Global Markets

[simoh1490]

The 30 year anniversary of Black Tuesday has come and gone but journalists continue to forecast doom and gloom and the inevitable markets Armageddon, even many reputable and knowledgeable ones.

 

Currently, global stock market valuations are at record highs and bond markets are preparing for interest rate rises. In addition, there are lots of interesting and potentially dangerous things taking place currently in the geopolitical scene, North Korea, Trump, Israel, Iran, Brexit etc etc., any of which could spark a rush to the exits.

 

Are you invested, are you nervous, have you gone into cash instead – any related thoughts and comments, what's the general investment mood out there amongst TVF readers/posters?

[tonray]

Always invested, no other option to earn returns. Always nervous, always watching for signs of trouble. Always wondering when and not if it will happen.

 

But reality is that markets will always revert to the mean rate of return over a long period of time. When you have an extended period of ascent one can reasonably expect the market forces to constrain further ascent UNLESS there is a game changer such as technology innovation that changes expectations for growth over the long term. But markets need not sell off in an Armageddon style to bring returns in line with the mean. Corrections can happen both in price (sell-offs) or in time (running in place) or a combination of the two to achieve the same result over time. This is why it is important especially for folks nearing or at retirement age to have some income producing components in their portfolio, running in place is OK if you are collecting dividends and interest while it is happening. Just my 2 cents.

[simoh1490]

No other option to earn returns, how true, I reckon that's why markets keep extending their peaks and why nobody cares about risk anymore, I watch the VIX daily and nothing seems to affect it, it's quite scary.

 

https://www.marketwatch.com/investing/index/vix

[xylophone]

I've always had a risk-averse risk profile and at the age of 70 (now) it is very much the case.

 

I have got about 15% of my net worth invested in equities in NZ and so far it has provided me with an average dividend of 5.5% per annum and capital growth of 15% (over a five-year period).

 

The rest of my funds are in fixed interest with the occasional bond if a suitable one becomes available (e.g. Rabobank at 8.75% when first launched, but subsequently reducing over the years as the reset mechanism kicked in).

 

For the past 10 years I have lived off the dividends and interest as well as a couple of pensions, and although my principal sum has not decreased at all, obviously if inflation were taken into consideration one can argue that it has. For my part I believe I can, in the main, overcome the effects of inflation here in Thailand by living and buying wisely.

 

I can't see myself investing in anything else unless, as I said, a good bond issue becomes available in NZ, mainly because I don't need to and by my calculations I will need to live to well over a hundred to have used everything up, based on my current rate of spend and a small inflation calculation.

 

PS. I too look at the global situation and cannot see the justification in share market valuations...........irrational exuberance comes to mind again.

Edited December 7, 2017 by xylophone

[simoh1490]

I'm 66% THB and 34% GBP, less than 2% of my THB is in LTF's or equities. But 34% of my GBP is in a 60/40 portfolio whilst a further 38% is in a self-administered pension which is also 60/40, the equities element (60%) is spread globally in both cases. My purpose in investing is to increase the amount of money I leave to my wife, my pensions keep us in bread, cheese and somtam! But the other reason I'm investing is that I have never done so before and doing the research is actually quite stimulating. I doubt I would be investing if there were other less risky ways to make a return, I hate the idea of leaving funds on deposit at 1.6% knowing that banks make substantially more from it. But I have to say the markets currently are making me very nervous, given everything that is going on and whilst losses today won't impact on my lifestyle, I would feel bad if they were maintained for several years.

[xylophone]

18 hours ago, xylophone said:

For my part I believe I can, in the main, overcome the effects of inflation here in Thailand by living and buying wisely

As a way of clarifying that statement I have seen many electrical appliances here that are cheaper than they were 9 years ago........just one example, with others one can find around the place.

[simoh1490]

1 hour ago, xylophone said:

As a way of clarifying that statement I have seen many electrical appliances here that are cheaper than they were 9 years ago........just one example, with others one can find around the place.

It's quite surprising how the prices of so many things remain flat for so long, it's not that difficult for the consumer to keep a lid on inflation in Thailand.