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The Investing Year Ahead


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55 minutes ago, Mike Lister said:

I don't know, Fidelity funds are always pricey hence they are a rare buy for me, I'm only a poor guy. 😞

They offer a lot of funds aside from their own. I only had a bond fund once and it was a dog. 

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2 minutes ago, Yellowtail said:

They offer a lot of funds aside from their own. I only had a bond fund once and it was a dog. 

Bonds can be tricky. I hold them as a counter balance to equities because if you buy the right ones, they can be negatively correlated but you have to buy the right type. There's a link below which is useful in helping figure out which are the right ones. 

 

When rates are high, the coupon rate can be worthwhile, the added benefit comes from holding  them just as rates are about to fall because that means the face value increases. I've been holding Vanguards Global Bond Index for none months, waiting for rates to fall, in the meantime I'm collecting around 5%. That's not much unless it's measured on a risk return adjusted basis which definitely makes it worth investing 15%.

 

https://www.morningstar.com/portfolios/which-bonds-provide-biggest-diversification-benefit?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_improvingfinances&utm_content=52991

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  • 2 weeks later...

After the recent "setback" of the markets, investors ponder once more the all important question:
- Was this just a technical correction or is the Bear knocking on the door?


My 2 cents worth: The hopes of steadily declining interest rates for the rest of the year are in question (at least concerning the US). Next weeks earnings reports by big (tech) companies better be within (high) expectations. Disappointing results may well trigger more market "correction".


This brings us back to square 1: At what point turns a "market correction" into a Bear Market?


To anyone giving me a clue, I will pay a commission of a buck and a half plus give the phone number of my ex-wife.

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4 hours ago, swissie said:

After the recent "setback" of the markets, investors ponder once more the all important question:
- Was this just a technical correction or is the Bear knocking on the door?


My 2 cents worth: The hopes of steadily declining interest rates for the rest of the year are in question (at least concerning the US). Next weeks earnings reports by big (tech) companies better be within (high) expectations. Disappointing results may well trigger more market "correction".


This brings us back to square 1: At what point turns a "market correction" into a Bear Market?


To anyone giving me a clue, I will pay a commission of a buck and a half plus give the phone number of my ex-wife.

It appears to me that this might be something larger than a blip, my guess is a correction or larger. The market was well over valued any way and the Israel/Iran situation was a step too far for risk tolerance. Tin foil hat time.

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Just for humour value, this is my current asset allocation below. Like many others, my bet on US rates failed but my exposure is not large. But if you combine the hit to EM resulting from a strong USD, and the hit to bonds as well, the hit will be somewhere between a scratch and a flesh wound!

 

Screenshot(89).png.65ad13fa7dab72d4e53bfda89c5feb88.png

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12 minutes ago, Mike Lister said:

This too shall pass.....keep the faith.

As long as you have enough to worry about, you're doing okay....

 

Gold's up 16% for the year...

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Does anyone understand even a little bit, what the heck is going on in markets currently because I don't!

 

S&P way over valued but pushing higher, despite the yield curve remaining inverted and bond yields touching 5% and inflation coming in hot!!! 

 

I am reminded of the phrase, "markets can remain irrational longer than you can remain solvent".

 

https://finance.yahoo.com/news/wall-street-humbled-fast-reversing-203427974.html

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On 4/27/2024 at 7:37 AM, Mike Lister said:

Does anyone understand even a little bit, what the heck is going on in markets currently because I don't!

 

S&P way over valued but pushing higher, despite the yield curve remaining inverted and bond yields touching 5% and inflation coming in hot!!! 

 

I am reminded of the phrase, "markets can remain irrational longer than you can remain solvent".

 

https://finance.yahoo.com/news/wall-street-humbled-fast-reversing-203427974.html

Personally, I think truly useful analysis went out the window online trading and the glut of "free" information. 

 

The closer people are to the P & L, the further they are from what's actually going on.

 

I retired from a Fortune 200 company a few years ago. To increase the division's market share, they were considering purchasing a competitor in India. All the president all the division VPs and about ten other people met at the plant. My boss' daughter was getting married and because I was involved with the India plants, sent me to represent operations. 

 

I think it was three days at the plant. A lot of what was discussed was over my head, I was very intimidated, and I said almost nothing, and no one asked me anything. Everyone was focused on the books and whatnot. On the last day when it was all but a done deal, the CEO asked if anyone had any questions. I felt like a dumbass, but asked: 1. Where's all the equipment, and 2. Where's all the product? When asked what I meant, I said the plant is supposed to be shipping so much a week, they have not shipped anything in the three days we've been here, and there's only so much work on the floor. And there does not seem to be equipment in the plant to build that volume of product. Now had my boss been there, he probably would have caught it on the first day, but none of the people running the company had any idea what $500K worth of product looked like, or what equipment it took to build that volume of product. 

 

 

 

 

 

 

 

 

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On 4/27/2024 at 2:37 AM, Mike Lister said:

Does anyone understand even a little bit, what the heck is going on in markets currently because I don't!

