The Investing Year Ahead

[jas007]

On 8/6/2024 at 8:12 AM, chiang mai said:

Commentators now saying that the markets melt down is merely a reaction to end of the large scale carry trade involving YEN and not much to do with the US economy at all. The Nikkei is up 13% this morning. That seems more plausible to me.

The markets are still wildly leveraged.  So that remains a problem. Let’s hope it remains just “problem.”  

[swissie]

Stocks are bouncing back nicely.  Not followed by "Industrial Metals". Suspicious. Given this, merely a "technical correction" taking place (according to the book).

On the other hand, if stocks should race quickly back to the recent highs, the headlines would read: "The most sinister market manipulation ever has taken place". Followed by a congressional investigation to find out who the "manipulators" were.

OR: If new lows should occur, the members of the FED will start shaking in their boots. = Lowering interest rates recklessly. Boy, we live in "interesting times". Don't we.

[Yellowtail]

On 8/3/2024 at 10:13 PM, swissie said:

How can you tell when the market has bottomed? Every financial institution is desperately looking for you.

 

Easy, that's where I always get out...

[Yellowtail]

On 8/3/2024 at 11:27 PM, jas007 said:

 So another few months until the election and then we’ll see.  I think there’s no way out of seeing more inflation, regardless of who wins the US election. Trump doesn’t seem interested in controlling government borrowing. Ditto for the Democrats.  

The issue is spending, not borrowing, and Trump might curb spending. 

 

Service on the debt now costs more that the defense budget. 

 

[swissie]

On 8/8/2024 at 2:50 AM, Yellowtail said:

Easy, that's where I always get out...

Love it! Your sense of humor is intact.

Next time around, when you are selling, would you tell me a couple of days ahead?

[swissie]

On 8/8/2024 at 2:53 AM, Yellowtail said:

The issue is spending, not borrowing, and Trump might curb spending. 

 

Service on the debt now costs more that the defense budget. 

 

Quote: "Service on the debt now costs more that the defense budget".

For heavens sake, don't spread it around just yet. It will be soon enough that by the election of 2028 this will be the main issue. 

[Thailand J]

Whatever the reason for the latest volatility, I hope it is over.

Volatility index VIX is now at 14.8.

My investments mostly are back to where there were, BRK B is the best performing, up 22% year to date.

[swissie]

On 8/7/2024 at 4:17 PM, swissie said:

Stocks are bouncing back nicely.  Not followed by "Industrial Metals". Suspicious. Given this, merely a "technical correction" taking place (according to the book).

On the other hand, if stocks should race quickly back to the recent highs, the headlines would read: "The most sinister market manipulation ever has taken place". Followed by a congressional investigation to find out who the "manipulators" were.

OR: If new lows should occur, the members of the FED will start shaking in their boots. = Lowering interest rates recklessly. Boy, we live in "interesting times". Don't we.

Above, I wondered what this "correction" caused. Now we know: The "carry trades" that have turned sour was the perpetraitor ! Margin calls, forced liquidations. Fine.

But: Having to sell your stocks to offset your losses in an other "playing field"? How much intertwined "leaverage" can the financial world stand?

 

I find, we are standing on "shaky ground". All of us, as we all are part of the "world economy". Depending on "free money" (low interest rates), to keep the financial "merry go round" turning.

 

[jas007]

On 8/19/2024 at 8:59 PM, swissie said:

Above, I wondered what this "correction" caused. Now we know: The "carry trades" that have turned sour was the perpetraitor ! Margin calls, forced liquidations. Fine.

But: Having to sell your stocks to offset your losses in an other "playing field"? How much intertwined "leaverage" can the financial world stand?

 

I find, we are standing on "shaky ground". All of us, as we all are part of the "world economy". Depending on "free money" (low interest rates), to keep the financial "merry go round" turning.

 

 I always knew there was a carry trade, but I never really realized the extent of it.  Decades of so-called “free money” for Wall Street.  Borrow Yen at zero percent and buy US Treasury bonds yielding substantially more than zero. And all the free money went to purchase US stocks. One bubble inflating another.  They say the unwinding is far from over.  Then again, it could all revert to business as usual to keep the party going.

[swissie]

On 8/23/2024 at 11:08 AM, jas007 said:

 I always knew there was a carry trade, but I never really realized the extent of it.  Decades of so-called “free money” for Wall Street.  Borrow Yen at zero percent and buy US Treasury bonds yielding substantially more than zero. And all the free money went to purchase US stocks. One bubble inflating another.  They say the unwinding is far from over.  Then again, it could all revert to business as usual to keep the party going.

