Your questions answered Vol 2 - IM Private Clients

[AdamIM]

pingu393 said:

I don't think anyone invested with IM will get wiped out.

There may be individual companies within particular portfolios that are wiped out, but their demise will be protected by the others.

It's just a case of whether one considers a 25% loss and a 5 year recovery to be a wipe-out.

My particular problem with IM at the moment is that NOWHERE is safe, other than cash. I would expect the most defensive to be in the range +/- 2%, but IM Optimum Defensive has lost 5.62% and IM Index 20 has lost 6.89% in the last 12 months.

Are defensive portfolios usually this volatile?

http://private-client.intelligentmoney.com/perform...

Hi Pingu

Under the majority of market conditions Equity and Bonds are negatively correlated. The one exception is where there is excessive inflation and raising rates, in theory cause fear that earnings will be reduced whether demand lead or via additional cost(or both). And of course higher rates compress the price of Bonds due to the yield increasing. The result is heavily weighted Bond funds also fall. I would say that we have rebalanced to shorter dated Bonds over the recent months to mitigate the impact. And it is also worth noting that any daily market price is simply the implied yield valuation. If a bond is held to maturity and paid by the issuer then you still receive all of the interest and capital.

[Ron-ski]

Simpo Two said:

I think that part of an investment strategy should include selling to cash - just as PHR did. I appreciate cash is not much of an investment just now, but there will be times in the ups and downs when it's a good place to be. In fact, if markets are down 20% and cash is only 'down' 10% then that makes cash less of a loss. Which do you prefer, 10% loss or 30% loss?

But cash isn't down, just its buying power is down. If I had £150k stuffed under the mattress on the first January, I'd still have £150k, presuming it hadn't been stolen.

If I had £150k of investments, then it would now be worth circa £127,500, 18% loss, and then factor inflation.

Your right, I'd much rather have been holding cash since the start of the year, but with my lack I wouldn't get back in and miss the best of the rises.

[Simpo Two]

Ron-ski said:

But cash isn't down, just its buying power is down.

Same thing IMHO.

With 10% inflation and investment growth of zero, your £100 is effectively £90.

With zero inflation and investment fall of 10%, your £100 is also £90.

I see inflation and growth as pulling in opposite directions. For example, inflation 10%, growth 10% - they cancel out, you're back where you started. People can dress it up with as many fancy words as they like, but ATEOTD it's the bottom line that counts.


IIRC I predicted 10% some while back. Do I win a teddy bear? I'm going for 14% by year end.

[Carbon Sasquatch]

Simpo Two said:

Same thing IMHO.

With 10% inflation and investment growth of zero, your £100 is effectively £90.

With zero inflation and investment fall of 10%, your £100 is also £90.

I see inflation and growth as pulling in opposite directions. For example, inflation 10%, growth 10% - they cancel out, you're back where you started. People can dress it up with as many fancy words as they like, but ATEOTD it's the bottom line that counts.


IIRC I predicted 10% some while back. Do I win a teddy bear? I'm going for 14% by year end.

I agree - except that investments have had negative growth

So your investment is down by 10% - it's worth £90 and then factor 10% inflation and it's effectively £80-81.

Whereas the purchasing power of cash is still equivalent to £90

[leef44]

Carbon Sasquatch said:

Simpo Two said:

Same thing IMHO.

With 10% inflation and investment growth of zero, your £100 is effectively £90.

With zero inflation and investment fall of 10%, your £100 is also £90.

I see inflation and growth as pulling in opposite directions. For example, inflation 10%, growth 10% - they cancel out, you're back where you started. People can dress it up with as many fancy words as they like, but ATEOTD it's the bottom line that counts.


IIRC I predicted 10% some while back. Do I win a teddy bear? I'm going for 14% by year end.

I agree - except that investments have had negative growth

So your investment is down by 10% - it's worth £90 and then factor 10% inflation and it's effectively £80-81.

Whereas the purchasing power of cash is still equivalent to £90

or put it simply, you are holding £100 and you are going to use it to purchase equity in the near future.
Equity was £100 and has now dropped to £90 and then you buy it.
You are clearly £10 better off.

