Where to put the money safe if you think a crash is coming

Sunny said:
Says who? You??? I am delighted if you are investing in a global equity fund that is delivering a 10% annualised return in a 10 year period. Which one is by the way? I presume are you are invested in equities since nobody has ever lost money in a 20 year period??? Because we all know that past performance is a perfect indicator of future performance. Foolproof strategy there. I feel silly now.
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Yes, all of my liquid assets are invested 100% in equities (except for a €60k emergency cash deposit and whatever’s in my current account).

Why? Because over long time horizons, equities are the best performing asset class.

Do I chop and change? Nope. I just buy more on a regular basis, probably circa €5k a month as cheaply and as tax-efficiently as possible.

Feel free to throw out smart remarks about “past performance being a perfect indicator of future performance”; I’ll just draw comfort from the fact that the person who invested the day before Franz Ferdinand was shot, the day before the 1929 crash, the day before Poland was invaded, the day before Pearl Harbour, the day before the Oil Crisis, the day before the Dot.Com bubble burst, or the day before the Financial Crisis has always been up in after-inflation terms 20 years later, provided he/she stayed the course.

Have you ever seen the stats around the US market which illustrate the total returns for (say) 10 or 15 years but then the effect of missing the 5 best days or the 10 best days (which tend to come after bad days)? I don’t have the stats to hand, but it’s something like the average annual return for 15 years was 8% but only 5% if you missed the 10 best days. That’s 10 days out of circa 5,000.

You may or may not have been lucky over the years, but your strategy is bonkers.
 
Gordon Gekko said:
Yes, all of my liquid assets are invested 100% in equities (except for a €60k emergency cash deposit and whatever’s in my current account).

Why? Because over long time horizons, equities are the best performing asset class.

Do I chop and change? Nope. I just buy more on a regular basis, probably circa €5k a month as cheaply and as tax-efficiently as possible.

Feel free to throw out smart remarks about “past performance being a perfect indicator of future performance”; I’ll just draw comfort from the fact that the person who invested the day before Franz Ferdinand was shot, the day before the 1929 crash, the day before Poland was invaded, the day before Pearl Harbour, the day before the Oil Crisis, the day before the Dot.Com bubble burst, or the day before the Financial Crisis has always been up in after-inflation terms 20 years later, provided he/she stayed the course.

Have you ever seen the stats around the US market which illustrate the total returns for (say) 10 or 15 years but then the effect of missing the 5 best days or the 10 best days (which tend to come after bad days)? I don’t have the stats to hand, but it’s something like the average annual return for 15 years was 8% but only 5% if you missed the 10 best days. That’s 10 days out of circa 5,000.

You may or may not have been lucky over the years, but your strategy is bonkers.
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Sigh. Still going on about best ‘Days’ and all the rest. Where have I once claimed that I am looking at a days movement? Or a weeks? Or a months? Or 6 months?I couldn’t care less if someone was assasinated or hitler comes back. I will still be invested in equity market just like you. However I might be 100% invested or I might not be. I am not timing the market. I am not like you. I don’t have 60,000 emergency cash. I can’t invest 5k a month so fair play to you. I need to find another way to have money available for opportunistic buying. Not setting up a cult for you to follow but still want to know what equity fund has returned over 10% annualised in the past 10 years so I can invest in it and save me the effort.

And if you are going to criticize smart comments, why don’t you look at your own pathetic comparison to the derby or something. Or calling my strategy bonkers. You are not my wife. I am not looking for your approval. If it all goes pear shape because I just happened to have a % of my fund invested outside equities for a period of time, then I shall just have to come on here and beg forgiveness for my recklessness.
 
I’ll give you 3 which I’ve been invested in and which I’ve never sold.

Morgan Stanley Global Brand - Circa 10% per annum over the 10 year period

Finbury Growth & Income Trust - Circa 15% per annum over the 10 year period

Zurich International Equity - Circa 9% per annum over the 10 year period

You are timing the market!
 
Gordon Gekko said:
Nobody has ever lost money investing in global equities over any 20 year period since records began. And I’m talking real, not nominal.
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I didn't believe this so I questioned it and got

Gordon Gekko said:
I don’t have any charts to hand, but within this article it confirms the position for the US market:
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Why do people make present statements as fact if they can not substantiate them? I agree with Gordon's central philosophy of buy and hold but why do people feel the need to make heroic statements?
 
First one from what I can see is circa 10% since inception, nearly 18 years.

Second one is a trust specializing in UK securities which you have used to back up your assertion that global equities should have returned over 10% annualised in a ten year period.

Goodnight......
 
Bob2018 said:
I didn't believe this so I questioned it and got



Why do people make present statements as fact if they can not substantiate them? I agree with Gordon's central philosophy of buy and hold but why do people feel the need to make heroic statements?
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I’m in a pub...I have seen the figures and the charts...that’s what I could pull whilst talking to people and trying to have a pint. The point stands; none of the investors have lost money over a 20 year period.

If you want more, try Bloomberg or Morningstar.
 
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The way to outperform the market is to recognize when it is seriously misprinted. Like here.

moneymakeover said:
It was obvious back in 2008 when p/e was through the roof that equities were overpriced
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For those who cannot find their time machine. Here is something else that will become obvious with hindsight.

The trade war which began in June 2018 was a really big deal and did serious damage to the world economy.