The party will go on because the party MUST go on. Economic "recessions" are no more allowed. If necessary, the Central Banks will provide enough "liquidity" once more to prevent this from happening. "Soft landings" are todays gospel. "Recession" has become a dirty word.

I remember times when recessions were "allowed". Helping to "self clense" economies. The Central Banks only acting to "soften" downturns at best.

The world economy has turned into a drug addict. = free money/low interest rates. Like a heroin addict, higher doses are required to maintain a certain level of "happyness".

Both addictions have one thing in common: There will be no "happy ending".

 

[KhunHeineken]

Arms manufacturing companies, and their subsidiaries, would seem to be a safe haven over the next 12 months. 

[chiang mai]

I was pondering the pro's and cons of an index tracker, to fill a small void in my holdings so I read through some debates on various investing forums. The one point that kept being repeated was that Trackers are better than managed funds, because most managed fund managers, fail to beat the benchmark.

 

I don't understand this, none of my funds have negative alpha, they are all at least +3% Alpha which means they beat the benchmark by at least risk adjusted 3%. I'm wondering why anyone would actually hold negative alpha funds, or is this just some old story line that people like to throw out in order to appear knowledgeable?

[chiang mai]

I continue to invest in global equities and to mostly steer away from index trackers. I realise that trackers such as Fidelity Index World and HSBC FTSE All World produce consistently higher than average returns but the lack of control in a downmarket is scary. I like the idea of having a fund manager who can swap out of high risk and rapidly falling territories and sectors and into something less risky. 

 

My three main global equities funds are now these:

 

Guinness Global, Royal London Global Equity and Columbia Threadneedle's Universal Map Adventurous. The latter is run by David Niven who has successfully managed the F&C Investment Trust for many years.

 

My Asian interests are managed by Invesco Pacific which spreads risk across Japan, India, China and EM's.

 

I have some bonds funds and a strategic bonds fund that has done exceptionally well. I also hold an L&G US Index tracker and a VG small caps fund.

 

All in all I'm very happy with my holdings and can imagine them remaining as is for some time. But I do think we're at that time when markets will correct, in fact, that time is past due.

[Thailand J]

47 minutes ago, chiang mai said:

I continue to invest in global equities and to mostly steer away from index trackers. I realise that trackers such as Fidelity Index World and HSBC FTSE All World produce consistently higher than average returns but the lack of control in a downmarket is scary. I like the idea of having a fund manager who can swap out of high risk and rapidly falling territories and sectors and into something less risky.

The last thing I want is to have a fund manager playing market timing on my behalf.

 

https://www.spglobal.com/spdji/en/research-insights/spiva/

 

[G_Money]

5 minutes ago, Thailand J said:

The last thing I want is to have a fund manager playing market timing on my behalf.

 

https://www.spglobal.com/spdji/en/research-insights/spiva/

 

Agreed.  Vast majority can’t even beat the market year after year long term.

 

They’re experts in churning your account to generate profits for themselves.

 

I’ll follow Jack Bogles philosophy,  Thank you.

 

Unfortunately Vanguard is slowly getting away from his principles since his demise.

[chiang mai]

12 minutes ago, G_Money said:

Agreed.  Vast majority can’t even beat the market year after year long term.

 

They’re experts in churning your account to generate profits for themselves.

 

I’ll follow Jack Bogles philosophy,  Thank you.

 

Unfortunately Vanguard is slowly getting away from his principles since his demise.

I don't want them to beat the market year after year, only this year.

[chiang mai]

22 minutes ago, Thailand J said:

The last thing I want is to have a fund manager playing market timing on my behalf.

 

https://www.spglobal.com/spdji/en/research-insights/spiva/

 

Each to their own, I reckon a good fund manager stands a much better chance than me.

[G_Money]

18 minutes ago, chiang mai said:

I don't want them to beat the market year after year, only this year.

Good luck with that.

 

Better luck on the Roulette Wheel.

Edited November 13 by G_Money

[chiang mai]

6 minutes ago, G_Money said:

Good luck with that.

 

Better luck on the Roulette Wheel.

It isn't binary and it definitely isn't black and white. It's not as if there is only one type of investment that will make a good profit and only one type of investor with one type of risk profile! Some of you guys make it look like it's a choice between using the bridge over the road or walking blindfolded across the motorway on foot,  in rush hour! 

[G_Money]

1 minute ago, chiang mai said:

It isn't binary and it definitely isn't black and white. It's not as if there is only one type of investment that will make a good profit and only one type of investor with one type of risk profile! Some of you guys make it look like it's a choice between using the bridge over the road or walking blindfolded across the motorway on foot,  in rush hour! 