[Simpo Two]

Carbon Sasquatch said:

I agree - except that investments have had negative growth

So your investment is down by 10% - it's worth £90 and then factor 10% inflation and it's effectively £80-81.

Whereas the purchasing power of cash is still equivalent to £90

Yes, another scenario of what I posted.

leef44 said:

or put it simply, you are holding £100 and you are going to use it to purchase equity in the near future.
Equity was £100 and has now dropped to £90 and then you buy it.
You are clearly £10 better off.

That suggests that if I spend all my cash on equities today, I will be better off. For that to happen, cash will have to continue to fall (which it will) and equities stop falling (who knows?). It all depends on how the lines cross and when you jump.

I suppose inflation is easier to predict in the short/medium term than equities, which get the shivers if somebody in the world farts.

[AdamIM]

Hi all,

A distraction from discussing inflation

Polestar will likely list tomorrow(Friday) via the Special Purpose Acquisition Coy (GGPI) which we hold within the PHT portfolio.

Polestar is an interesting EV manufacturer which has received high praise from the motoring industry. They have a full order book and a long pipeline of new vehicles. Unlike most manufacturers in this segment, the company is producing and selling a lot of vehicles, now and they have the full support of their Parent Geely and sister subsidiaries Volvo from whom they leverage know-how and manufacturing capacity.

We also like the fact that they have partnered with Nvidia to source all Self-Drive architecture, digital assistant and infotainment systems.
Polestar is revealing one concept and another pre production car at Goodwood today.



On PH home page
https://www.pistonheads.com/news/electric-vehicles...

Edited by AdamIM on Thursday 23 June 10:15

[Ron-ski]

Whichever way you look at it I would have been better off holding cash for the last six months. The buying power of cash has decreased, but investments have decreased far more, and ultimately my investments are to fund my future retirement, and thus will need to be turned into cash, so the buying power of those investments have been eroded by both inflation, and their decrease in value.

The only place where the buying power of cash has increased, is the quantity of shares you can buy with it.

Ultimately we hope the market recovers, and out performs inflation, but all the time markets are loosing money faster than inflation surely cash is better, the catch comes to when you put it back in, which is why I'm still invested.

[leef44]

AdamIM said:

Hi all,

A distraction from discussing inflation

Polestar will likely list tomorrow(Friday) via the Special Purpose Acquisition Coy (GGPI) which we hold within the PHT portfolio.

Polestar is an interesting EV manufacturer which has received high praise from the motoring industry. They have a full order book and a long pipeline of new vehicles. Unlike most manufacturers in this segment, the company is producing and selling a lot of vehicles, now and they have the full support of their Parent Geely and sister subsidiaries Volvo from whom they leverage know-how and manufacturing capacity.

We also like the fact that they have partnered with Nvidia to source all Self-Drive architecture, digital assistant and infotainment systems.
Polestar is revealing one concept and another pre production car at Goodwood today.



On PH home page
https://www.pistonheads.com/news/electric-vehicles...

Edited by AdamIM on Thursday 23 June 10:15

Thanks Adam

So GGPI is in PHT.

Excuse my ignorance, does this mean we now own Polestar who is GGPI a vehicle that provides a service to list Polestar?

[AdamIM]

leef44 said:

AdamIM said:

Hi all,

A distraction from discussing inflation

Polestar will likely list tomorrow(Friday) via the Special Purpose Acquisition Coy (GGPI) which we hold within the PHT portfolio.

Polestar is an interesting EV manufacturer which has received high praise from the motoring industry. They have a full order book and a long pipeline of new vehicles. Unlike most manufacturers in this segment, the company is producing and selling a lot of vehicles, now and they have the full support of their Parent Geely and sister subsidiaries Volvo from whom they leverage know-how and manufacturing capacity.

We also like the fact that they have partnered with Nvidia to source all Self-Drive architecture, digital assistant and infotainment systems.
Polestar is revealing one concept and another pre production car at Goodwood today.



On PH home page
https://www.pistonheads.com/news/electric-vehicles...

