Bear market asset classes?

[davepoth]

My "Portfolio" is ticking over quite nicely as I'm sure most are at the moment, but I'm mindful that it only consists of cash and equities (in tracker ETFs). Since I've only been investing in a bull market, I'm not quite sure about the best way to go to shore things up for when the market turns bearish. Any thoughts as to what sorts of things I should be looking at?

[xeny]

Bonds (maybe), Gold (maybe) Cash you already have. Anything defensive will cost you return in the until a downturn of course compared to equities.

How near are you to wanting to take anything out? If that's a long way in the future, you may want to balance lower returns and some degree of downturn protection against better returns/greater volatility and just letting it fall in a bear market (easier said than done I know).

[kurt535]

Bonds, food stocks and shares. Gold if political situation looks bad.

[ringram]

Cash is good.
As is Govt Bonds... unless its the Gov Bonds that set the market off in the first place.. (due to inflation etc)

[BanzaiMan]

davepoth said:

My "Portfolio" is ticking over quite nicely as I'm sure most are at the moment, but I'm mindful that it only consists of cash and equities (in tracker ETFs). Since I've only been investing in a bull market, I'm not quite sure about the best way to go to shore things up for when the market turns bearish. Any thoughts as to what sorts of things I should be looking at?

There is a case for fixing your asset allocation upfront at not tinkering with it (apart from periodic rebalancing). Maybe consider fixed income, but beware duration and credit risk.

[WindyCommon]

BanzaiMan said:

There is a case for fixing your asset allocation upfront at not tinkering with it (apart from periodic rebalancing). Maybe consider fixed income, but beware duration and credit risk.

And perhaps above all beware buying assets that are still within touching distance of 40+ year highs! We may see better opportunities to add fixed income exposure to portfolios during the next few years.

[WindyCommon]

PH'ers interested in this thread may find the short 2018 outlook video pieces linked below interesting. They are both from experienced fund managers for whom I have the utmost professional respect. Both managers are running mandates essentially unconstrained in terms of asset allocation let alone indices, and are able to take short as well as long positions. You will find their narratives refreshingly different to the usual underweight this/that trotted out by the closet indexers.

William Littlewood - https://www.artemisfunds.com/en/gbr/adviser/invest...

James Clunie - https://www.jupiteram.com/UK/en/Professional-Inves...

Their principal funds have underperformed in recent times as their positioning has been defensive, and it is of course far easier to identify investment skill ex post than it is ex ante. But both express carefully considered views and - perhaps more importantly - run the funds they manage in a manner consistent with their thinking. Are they stopped clocks who will one day be right? I don't think so, but watch them and form your own opinion.

[You may have to be a little creative in answering questions about your investor type to view the videos, but that shouldn't be beyond anyone here.]