Good luck.  Let us know when you reach your 1st million USD.

[chiang mai]

I'm happy with between 10 and 12% per year, as long as the risk is not high. I want low volatility and short drawdown. I don't care if the Fund Manager makes 10% off my investment, as long as I get my 10% to 12%.

[Captain Flack]

Some off topic posts and the replies, which are trying to deflect the topic into a political discussion, have been removed.

[oldcpu]

On 11/13/2024 at 1:52 PM, chiang mai said:

Each to their own, I reckon a good fund manager stands a much better chance than me.

 

I guess the key word there is "good".    We have no control if a company with different funds decides to decides to change their fund manager.  Which could be "good" or "bad".   I have always had the view that the primary purpose of a fund is to make money for those running the fund, ... and to do so they need to convince investors to let them play with the investor's money.

 

Having typed that - I have no opinion as to what approach is better in practice .... go with a fund manager?  go with an index fund/ETF? or trade on one's own with one's own assessment ?  or a mix?

 

But I do read the occasional thread (such as this) to see if there is something I need to try to learn and attempt to drive good information spotted into my thick skull.  🙂 

[chiang mai]

10 minutes ago, oldcpu said:

 

I guess the key word there is "good".    We have no control if a company with different funds decides to decides to change their fund manager.  Which could be "good" or "bad".   I have always had the view that the primary purpose of a fund is to make money for those running the fund, ... and to do so they need to convince investors to let them play with the investor's money.

 

Having typed that - I have no opinion as to what approach is better in practice .... go with a fund manager?  go with an index fund/ETF? or trade on one's own with one's own assessment ?  or a mix?

 

But I do read the occasional thread (such as this) to see if there is something I need to try to learn and attempt to drive good information spotted into my thick skull.  🙂 

Good Fund Managers are hard to find, they come and go....sometimes they are good, sometimes they aren't. Nick Train is one example, at one stage he was touted as the UK's Warren Buffet,...until he wasn't. But while he was good, he was very good.

 

Simon Edeleston is another, the team running Royal London Equity Select are yet another. I personally like consistent FM's, Paul Niven at Columbia Threadneedle is one of my favorites. There are loads out there, you just have to look, the Citywire link is useful for this purpose. 

 

https://citywire.com/selector/sector/equity-global-growth/i3745?utm_medium=website&utm_source=citywire_global&utm_campaign=asset-class-page-league-table&utm_content=h18

 

I think people get hung up about the cost of managed funds vs the cost of index funds and ETF's. I don't care what managed fund managers charge, as along as they are good and they return me the profit I expect but I typically wont pay more than 0.75%. So I can get something similar for 0.05%, so what, you have to be able to pick it in the first place using what as a the criteria!  And when an Index slides you have to ride it all the way down, there's no get out as there can be with managed funds. It's personal preference.

[swissie]

Here we go again (once more).

Not long ago, most financial analyst found that Gold can only go one way = up! Only disagreeing how much "up" it would be.
Only confirming an old rule: If everybody including his Uncle have joined the bandwagon, it's time to leave the party. Lo and behold, Gold has "corrected" significantly since. It remains to be seen if Gold has only "corrected" or turned into "sleep-mode" that can last for years. It has happened before.

NOTE: Currently most analysts have concludet, that the US markets have only one way to go: UP ! I am getting increasingly nervous, especially as my Uncle bought some US tech-shares lately.

[chiang mai]

3 hours ago, swissie said:

Here we go again (once more).

Not long ago, most financial analyst found that Gold can only go one way = up! Only disagreeing how much "up" it would be.
Only confirming an old rule: If everybody including his Uncle have joined the bandwagon, it's time to leave the party. Lo and behold, Gold has "corrected" significantly since. It remains to be seen if Gold has only "corrected" or turned into "sleep-mode" that can last for years. It has happened before.

NOTE: Currently most analysts have concludet, that the US markets have only one way to go: UP ! I am getting increasingly nervous, especially as my Uncle bought some US tech-shares lately.

I'm with you, I think we're headed for a spell downwards.

[swissie]

17 minutes ago, chiang mai said:

I'm with you, I think we're headed for a spell downwards.

For the last 40 years, I have tried to seperate "technical corrections" versus a "veritable trend change". I used all technical/fundamental indicators including the wisdom of a Romanian Cairvoiant Gipsy Lady. Age 102.

Useless. I still can't seperate a "technical correction" from a "change of trend". Not after 40 years. 😂