Investors took a long time to recognize the seriousness of Trumps sanctions. As the economics of the trade war made no sense investors expected wiser counsels to prevail.

However as we now know events were driven by politics not logic and a tit for tat downward spiral became unstoppable.

After an initial wobble Stock markets continued to rise for Many months before going into their most serious decline in over a century.
 
cremegg,

This is your main issue; you’re behaving as if the last crisis is about to happen again. There was a “trade war” with China a couple of months ago and then they came to an agreement! Paul Sommerville was on Newstalk talking about the end of the financial world 3/6/9/12 months ago. It hasn’t happened. Market climb the wall of bad news, whilst bad investor behaviour means that people don’t participate.
 
Having recently been researching and thinking a lot about equities, bonds, asset allocations, the pros and cons of amateur personal investors vs professional investment managers etc and a lot of the talk around the subject seems quite contradictory. This thread is a good example.

It strikes me that if Sunny came on here and said:

"I am 100% in equities - I am going to sell a portion to put in bonds because I believe that my equity holdings as a % should be no more than 100 minus my age; I am simply more comfortable with that asset allocation"

there are those that would laud him as a model example of a wise private investor.

Whereas if he said:

"I am 100% in equities - I am going to sell a portion to put in bonds because I believe the stock market is way over valued, the current prospects of growth are limited, compared to the prospects of a fall, and I am prepared to lose out on any upside so I can protect myself against the risk of the downside."

some of those same people would pillory him for being the typical idiotic amateur private investor trying to time the market.

I must admit that it seems to me that the net result is the same thing, the only reason is the decision making criteria.

The criteria in the second example seems to be perfectly valid, dare I say it more valid, than the first.

Am I missing something?
 
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the problem with going defensive in the current market is that you either go into bond funds or euros, we have already seen the wobbles in the euro lately with italian elections, also bond funds extremely risky with interest rates starting to rise , in that environment the value of your bond funds go down, presumably the best managed funds can manage that but interest rates have been falling since 1982 effectively, so we wont really know how good they really are. Warren Buffet made a specific warning about bonds recently (albeit he was more concerned that investors were sitting out the potential in the stock markets). He added that he should have invested in bonds in 1982 when interest rates were at their height but that was the only time he would have invested in bonds.
 
Gordon Gekko said:
Nobody has ever lost money investing in global equities over any 20 year period since records began. And I’m talking real, not nominal.
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If you had invested 20 years ago in the Eurostoxx50 on 1 June 2018 at its close of 3406.82 you were still at a loss at the end of last month when it closed at 3406.65. If you had invested at its peak of 5450.22 in Feb 2000, i.e. 18 years ago, you've still a long way to go to recover your loss. (Figures for ^STOXX50E from Yahoo Finance). And after 30 years the Nikkei (^N225) is nowhere near its 1989 peak. This should be, as you correctly point out, the starting point for any investor.
 
Which is why one shouldn’t invest exclusively in Japanese or large cap European stocks.



Page 8 shows the effect of poor investor behaviour (basically how investors react to bad news by selling). The average investor through poor behaviours earns circa 2.1% per annum. cremegg’s claims that his/her approach has worked, but it does not work for the vast majority of people.

Page 16 shows the effect of missing the best 10 days over a 20 year period (the annualised return drops from 8% to 4.5%). These best days tend to follow poor days.

Here are the probabilities for positive returns:

http://awealthofcommonsense.com/2015/11/playing-the-probabilities/

Nobody has ever lost over a 20 year period.
 
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Gordon Gekko said:
Nobody has ever lost over a 20 year period.
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Gordon: You can repeat the same thing as often as you like but after a few replies you still have not substantiated the claim that I queried in relation to Global Equities. My belief is that not alone can you not substantiate it but you are not prepared to acknowledge this either.
 
Bob2018 said:
Gordon: You can repeat the same thing as often as you like but after a few replies you still have not substantiated the claim that I queried in relation to Global Equities. My belief is that not alone can you not substantiate it but you are not prepared to acknowledge this either.
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Bob,

Are you suffering from a bad dose of myopia? It is a bank holiday weekend; I have replied to say that I don’t have access to a whole heap of data right now but I’ve shown you enough to prove that nobody has ever lost on the S&P over any 20 year period. Did you even read the posts? Or do you and your mates just prefer to have a row?

Gordon
 
Bob2018 said:
Ah - I see your confusion - you believe the S&P is the same as world equities - silly me.
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No, Bob, there’s just truckloads more data available for the largest market in the world, and the MSCI World Index only kicked off in 1969.

But people like yourself prefer to act the pedant and squirm down rabbit-holes with a view to deflecting attention away from the substantive point.

Give us the benefit of your wisdom; do you think that being invested in global equities for any 20 year period has ever led to a loss?
 
I don't think anybody can legitimately say that nobody who ever invested in global stocks over a 20-year period ever lost money. We just don't have sufficient data to substantiate that claim.

We know that the Dow (as a proxy for stocks generally) took 25 years to return to its 1929 high point (the S&P500 didn't come into existence until 1957).

More importantly, there have been 30-year+ periods in all major economies (including the U.S.) where domestic government bonds outperformed domestic equities.

In any event, the past is not prologue. A balanced approach, as suggested by others, seems entirely sensible to me.
 
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