Stock market is a "fully-fledged epic bubble" and will burst

[dmahon]

Not a bad week on the markets. S&P up 6.5%.

I’m still afraid to log in and check my accounts, but not sleeping toooo badly wrt equity investments.

I can see headlines later this year where inflation falls faster than expected and expectations for a few interest rate rises start to diminish. We won’t be back to “money printer go brrr”, but I’m still hopeful for a green H2.

[Rob_125]

Got a couple of funds in my vanguard isa, ls60 and global equity. Marginally up on ls60 and down on global equity. Basically breaking even over 3 years. Just need to forget about it and continue my monthly contribution. To be honest I'm surprised how much the ls60 has dropped back.

The pension is managed by Aviva, given the circumstances its down around 8% from peak, which I think is fair.

[DonkeyApple]

Panamax said:

Compare that with most workers' pay increase over the same period and you can see why they're all going to vote for strike action.

It doesn't exactly help that Boris promised a high wages economy but has absolutely no way of delivering it. Neither does it help that the workers who used to be willing to do the low paid jobs are no longer allowed into the country. Most economies are at risk of recession in view of current global conditions but UK has set itself up for complete disaster.

Meanwhile FTSE contains significant foreign earnings so may not get beaten up as badly as the economy as a whole. amongst other things a weak pound will increase the apparent value of those foreign earnings.

Yup. They're kind of screwed. We know that the inflation is imported and temporary whereas we know that wage rises tend to be permanent and therefore will be long term inflationary.

I think the real failing is that they failed to stage manage matters credibly. They should have given modest rises and bumped them up with temporary bonuses delivered so that they were absorbed by the temporary inflationary issues while not being scared to place modest taxation where it could be most easily absorbed. As someone mooted earlier they could have done this during the end of Covid and branded it under patriotism

[ooid]

crypto dudes will love this

A UK developer backed by Hong Kong billionaire Henry Cheng Kar-shun is planning to raise as much as £140 million (US$171.4 million) via a tokenisation plan, allowing individual investors to share the income from a residential tower in central London.

https://sg.news.yahoo.com/uk-developer-backed-hong...

[Mr Whippy]

ooid said:

crypto dudes will love this

A UK developer backed by Hong Kong billionaire Henry Cheng Kar-shun is planning to raise as much as £140 million (US$171.4 million) via a tokenisation plan, allowing individual investors to share the income from a residential tower in central London.

https://sg.news.yahoo.com/uk-developer-backed-hong...

I suppose the key question is, what is the tower worth, and what’s the expected rental yield @ 80pc?

£140,000,000 / 0.8 sounds like an expensive tower!

£1,400 of REIT in an S&S ISA seems a better idea.

[ooid]

Mr Whippy said:

£1,400 of REIT in an S&S ISA seems a better idea.

I hardly think, any sophisticated investor that would invest in REITS like Derwent, GPE or LandSec would consider Knight Dragon "tokens" for future earnings of their central London tower.....

[BobToc]

PeteinSQ said:

Jeremy Grantham warns that the stock market is going to implode and it could be like 1929 all over again.

https://www.bloomberg.com/news/articles/2021-01-05...

Assuming you agree with his assesment, what can you do to mitigate against this risk?

Edited by PeteinSQ on Thursday 7th January 14:45

Who knows whether we go up or down from here, but it’s interesting to me that despite the recent fall the S&P 500 is basically only back to the level it was when Grantham made this forecast (and there’s probably been a 2-3% dividend yield along the way).

[DonkeyApple]

BobToc said:

PeteinSQ said:

Jeremy Grantham warns that the stock market is going to implode and it could be like 1929 all over again.

https://www.bloomberg.com/news/articles/2021-01-05...

Assuming you agree with his assesment, what can you do to mitigate against this risk?

Edited by PeteinSQ on Thursday 7th January 14:45

Who knows whether we go up or down from here, but it’s interesting to me that despite the recent fall the S&P 500 is basically only back to the level it was when Grantham made this forecast (and there’s probably been a 2-3% dividend yield along the way).

Given he said this 18 months ago and with a U.S. centric perspective he has arguably been proven right? The reckless gambling stocks have handed their speculators their own arses.

[BobToc]

DonkeyApple said:

Given he said this 18 months ago and with a U.S. centric perspective he has arguably been proven right? The reckless gambling stocks have handed their speculators their own arses.

Maybe, although when I think of a “fully-fledged epic bubble” bursting I’m not sure I have “basically flat over 18 months” in mind. I haven’t gone back to check if he was making a specific comment on the NASDAQ, or an even narrower focus on a basket of loss-making tech companies, but I’m a little sceptical that we’d have seen the bursting of an epic bubble as a flat S&P or VTI.

[BobToc]

Or maybe put slightly differently, I’m not sure the performance of GMO’s US equities fund since this call makes a particularly strong case for it.

[Derek Chevalier]

BobToc said:

PeteinSQ said:

Jeremy Grantham warns that the stock market is going to implode and it could be like 1929 all over again.

https://www.bloomberg.com/news/articles/2021-01-05...

