AyG
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Post by AyG on Jun 21, 2022 17:12:49 GMT 7
It would appear that the 60/40 portfolio (something of which I've never been a fan) isn't working at the moment. There's positive stock-bond correlation (both heading south). According to Bloomberg "the time-honored method of allocating 60% to equities and 40% to fixed income has plunged about 14% so far this quarter. That’s a worse quarterly showing than in depths of the global financial crisis and during the once-in-a-century pandemic rout," Of course, this refers to US investors, but it's still pretty dire elsewhere. www.bnnbloomberg.ca/wall-street-alarms-bell-as-60-40-set-for-worse-quarter-than-2008-1.1781044
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chiangmai
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Post by chiangmai on Jun 21, 2022 18:02:26 GMT 7
Let me see, would I prefer 100% in Scot mortgage right now or 100% in cgt, hmm, tricky......ok I've thought about it, call me foolhardy if you must but I'm going with cgt. The problem of course is that not all equities, just like all 60/40's, are not created equally.
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Post by rgs2001uk on Jun 21, 2022 21:20:31 GMT 7
It would appear that the 60/40 portfolio (something of which I've never been a fan) isn't working at the moment. There's positive stock-bond correlation (both heading south). According to Bloomberg "the time-honored method of allocating 60% to equities and 40% to fixed income has plunged about 14% so far this quarter. That’s a worse quarterly showing than in depths of the global financial crisis and during the once-in-a-century pandemic rout," Of course, this refers to US investors, but it's still pretty dire elsewhere. www.bnnbloomberg.ca/wall-street-alarms-bell-as-60-40-set-for-worse-quarter-than-2008-1.1781044Never been a fan of it, I thought that was what KYC was for. The time honoured method, .
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Post by rgs2001uk on Jun 21, 2022 21:23:36 GMT 7
Let me see, would I prefer 100% in Scot mortgage right now or 100% in cgt, hmm, tricky......ok I've thought about it, call me foolhardy if you must but I'm going with cgt. The problem of course is that not all equities, just like all 60/40's, are not created equally. And theres the rub, right now, zoom out. I trust you sleep as well in bed at night as I do, for me personally I am now back to 2019 holding levels, nothing to see here, move on, just normal stock market behaviour.
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Post by rgs2001uk on Jun 21, 2022 21:28:58 GMT 7
It would appear that the 60/40 portfolio (something of which I've never been a fan) isn't working at the moment. There's positive stock-bond correlation (both heading south). According to Bloomberg "the time-honored method of allocating 60% to equities and 40% to fixed income has plunged about 14% so far this quarter. That’s a worse quarterly showing than in depths of the global financial crisis and during the once-in-a-century pandemic rout," Of course, this refers to US investors, but it's still pretty dire elsewhere. www.bnnbloomberg.ca/wall-street-alarms-bell-as-60-40-set-for-worse-quarter-than-2008-1.1781044AyG, like you I am no fan of this Americana, two things spring two mind, why does no one ever mention pensions, if it all goes to shit tomorrow in theory I should still have pensions coming in, no one ever mentions draw down, at what age/point should I start drawing down capital?
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chiangmai
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Post by chiangmai on Jun 22, 2022 6:22:20 GMT 7
It would appear that the 60/40 portfolio (something of which I've never been a fan) isn't working at the moment. There's positive stock-bond correlation (both heading south). According to Bloomberg "the time-honored method of allocating 60% to equities and 40% to fixed income has plunged about 14% so far this quarter. That’s a worse quarterly showing than in depths of the global financial crisis and during the once-in-a-century pandemic rout," Of course, this refers to US investors, but it's still pretty dire elsewhere. www.bnnbloomberg.ca/wall-street-alarms-bell-as-60-40-set-for-worse-quarter-than-2008-1.1781044To be clear on this point yet again, 60/40 to me refers to 40% of non equities based instruments or holdings. That can mean precious metals, gilts, t,'bills, options etc etc.
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chiangmai
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Post by chiangmai on Jun 22, 2022 6:31:12 GMT 7
It would appear that the 60/40 portfolio (something of which I've never been a fan) isn't working at the moment. There's positive stock-bond correlation (both heading south). According to Bloomberg "the time-honored method of allocating 60% to equities and 40% to fixed income has plunged about 14% so far this quarter. That’s a worse quarterly showing than in depths of the global financial crisis and during the once-in-a-century pandemic rout," Of course, this refers to US investors, but it's still pretty dire elsewhere. www.bnnbloomberg.ca/wall-street-alarms-bell-as-60-40-set-for-worse-quarter-than-2008-1.1781044AyG, like you I am no fan of this Americana, two things spring two mind, why does no one ever mention pensions, if it all goes to shit tomorrow in theory I should still have pensions coming in, no one ever mentions draw down, at what age/point should I start drawing down capital? It's interesting that when I raised the point about average growth rates over the next ten years, you effectively responded with an answer of zero. You understand of course that future growth rates are a key component of the equation regarding when and how much to take by way of drawdown. There is a useful table showing recommended age to begin to drawdown, versus the percentage to be taken, this naturally increases with age. The table may well be Americana so use discretion in whether to read it or not😏. So I, at age72, can easily drawdown 6% per year whereas a person age 60 would be advised to drawdown about 3%. The missing ingredient in both examples is estimated future rate of growth because that determines how quickly the pot will be depleted.