 

S&P way over valued but pushing higher, despite the yield curve remaining inverted and bond yields touching 5% and inflation coming in hot!!! 

 

I am reminded of the phrase, "markets can remain irrational longer than you can remain solvent".

 

https://finance.yahoo.com/news/wall-street-humbled-fast-reversing-203427974.html

Just a theory: For decades (mainly in Europe), The "working class" has saved their money to purchase a house with garden. But in the meantime a house and garden is no more affordable for them. Mainly the case in Europe, less so in the US, so far.


But still some savings are accumulated. If not enough for a house, still enough to buy some stocks. Perhaps those savings find their way into the stock markets, providing the "liquidity" that fuels any broad based Bull market, regardless of any other "logical inputs".


"Excess Money" (savings) will end up somewhere. Currently preferrably in the stock markets. Regardless of other "logical inputs".


While currently everybody including his uncle is mesmorised by the performance and resiliancy of the stock markets, I have decided to re-direct my funds to greener pastures.

 

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27 minutes ago, swissie said:

Just a theory: For decades (mainly in Europe), The "working class" has saved their money to purchase a house with garden. But in the meantime a house and garden is no more affordable for them. Mainly the case in Europe, less so in the US, so far.


But still some savings are accumulated. If not enough for a house, still enough to buy some stocks. Perhaps those savings find their way into the stock markets, providing the "liquidity" that fuels any broad based Bull market, regardless of any other "logical inputs".


"Excess Money" (savings) will end up somewhere. Currently preferrably in the stock markets. Regardless of other "logical inputs".


While currently everybody including his uncle is mesmorised by the performance and resiliancy of the stock markets, I have decided to re-direct my funds to greener pastures.

 

Agreed/ I also think inheritance is playing a role, the younger set now have mum and dads money and are putting it to work because they don't trust the banks.

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I can't speak to Europe, but about two-thirds of Americans own their home, and over one third have less than US$5,000 in savings. 

 

IRAs and 401Ks were started in the '70s and were in full swing by then end of the '80s. Over half of working age Americans (15-64) owns at least one such account. 

 

Enter the internet. Virtually half the country has an online "brokerage" account, and everyone paying attention sees how much better they can do with a simple index fund (I think also started in the '70s) than with a savings account. 

 

 

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I manage a pot of money that is an inheritance that will be left to someone else, it's about 100k Pounds so not huge. In the past I've invested those funds similar to the way I've invested my own funds, but lately I've decided to put those investments on automatic! 

 

I'm going to put a large portion into global trackers, but I can't decide whether it's better to put them into something global such as HSBC FTSE All World or whether I should put them into separate index trackers such as S&P 500, FTSE Developed EU and FTSE 350 etc. 

 

The problem with global trackers is you have no choice but to take the ride when one market goes South. At least with individual index trackers it's easy to shut down say the US or UK investments without impacting everything else.

 

Does anyone have a view on this?

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2 hours ago, Mike Lister said:

I manage a pot of money that is an inheritance that will be left to someone else, it's about 100k Pounds so not huge. In the past I've invested those funds similar to the way I've invested my own funds, but lately I've decided to put those investments on automatic! 

 

I'm going to put a large portion into global trackers, but I can't decide whether it's better to put them into something global such as HSBC FTSE All World or whether I should put them into separate index trackers such as S&P 500, FTSE Developed EU and FTSE 350 etc. 

 

The problem with global trackers is you have no choice but to take the ride when one market goes South. At least with individual index trackers it's easy to shut down say the US or UK investments without impacting everything else.

 

Does anyone have a view on this?

What is the time frame and country of residence/citizenship of the recipient? 

 

If I were setting up something for my boy would get when I die, I would put half in a S & P 500 index fund, a quarter in in an emerging market fund and a quarter in a large-cap international fund. 

 

My Mother gave each of the grand kid $5K in an S & P fund they got when they turned 18. 

Edited by Yellowtail
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1 minute ago, Yellowtail said:

What is the time frame and country of residence/citizenship of the recipient? 

 

If I were setting up something for my boy would get when I die, I would put half in a S & P 500 index fund, a quarter in in an emerging market fund an

Agreed, but what's your other quarter?

 

Time frame is probably under  3 or 5 years, Brit subject, Thai residency, investing offshore so no tax implications'.

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1 minute ago, Mike Lister said:

Agreed, but what's your other quarter?

 

Time frame is probably under  3 or 5 years, Brit subject, Thai residency, investing offshore so no tax implications'.

Sorry, fat-finger post, edited since. 

 

How old is the recipient? 

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2 minutes ago, Mike Lister said:

Agreed, but what's your other quarter?

 

Time frame is probably under  3 or 5 years, Brit subject, Thai residency, investing offshore so no tax implications'.

I don't know anything about UK law, but I have my boy in a Roth IRA. Deposits are post tax, growth is tax-free. 

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Just now, Mike Lister said:

Not savvy, not even a little bit, thick as two short planks actually.

So, they can learn a bit with your help in the few years or not have the slightest idea what to do with it when they get it. 

 

 

 

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