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Post by rgs2001uk on Feb 9, 2021 20:38:00 GMT 7
This is a risk reduction and scaling down exercise rgs, not abandonment. If I'm brutally honest it's insane for a 70 year old to hold such a high risk portfolio, especially in todays market conditions. For that reason I'm moving from 100% of capital at medium/high risk to something like 20% at high risk, 30% at medium risk and 50% at low risk, or similar. I'm not sure I'm interested in low risk IT's but thank you for taking the time to look anyway. I'm planning on keeping <10% in my small caps, that along with the remaining high/medium risk funds should provide enough growth and income to make it worthwhile and keep things interesting, it's just that underneath it all I'll have this layer of protective dullness but hey, that's the price to be paid for security. Its feasible you could easily live for another 20 years. I know of at least 3 farangs who didnt plan to live for so long, one told me, "i didnt expect to live so long" ended up underfunded and moving from one low rent condo to another further and further out of town. One went back to jolly ole blighty, and another died.
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Post by rgs2001uk on Feb 9, 2021 20:38:54 GMT 7
If you found that helpful, then you must be an American. It's pretty much irrelevant to someone not indoctrinated into the cult of believing "USA #1". FFS AyG, don't you ever stop with this shite!!! To be frank, I agree with him.
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chiangmai
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Post by chiangmai on Feb 9, 2021 20:49:13 GMT 7
FFS AyG, don't you ever stop with this shite!!! To be frank, I agree with him. Well frank, I just don't know what to tell you in that case!
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chiangmai
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Post by chiangmai on Feb 10, 2021 7:08:49 GMT 7
More definition issues:
A while ago we had the debate about which countries constitute Emerging Markets and Developed Asia, sadly the industry didn't participate in that discussion so they still confuse investors by using different definitions. Now we have the debate about what constitutes small, medium and large-cap companies and guess what, the industry doesn't agree yet again. All of this makes it very confusing for the poor guy who's trying to buy medium caps in Developed Asia because the industry can't agree on what or where that is!
Morningstar in their glossary of terms defines small caps thus: "Small-caps are generally defined as companies with less than about $800 million in capitalization. Many successful small-cap companies eventually grow into large-cap corporations".
Elsewhere in an article, they refer to mid-caps as $500 mill to 4 bill.
Investopedia takes a different view, they say: "Big-cap stocks are large and have a market cap of $10 billion or more. Small-cap stocks generally have a market cap of $300 million to $2 billion.Nov 26, 2563 BE"
Turning to the dictionary, Collins says: "a large cap, designating a company, or a mutual fund that invests in companies, with a market capitalization of $5 billion or more".
Hmmm!
The free Financial Dictionary covers all bases and says: "Though there is no fixed measurement, a large-capitalization company typically has a market capitalization over $5 billion or $10 billion. Some brokerages or exchanges have slightly different definitions of large-capitalization".
Wiki gives an even less clear definition: "Market cap terms - Traditionally, companies were divided into large-cap, mid-cap, and small-cap.[2] The terms mega-cap and micro-cap have also since come into common use,[7][8] and nano-cap is sometimes heard. Different numbers are used by different indexes;[9] there is no official definition of, or full consensus agreement about, the exact cutoff values. The cutoffs may be defined as percentiles rather than in nominal dollars. The definitions expressed in nominal dollars need to be adjusted over decades due to inflation, population change, and overall market valuation (for example, $1 billion was a large market cap in 1950, but it is not very large now), and market caps are likely to be different country to country.
Whaaa!
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chiangmai
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Post by chiangmai on Feb 10, 2021 7:55:13 GMT 7
Just to wrap up my downsizing exercise:
I've revamped my portfolio by scaling back or eliminating some of my high-risk funds, I've then added some lower-risk funds and attempted to improve the balance between of large-cap to small-cap. I'm left with four higher-risk funds, these are the ones that will produce growth and include Baillie Gifford Int, JPM EM, FSSA Asia and Fundsmith.
In the middle tier are medium/lower risk IT's and on the low-risk end, I've introduced CGT IT. I decided against the Gilt funds because the return was so low that there was little to differentiate them from holding cash. I've looked at Ruffer and whilst I like it the NAV is quite high so I'll hold for now. I've also looked at PAT and decided against it and Trojan X doesn't do anything for me, as a result, I shall continue to hold a larger amount of cash until something comes along that appeals or my views on life and markets change.