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AyG
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Post by AyG on Jun 22, 2022 7:03:25 GMT 7
To be clear on this point yet again, 60/40 to me refers to 40% of non equities based instruments or holdings. That can mean precious metals, gilts, t,'bills, options etc etc. It may refer to that to you, but for everybody else it refers to a portfolio of 60% stocks and 40% bonds. The logic (such that it is) of the 60/40 portfolio is that stock and bond prices are inversely correlated (except when they're not). Stock prices go up, bond prices go down and vice versa, so the portfolio value is stabilised. If you replace the bonds with, say, precious metals you lose the inverse correlation and the portfolio doesn't work. If you replace the (long term) bonds with short term bonds such as T-bills, you again lose the inverse correlation and the portfolio doesn't work. (T-bills really are a proxy for cash.)
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chiangmai
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Post by chiangmai on Jun 22, 2022 16:10:07 GMT 7
To be clear on this point yet again, 60/40 to me refers to 40% of non equities based instruments or holdings. That can mean precious metals, gilts, t,'bills, options etc etc. It may refer to that to you, but for everybody else it refers to a portfolio of 60% stocks and 40% bonds. The logic (such that it is) of the 60/40 portfolio is that stock and bond prices are inversely correlated (except when they're not). Stock prices go up, bond prices go down and vice versa, so the portfolio value is stabilised. If you replace the bonds with, say, precious metals you lose the inverse correlation and the portfolio doesn't work. If you replace the (long term) bonds with short term bonds such as T-bills, you again lose the inverse correlation and the portfolio doesn't work. (T-bills really are a proxy for cash.) Mixed assets funds represent a broad spectrum of funds that include 60/40 along with a whole host of variants, including 80/20 and 20/80. As the equities element changes, so does the other element which at one end of the spectrum includes AAA+ bonds and at the other end, t,'bills, with everything else in between. 60/40 is nothing more than a single product type, in that spectrum.
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Post by rgs2001uk on Jun 22, 2022 22:25:30 GMT 7
AyG, like you I am no fan of this Americana, two things spring two mind, why does no one ever mention pensions, if it all goes to shit tomorrow in theory I should still have pensions coming in, no one ever mentions draw down, at what age/point should I start drawing down capital? It's interesting that when I raised the point about average growth rates over the next ten years, you effectively responded with an answer of zero. You understand of course that future growth rates are a key component of the equation regarding when and how much to take by way of drawdown. There is a useful table showing recommended age to begin to drawdown, versus the percentage to be taken, this naturally increases with age. The table may well be Americana so use discretion in whether to read it or not😏. So I, at age72, can easily drawdown 6% per year whereas a person age 60 would be advised to drawdown about 3%. The missing ingredient in both examples is estimated future rate of growth because that determines how quickly the pot will be depleted. Scot Mort is down 50% thats means it has to grow 100% just to get back to where it was, will this happen in the next 10 years, the honest answer is neither I nor anyone else knows. I prepare for the worst and hope for the best, we all find our own path, my path suits me just fine. The trouble with pots, it depends how much is in it, this will determine how much is left for those who come after us.
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Post by rgs2001uk on Jun 22, 2022 22:26:47 GMT 7
To be clear on this point yet again, 60/40 to me refers to 40% of non equities based instruments or holdings. That can mean precious metals, gilts, t,'bills, options etc etc. It may refer to that to you, but for everybody else it refers to a portfolio of 60% stocks and 40% bonds. The logic (such that it is) of the 60/40 portfolio is that stock and bond prices are inversely correlated (except when they're not). Stock prices go up, bond prices go down and vice versa, so the portfolio value is stabilised. If you replace the bonds with, say, precious metals you lose the inverse correlation and the portfolio doesn't work. If you replace the (long term) bonds with short term bonds such as T-bills, you again lose the inverse correlation and the portfolio doesn't work. (T-bills really are a proxy for cash.)Some I know refer to them as IOUs and best avoided.
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chiangmai
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Post by chiangmai on Jun 23, 2022 9:21:31 GMT 7
It may refer to that to you, but for everybody else it refers to a portfolio of 60% stocks and 40% bonds. The logic (such that it is) of the 60/40 portfolio is that stock and bond prices are inversely correlated (except when they're not). Stock prices go up, bond prices go down and vice versa, so the portfolio value is stabilised. If you replace the bonds with, say, precious metals you lose the inverse correlation and the portfolio doesn't work. If you replace the (long term) bonds with short term bonds such as T-bills, you again lose the inverse correlation and the portfolio doesn't work. (T-bills really are a proxy for cash.)Some I know refer to them as IOUs and best avoided. Every bond is an iou.
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AyG
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Post by AyG on Jun 23, 2022 10:25:07 GMT 7
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chiangmai
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Post by chiangmai on Jun 23, 2022 11:16:47 GMT 7
So 60/40 is not just one of the many similari mixed assets, who ever would have known!
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AyG
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Post by AyG on Jun 23, 2022 16:28:25 GMT 7
So 60/40 is not just one of the many similari mixed assets, who ever would have known! Well, pretty much everyone involved in investing their money, but clearly not you. (And in your defence, you are very new to this.) However, you may take the stance of Humpty Dumpty: “When I use a word,” Humpty Dumpty said in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”
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