Buying bonds is insane. They are ludicrously underpriced given the default risk, or the risk of being paid back in printed money (if you are buying sovereign bonds)
Yep it does appear too high to my amateur investor mind. Largely propped up by free money from the govt and Biden's helicopter payments.
The key question is, when it corrects, how much does it correct by? Drop to 6500 for example is not a big deal for long term investors. No idea what the correct answer is.
Gilts pay diddly. Linkers cost you 2-3% up front. Equities look ripe for a fall. Property is at a historical peak. Oh and cash will get eaten by inflation. Good isn’t it? Corporate bonds, you say? Good luck with that.
I took about 30% of my equities out just before corona and bought back about 15% when it had recovered to about 6000. Been meaning to put the other 15% back in as I assume inflation is coming . But it all seems horribly volatile to me and could go either way tbh. With a long term fix rate mortgage Im pretty well placed for inflation anyway: another crash and a bit of asset deflation would be more damaging, so Im probably not gonna change my allocation right now.
Apart from our house we have been pretty much 100% US equities since the credit crisis. I keep telling my wife not to get too carried away cos the annualised return since April 2009 (16.2%!) cannot continue forever.
It can't continue forever, but at the same time I think a lot of European investors do not appreciate quite how spectacularly well US businesses are doing.
The US and Europe are not the same. Our companies are moribund, theirs are absolutely printing money faster than they can count it. The fact that everything really feels a bit shit here is not a guide to how it is in America.
The general view across the investment management world is that if you go off equity risk premiums based on real yields, returns will be lower in the future.
If you went back to the 90s and built a portfolio, you could hold something like 50% in gilts and get a pretty good return. Not now.
If you are timing the market and are day-trading in individual shares or investing within a five-year window, you’re playing a different game entirely.
Even if inflation does spike, the reasons for the decline in interest rates over several decades are multifaceted.
If they’d not borrowed so much, the government and central banks might like a bit of monetary wiggle room with inflation and a rate rise. They don't seem too worried tbh.
I don't thinks it's just "the US is doing better than Europe" although that is a factor.
US companies, no matter where they operate, tend to be leaner and more focused on shareholder return. That's the reason I'm almost entirely US equities even with the 15% witholding tax and FX charge disadvantages.
I don’t understand the haterz on corporate bonds. Especially with short term maturities. I’m putting more of my cash there rather than in a low rate savings account.
Mortgage your house to the max on an interest only mortgage. Put it in equities and ride the liquidity wave for a year. Switch into inflation linked govt bonds and wait for inflation to pay off your mortgage.
Also if you are a higher rate taxpayer nowhere near the lifetime allowance SIPP all you can now for a 40% immediate return on the cash.
0
0
No it is going to keep going up forever, just like bitcoin.
0
0
yes I am
0
0
Heh @ buying bonds
0
0
What JB said.
Buying bonds is insane. They are ludicrously underpriced given the default risk, or the risk of being paid back in printed money (if you are buying sovereign bonds)
0
0
Inflation’s coming
0
0
Yep it does appear too high to my amateur investor mind. Largely propped up by free money from the govt and Biden's helicopter payments.
The key question is, when it corrects, how much does it correct by? Drop to 6500 for example is not a big deal for long term investors. No idea what the correct answer is.
0
0
Yeah, I'm holding off putting any more in until it corrects I think.
0
0
I'm always nervous when we're at an all-time high, but I keep buying all the same.
0
0
I'd be nervous if I was investing for the short term. As my money in the stock market is for the long term I'm pretty relaxed.
0
0
Gilts pay diddly. Linkers cost you 2-3% up front. Equities look ripe for a fall. Property is at a historical peak. Oh and cash will get eaten by inflation. Good isn’t it? Corporate bonds, you say? Good luck with that.
0
0
I took about 30% of my equities out just before corona and bought back about 15% when it had recovered to about 6000. Been meaning to put the other 15% back in as I assume inflation is coming . But it all seems horribly volatile to me and could go either way tbh. With a long term fix rate mortgage Im pretty well placed for inflation anyway: another crash and a bit of asset deflation would be more damaging, so Im probably not gonna change my allocation right now.
Might just but a new car tbh.
0
0
Yeh following my thread RE stocks and shares ISAs. I'll be holding fire for a few months
0
0
Don't see much reason to stop putting money in as long as the US government is firmly in on board with the same strategy.
They're pumping trillions into an economy that's already booming, turbo mode at least has a while to run.
0
0
I have been nervous for about the last 4 years.
Apart from our house we have been pretty much 100% US equities since the credit crisis. I keep telling my wife not to get too carried away cos the annualised return since April 2009 (16.2%!) cannot continue forever.
0
0
It can't continue forever, but at the same time I think a lot of European investors do not appreciate quite how spectacularly well US businesses are doing.
The US and Europe are not the same. Our companies are moribund, theirs are absolutely printing money faster than they can count it. The fact that everything really feels a bit shit here is not a guide to how it is in America.
0
0
The general view across the investment management world is that if you go off equity risk premiums based on real yields, returns will be lower in the future.
If you went back to the 90s and built a portfolio, you could hold something like 50% in gilts and get a pretty good return. Not now.
If you are timing the market and are day-trading in individual shares or investing within a five-year window, you’re playing a different game entirely.
Even if inflation does spike, the reasons for the decline in interest rates over several decades are multifaceted.
If they’d not borrowed so much, the government and central banks might like a bit of monetary wiggle room with inflation and a rate rise. They don't seem too worried tbh.
0
0
I don't thinks it's just "the US is doing better than Europe" although that is a factor.
US companies, no matter where they operate, tend to be leaner and more focused on shareholder return. That's the reason I'm almost entirely US equities even with the 15% witholding tax and FX charge disadvantages.
0
0
I don’t understand the haterz on corporate bonds. Especially with short term maturities. I’m putting more of my cash there rather than in a low rate savings account.
0
0
Mortgage your house to the max on an interest only mortgage. Put it in equities and ride the liquidity wave for a year. Switch into inflation linked govt bonds and wait for inflation to pay off your mortgage.
Also if you are a higher rate taxpayer nowhere near the lifetime allowance SIPP all you can now for a 40% immediate return on the cash.
Join the discussion