I've reduced my small caps to just 12% and mid-caps to 28%.
Higher-risk funds now represent 31%, medium and medium low risk 43% and low risk (incl cash) 26%, that's a big change from previously holding almost nothing in the low-risk category.
Job done, I'll sleep better I reckon.
Out.
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Post by rgs2001uk on Feb 10, 2021 20:18:24 GMT 7
^^^ great stuff, see you again in 6 months for another update, get a few beers down you always helps me sleep, .
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GavinK
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Post by GavinK on Feb 10, 2021 20:45:04 GMT 7
I decided against the Gilt funds because the return was so low that there was little to differentiate them from holding cash. I shall continue to hold a larger amount of cash until something comes along that appeals or my views on life and markets change. How about uk premium bonds - 1% annual prize fund, tax free, 100% backed by HMT, plus the unlikley chance of winning a million! Reasonable low risk place to park up to £50k per person with reasonable access when something better comes along ?
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Post by rgs2001uk on Feb 10, 2021 21:23:45 GMT 7
^^^, , if you have a death wish have at it, worst company I have ever dealt with, took almost 3 months to free up my money. If you want to be effed around, lied to, and generally treated like a soi dog, have at it. Read the reviews on trustpilot. www.trustpilot.com/review/secure3.nsandi.comTotally unprofessional, staff who will just hang up after you have waited in line for half an hour just to talk to them. Example, can you advise me pls on this letter, we havent received that letter, really, so why do I have a letter in front of me signed by X refrecing the letter you just told me you havent recieved? Phone slammed down. Dont bother asking for names, not allowed to give them, so you have no way of telling them who you spoke to. I woudnt recommend this lot to my worst enemy.
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chiangmai
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Post by chiangmai on Feb 11, 2021 2:52:58 GMT 7
I decided against the Gilt funds because the return was so low that there was little to differentiate them from holding cash. I shall continue to hold a larger amount of cash until something comes along that appeals or my views on life and markets change. How about uk premium bonds - 1% annual prize fund, tax free, 100% backed by HMT, plus the unlikley chance of winning a million! Reasonable low risk place to park up to £50k per person with reasonable access when something better comes along ? Premium bonds are too far down the risk/reward scale for me, the odds are so pathetically poor they are only marginally better than holding cash, slightly better than buying lottery tickets I suspect. If you haven't already looked at them, the wealth protection funds are an interesting consideration, a blend of equities, government bonds and a few exotics that should produce reasonable levels of income in the good times (but nothing stellar, 40% over 5 years) and good protection in a down market.....Ruffer, Capital Gearing, Troy Trojan, Personal Assets Trust and RIT are all names in that category. At this point in my life the priorities in the mission statement of funds like CGT are just perfect, "to preserve the real wealth of clients and then achieve an absolute return".
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AyG
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Post by AyG on Feb 11, 2021 7:12:25 GMT 7
When journalists (and others) write suggesting that large cap stocks are inherently "safer" they're writing about how things were 50 years ago. If you look at the top 10 listed companies by market capitalisation in 1997 (the earliest I could find) they were: All of them producing a physical product or providing a tangible service. Now if we look at the end of last year: (TSMC is Taiwan Semi.) The characteristics of many of these companies are very different. I'm not sure how defensive companies some of them are. And I'm far from certain that large caps as a whole continue to be as defensive as they might once have been. Source: en.wikipedia.org/wiki/List_of_public_corporations_by_market_capitalization
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chiangmai
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Post by chiangmai on Feb 11, 2021 8:05:04 GMT 7
Microsoft remained, Toyota morphed into another company that produces cars, Tesla, Intel morphed into another chip maker, TSMC, Oil is on its way out, oil companies are out of fashion, it's no surprise Exxon and RDS aren't still there, Amazon has replaced much of the high street, they produce all the things the high street used to, except for the shopping experience, Alibaba is the eastern version of Amazon, ditto the above. What remains is Tencent, Alphabet and Facebook, your favourites! Alphabet and Tencent are the east and west versions of broadly the same thing, they represent electronic/software infrastructure on which everything else relies to a large extent. Facebook produces tangibles, they provide the marketing platform and service for Mrs CM's bakery business, it costs her 3k per month and generates close to 100K in business in the same period!
