The investment outlook

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cremeegg

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TheBigShort said:
Between stocks, bonds, cryptos, property etc...its fairytale stuff, isnt it?
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Bonds are highly valued for a number of perfectly understandable reasons. Most emanating from the 2008 crash. At that time there was a fear that counterparts would default. This has left a legacy of seeking safety over return with some investors. Legislation inspired by the crash tightened capital requirements for banks and insurance companies, pushing them towards bonds. Further legislation required pension companies to more closely match their assets with their liabilities, again pushing them toward bonds.

Stocks are highly valued because interest rates are so low. Because profits are rising. Because politicians are in tax cutting mode.

Property is highly valued, in Ireland at least, because we aren't building much of it. Because over 50% of the cost is going to the government. Because the Irish planning system, does not so much plan as say no. Because the construction industry is undercapitalised. Because the construction labour force has shrunk. Because banks are unable or unwilling to lend.

TheBigShort said:
If it transpires that everything is overvalued, what then? Is the global financial system caught in a deflationary trap?
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I dont think so. I believe that we may be at the beginning of an resurgence of inflation. Not this year or next but after the present period of prosperity winds down.

Money is becoming more plentiful, labour markets everywhere are tight. Politically many tensions would be dissolved by a dose of inflation.

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There was a like on this 4 year old post of mine this week @Daithi17, so I re-read it. https://www.askaboutmoney.com/threads/the-stock-market-never-goes-down-anymore.206755/#post-1549450. Wow ! I'm good.

So what does the next 4 years hold.

In the absence of a nuclear escalation, I think the war in Ukraine will become background noise (awful, but this is what I expect). China's efforts to catch up will keep them exporting and so inflation will become less of an issue, though it may not go back to the previous era of undershooting the 2% target.

It's infrastructure issues and labour shortages that will shape rich world economies over the next while, especially here.

The government will continue to have lots of money, but struggle to find a way to use it to fix, housing, health and transport.
 
that was a thread from the start of 2018 when there was actually a sell off, then there was the crash of march 2020 which saw a 30% sell off, it was much worse than that if you were not invested in the big tech stocks.
Its not true to say that the stockmarket were overvalued, there were elements of it like tech that were , but alot of stuff especially the financials and energy were not. If you had invested in financials and energy then you still would have had a horrible time as they suffered another whopper of a sell off in 2020. Of course everything has turned around now because of inflation and rising interest rates.

The right thing thing to have been doing was selling tech stocks through 2020 and reinvesting them in the "old world" but everyone was doing the opposite chasing stocks like Tesla ever upwards, how many posts were there on this site looking to invest exclusively in the S&P500 and ignoring Europe completely?
 
ClubMan said:
Sorry, but that's an absolutely ridiculous statement and classic timing the market fallaciousness.
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why is it ridiculous, its rebalancing , you are counteracting the cycles of the markets by investing counter cyclically, very difficult to do actually . Tech stocks were roaring hot in 2020. Its not timing the market because you are not selling the market but rebalancing into sectors that have underperformed. Are you suggesting that the valuations of the tech stocks were correct in 2020 or they are correct now?
 
joe sod said:
Its not true to say that the stockmarket were overvalued, there were elements of it like tech that were
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joe sod said:
Tech stocks were roaring hot in 2020. Its not timing the market because you are not selling the market but rebalancing into sectors that have underperformed
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So tech was over valued but has performed? And 'old world' stocks that under performed are not over valued?

So you're looking to find performing stocks until they are over valued and then cash out of them before the value has a correction?
 
@PGF2016 you know perfectly well what I'm talking about , stop nit picking my post to try and make yourself look smart. The point is that energy and financial stocks were very undervalued in 2020 and the proof of that is their share price today.
My biggest technology stock was Microsoft but I had sold most of it by the beginning of 2020, yes I missed out on the big gains of 2020 but I had still done good because I had bought Microsoft back in 2011 when it was then disregarded as "old tech". Since 2020 I have bought no US stocks except for an energy stock, I'm predominantly european ,UK and some Irish ,however its only in the last year that that strategy has really paid off as these are now performing well due to inflation.
 
@joe sod

The S&P500 has comfortably outperformed Eurostoxx50 since the start of 2020, in euro terms.

So how has your strategy of moving in and out of sectors that you consider “over valued” been a good idea?

Surely you would have done better if you just held a global index tracker throughout the entire period?
 
You're confidently saying the right thing to do was sell stocks that have recently hit a peak and buy those on the way up based on hindsight. At a single point in time.

If you're posting that expect to be questioned on it like I and others have.

Good luck. I'll leave you to it.
 
No because I don't just have eurostoxx 50, I have a wide selection of European and UK stocks now aswell as investment trusts (thanks to some of your advice actually, appreciated).
If I had a global index tracker I would have had a much better 2020, my selection was down more in March 2020 than the global index. However its been the opposite since 2021 . I'm not saying I'm smart or anything like that but it is easier for individual investors to take advantage of cyclicality and it is never the case that the whole stock market is overvalued there are always sectors that are undervalued and out of favour for years. Remember technology itself was out of favour for a decade after the dot com crash
 
My point is that your efforts at taking “advantage of cyclicality” haven’t worked out - surely you can see that?

It’s just another version of market timing.

Sure, you might get lucky from time time but generally a simple buy and hold strategy works out better in the long run.

Stop looking for a needle in a haystack - just buy the haystack!
 
Sarenco said:
Stop looking for a needle in a haystack - just buy the haystack!
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I am buying a haystack and am very happy with it actually, there were a few haystacks left in the field which are only bring picked up now by the markets,

There are a few other haystacks that are heating in the shed due to being harvested when still green ,like the tesla of this world.
 
joe sod said:
There are a few other haystacks that are heating in the shed due to being harvested when still green ,like the tesla of this world.
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Isn’t that exactly what you did by selling out of tech stocks too early (as it turned out)?
 
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