Assuming you agree with his assesment, what can you do to mitigate against this risk?

Edited by PeteinSQ on Thursday 7th January 14:45

Who knows whether we go up or down from here, but it’s interesting to me that despite the recent fall the S&P 500 is basically only back to the level it was when Grantham made this forecast (and there’s probably been a 2-3% dividend yield along the way).

S&P is 5% up over 12 months (total return in GBP)

[emicen]

Mr Whippy said:

ooid said:

crypto dudes will love this

A UK developer backed by Hong Kong billionaire Henry Cheng Kar-shun is planning to raise as much as £140 million (US$171.4 million) via a tokenisation plan, allowing individual investors to share the income from a residential tower in central London.

https://sg.news.yahoo.com/uk-developer-backed-hong...

I suppose the key question is, what is the tower worth, and what’s the expected rental yield @ 80pc?

£140,000,000 / 0.8 sounds like an expensive tower!

£1,400 of REIT in an S&S ISA seems a better idea.

20% retained ownership, let’s suspect any controlling vote in decision making also.

80% ownership via tokens, an instrument with no real legal definition afaik in law which makes actual rights very hard to establish.

Sounds like a great opportunity.

[BobToc]

Derek Chevalier said:

S&P is 5% up over 12 months (total return in GBP)

Yeah, although to DA’s point Grantham was making a point about US markets and cable has flattered that somewhat from our parochial perspective.

[Derek Chevalier]

BobToc said:

Derek Chevalier said:

S&P is 5% up over 12 months (total return in GBP)

Yeah, although to DA’s point Grantham was making a point about US markets and cable has flattered that somewhat from our parochial perspective.

Yep, sometimes our faltering £ has some benefits

[Derek Chevalier]

bhstewie said:

loafer123 said:

Surely the reason is that most people have over half their net worth in the family home, and then once you dilute with bond returns, the remaining equity exposure has too much work to do?

I don't know if the studies (like Dalbar) take homes into account but honestly I'm pretty sure it's as simple as bad decision making around jumping in and out of asset classes and trying to time the market.

Versus stick it in a global tracker or 60/40 and pretty much get an average of around 7%

You see it on here where people are asking about the current "favourite" fund or whatever else it might be.

You don't see many people who just stick the lot in a tracker and then ps off and don't look for 20 years.

https://portfolio-adviser.com/half-time-scores-how-the-investment-industry-is-faring-in-2022/

This market malaise has hit even the most established fund groups. May’s Morningstar data shows Aviva, BlackRock, and Baillie Gifford each recorded outflows of £1bn or more. Even the UK’s largest fund, the £23.7bn Fundsmith Equity fund was not immune and recorded £622m of outflows – its largest monthly outflows on record.

[BobToc]

Derek Chevalier said:

Yep, sometimes our faltering £ has some benefits

I noticed it in 2009, but having seen it again in this market I’m definitely appreciating dollar strength in times of market weakness softening the blow a little!

[DonkeyApple]

emicen said:

20% retained ownership, let’s suspect any controlling vote in decision making also.

80% ownership via tokens, an instrument with no real legal definition afaik in law which makes actual rights very hard to establish.

Sounds like a great opportunity.

The real genius has got to be borrow £140m at a rate that is permanently fixed at 80% of net, net yield from people you'll never, ever have to repay nor foreclose. And all with very little oversight.

Beats having to borrow from banks with their pesky due diligence, valuations, market rates and expecting to get their money back.

And while the view from the punters' perspective might look even more daft than a P2P proposition, by tapping the crypto punter segment the view probably looks pretty good as a coin backed by a pile of concrete too heavy for someone to wire to a Cayman bank account.

[Jon39]

Derek Chevalier said:

https://portfolio-adviser.com/half-time-scores-how...

Wonder if there might be a topic on here - 'What was your 2022 half-time score ?'
If so, I had better post. Goodness knows where we might be, at the end of 2022.
The market just snicked a close win over me last week, but it is a lap down.

Rather a sloppy headline for Portfolio Adviser.
You would think a portfolio adviser, ought to be paying careful attention to accuracy.

They published their report last week.
Half-time scores will not be known, until the close of business this coming Thursday, 30th June 2022.



Interesting that they report big withdrawals from funds. Presumably by people seeing declining values. Hope not buyng high selling low.

[Mr Whippy]

What’s worse?

Buying high. Selling low.
Selling lower.
Waiting a decade to break even.

I’d argue that selling low and buying lower is a good way to neutralise the loss into a market bottom (assuming that transpires).


Inflation still hot, risky geopolitics. CBs still targeting record levels of moves towards tightening, and actually tightening faster as time passes.
QT starting to kick in.


Only a massive optimist would want to stay in, if they’d bought at recent highs… imo.

[BobToc]

Selling low and watching markets climb for potentially years while you wait in vain for the price to the level you’ve convinced yourself you’d buy at is also a possibility.