single post while bemoaning the fact that it's virtually impossible for me to avoid noting the mention of their name at every turn! The horror!
 
T McGibney said:
My approach to my own pension is to read the annual performance summary letter that issues from the relevant provider each winter, file it away, and pay no attention to it whatsoever until the following year's report arrives 12 months later. I've found that approach has served me very very well, over 20 years.
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Agree with this, but with the caveat that it's important that you have set the direction correctly in the first instance. For some who have been poorly guided and/or have chosen conservative products early in their careers, checking that statement and thinking "hmmm, didn't I read that markets were up 20% last year but my pension is only up 4%???" can mean a difference of tens or even hundreds of thousands of euro by the time their retirement rolls around.
 
Fortune said:
I am in my 40s and think a crash would be great. It'll make the units in my pension fund cheaper to buy and I'll have a few years to enjoy the post-crash growth before I'll be retiring
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This spot on, most dont think like this
 
Most people don't even think it tbh let alone investigate the risk and returns of different plans. No harm in questioning it though OP as long as you have full understanding of how the pension fund is supposed to work over a lifetime of contributions and growth. People who are risk averse might ask themselves if they are considering the risk of having less in retirement or considering the risk of short term losses?
 
laurcapa said:
I am in my early 40 so still time until retirement , but wouldn't want to see market crash and me waiting while the US administration decides how to crash the market even more :)
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I'd hold off staying in your current funds for a couple weeks /months until markets have tanked or dropped 25% from their all time highs. Then as you are in your early forties I'd move everything to a higher risk fund such as IL-5 and then forget about it until you are in your mid fifties. IL-2 is not necessarily safer as it has a high proportion of bonds which generally dont do well in the inflationary enviroment I expect will continue for the next 5-10 years. Best thing that could happen to you is that the markets crash giving you the ideal opportunity to redirect your pension to higher risk funds.
 
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BIG-notorious said:
But usually you don't have to deal with seeing or hearing "Trump, Trump, Trump, Trump, Trump, Trump, Trump, Trump, Trump, Trump, Trump, TRUMP!!!!" every time you do anything except hide in your room. Ukraine? Trump. Gaza? Trump. Technology? Trump. The weather? Trump. S
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Looks like the orange peril has back tracked yet again on tariffs, what a beauty. It's obvious the US stock market reaction has spooked him. When he was asked did he reverse course because of stock market he said , No the markets had nothing to fo with it, actually I never looked at the market he said. Then cnn showed numerous clips of trump bragging about the stock markets loving him when they were rising, now he doesn't look at them. I had to laugh at that as it was blatantly obvious he was lying like his buddy putin
 
joe sod said:
Looks like the orange peril has back tracked yet again on tariffs, what a beauty. It's obvious the US stock market reaction has spooked him. When he was asked did he reverse course because of stock market he said , No the markets had nothing to fo with it, actually I never looked at the market he said. Then cnn showed numerous clips of trump bragging about the stock markets loving him when they were rising, now he doesn't look at them. I had to laugh at that as it was blatantly obvious he was lying like his buddy putin
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Tariffs are essentially a stealth sales tax or like VAT on the consumer of the country imposing them and inevitably lead to inflation. Trump got elected because inflation was too high under Biden so he'd be very foolish to impose long term tariffs. He's suggesting that he can cut income taxes and fund that through tariffs. Tariffs are a tax on American consumers so it's just shuffling the deck and irrelevant.

His bigger issue is that he has approved congress's government spending increases of $4 trillion. His plan only works if he can flatten or reduce government spending. Cracks in the logic are already evident. Expect US national debt to continue to rise, quantative easing or money printing to continue and US inflation to continue to rise as the economy falters. US stagflation is on the cards which the central bank can't mitigate against. Retaliatory tarffis are a bad idea for China, Japan, Europe etc.. Better to just offload US treasuries/ debt rather than impose stealth taxes on your own citizens.

Also European & Japanese bond yields are on the rise (increased European borrowing to fund rearming Europe) so the dollar is falling in euro terms. A weaker US dollar is on the cards for trump's second term. European bond prices are declining as a result.
 
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2 bits of advice I heard on market timing which have stayed with me.

1 To do it correctly you have to be right twice. I am not confident I would get it right once, never mind twice, so better to leave it alone.
2. Global equities are like someone moving a yoyo up and down, all the while standing on a rising escalator. The short terms downs are inevitable but stay the course long enough and they only go one way.

I am in my early 40s in a high risk fund so will be leaving it alone for the long haul. Having been in low to medium risk funds for most of my 30s I realise the bigger risk is in being in the wrong fund to begin with as previous posters have mentioned.
 
Bagman said:
am in my early 40s in a high risk fund so will be leaving it alone for the long haul. Having been in low to medium risk funds for most of my 30s I realise the bigger risk is in being in the wrong fund to begin with as previous posters have mentioned
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You really need to dive into what "high risk" fund is invested in, obviously many people found out that "low risk" funds weren't low risk at all ,they had a high proportion of bonds that were bought at very high prices(low interest rates) and the prices dropped as the interest rate rose with the covid inflation.
I would be steering clear of us stocks, even the msci global index is heavily weighted to US. You need to choose funds with a European or international focus in my opinion
 
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