The change from the old large caps to the new large caps is a natural progression, you just don't see it because you're a Luddite.
As for whether or not a large-cap is more defensive than the alternatives...I dunno, but until "the industry" comes up with a different storyline I'm happy to believe that's the case, after all, small caps still fall faster and father in a downmarket than the alternatives so that hasn't changed.
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chiangmai
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Post by chiangmai on Feb 11, 2021 8:10:30 GMT 7
Something else I found useful (oh no, there's that word again) is the Trustnet portfolio tracker, even if it is an American site!
I keep details of my holdings in it so it's easy to quickly see the value and performance of my portfolio without having to log into a rather security heavy investment platform. I also find it useful to help assess risk and to model possible options, I'm currently running two portfolio's side by side, my old portfolio and my newly de-risked portfolio so I can see the impact on income etc.....and it's free.
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chiangmai
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Post by chiangmai on Feb 12, 2021 16:56:53 GMT 7
Earlier I mentioned wealth preservation funds. A useful comparison table here showing performance after crashes:
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chiangmai
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Post by chiangmai on Feb 13, 2021 6:01:36 GMT 7
If Warren Buffet is correct, things are getting out of hand, this from a non-UK business newspaper: "The “Buffett Indicator” is a simple ratio: The total market capitalization of U.S. stocks divided by the total dollar value of the nation’s gross domestic product. It first crossed above its previous dot-com era peak in 2019. Still, it has been trending higher for decades, and if there’s one mantra investors love even more than Buffett’s it’s, “the trend is your friend.” However, in recent weeks, even that long-term trend fails to justify the metric’s frothy appearance. With U.S. market cap more than double the level of estimated GDP for the current quarter, the ratio has surged to the highest-ever reading above its long-term trend, according to an analysis by the blog Current Market Valuation, suggesting a “strongly overvalued” situation". "This detachment of the Buffett indicator from its long-term trend joins an assortment of other valuation metrics that have exceeded their previous records in the rebound from the pandemic-induced bear market last year -- if not years earlier. Price-to-earnings, price-to-sales and price-to-tangible-book value are among the metrics firmly above dot-com era levels that many investors assumed were once-in-a-lifetime peaks". However... "Rising valuations are famously bad tools for timing market tops. Indeed, all tools are. For now, many investors are confident to bet that the recovery from the pandemic will boost some of the denominators in ratios like these, so they’re not letting valuations scare them off". I'm not suggesting the sky is falling because I don't believe it is, the VIX is actually at it's lowest for a year. I've already reduced my investment risks to a level I'm very comfortable with so I don't care that much if I'm wrong because if I am, I wouldn't do anything differently. But Buffets observations are worth paying attention to, if nothing else his voice is yet another that is saying the same thing, markets are looking dangerous for those who don't have protection, don't really know what they are doing and/or, those who can't afford to take a financial hit. Finally, please don't take a pop at me for posting a quote from Bloomberg just because it's American otherwise I might just lose it, if you don't like Bloomberg don't read it. www.bloomberg.com/news/articles/2021-02-12/warren-buffett-s-favorite-valuation-metric-is-ringing-an-alarm?srnd=premium-asia
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Post by rgs2001uk on Feb 15, 2021 20:46:10 GMT 7
, perhaps good old Warren would like to explain zero interest rates, govts like america love them, can print free money for cents on the dollar and kick the can down the road. People who should never be in the market in the first place are now forced to seek somewhere to preserve their wealth, banks and bonds aint it. Leaves property, not for me, bitcoin and gold, not for me. The schmucks are now left with nothing but the markets, the bigger schmucks like me are now willing to pay a premium for stocks etc than can deliver more than the banks, hence why ITs are now trading at a premium. Perhaps old warren should introduce an new indicator, the s&p or dow jones vs the american national debt. I dont watch bloomberg on the telly, and dont read any of their articles, contrary to what bloomberg and uncle sam may think, the world isnt built on american exceptionalism.
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