Edited by AdamIM on Thursday 23 June 10:15

Thanks Adam

So GGPI is in PHT.

Excuse my ignorance, does this mean we now own Polestar who is GGPI a vehicle that provides a service to list Polestar?

Yes, PHT hold a position in 'Polestar'. Technically GGPI (Gores Guggenheim) which is an entity with no commercial purpose other than.....A special purpose acquisition company (SPAC) formed strictly to raise capital through an initial public offering (IPO) or the purpose of acquiring or merging with an existing company (Polestar). Entity structures like this were used historically to fastback the IPO/listing process. Geely/Volvo owns Polestar. They will tip the assets of Polestar division into the GGPI (SPAC) entity, add some cash, form a Board of Directors and presto, Polestar emerges. Geely retain a majority stake as they are contributing the majority of assets

The structure as set allowed investors to buy the SPAC before Polstar was officially formed on the basis that 1 GGPI share will equate to 1 Polestar share, issued at $10 each. I believe Polestar will commence trading under its own steam, Friday.

[leef44]

AdamIM said:

Yes, PHT hold a position in 'Polestar'. Technically GGPI (Gores Guggenheim) which is an entity with no commercial purpose other than.....A special purpose acquisition company (SPAC) formed strictly to raise capital through an initial public offering (IPO) or the purpose of acquiring or merging with an existing company (Polestar). Entity structures like this were used historically to fastback the IPO/listing process. Geely/Volvo owns Polestar. They will tip the assets of Polestar division into the GGPI (SPAC) entity, add some cash, form a Board of Directors and presto, Polestar emerges. Geely retain a majority stake as they are contributing the majority of assets

The structure as set allowed investors to buy the SPAC before Polstar was officially formed on the basis that 1 GGPI share will equate to 1 Polestar share, issued at $10 each. I believe Polestar will commence trading under its own steam, Friday.

Thanks for the explanation

Will GGPI be used as a SPAC for other listings or is it exclusively for Polestar?

[AdamIM]

leef44 said:

AdamIM said:

Yes, PHT hold a position in 'Polestar'. Technically GGPI (Gores Guggenheim) which is an entity with no commercial purpose other than.....A special purpose acquisition company (SPAC) formed strictly to raise capital through an initial public offering (IPO) or the purpose of acquiring or merging with an existing company (Polestar). Entity structures like this were used historically to fastback the IPO/listing process. Geely/Volvo owns Polestar. They will tip the assets of Polestar division into the GGPI (SPAC) entity, add some cash, form a Board of Directors and presto, Polestar emerges. Geely retain a majority stake as they are contributing the majority of assets

The structure as set allowed investors to buy the SPAC before Polstar was officially formed on the basis that 1 GGPI share will equate to 1 Polestar share, issued at $10 each. I believe Polestar will commence trading under its own steam, Friday.

Thanks for the explanation

Will GGPI be used as a SPAC for other listings or is it exclusively for Polestar?

The legal entity will change its name to Polestar Automotive.

[Mr Whippy]

Simpo Two said:

Ron-ski said:

But cash isn't down, just its buying power is down.

Same thing IMHO.

With 10% inflation and investment growth of zero, your £100 is effectively £90.

With zero inflation and investment fall of 10%, your £100 is also £90.

I see inflation and growth as pulling in opposite directions. For example, inflation 10%, growth 10% - they cancel out, you're back where you started. People can dress it up with as many fancy words as they like, but ATEOTD it's the bottom line that counts.


IIRC I predicted 10% some while back. Do I win a teddy bear? I'm going for 14% by year end.

Not this again.

If your cash is to buy stocks/shares, then all that matters is stock/share 'inflation'... which is negative right now. Or deflationary.


Goods/services inflation/deflation /= asset price inflation/deflation.


Now if you have a load of cash sat there, and you're thinking 911 Turbo or stocks/shares... then yes maybe the rate of inflation is important.

But given 911 Turbo are more like an asset than a CPI comparable good/service, it's probably reasonable to expect 911 Turbo prices to drop shortly too.

[pingu393]

Mr Whippy said:

Simpo Two said:

Ron-ski said:

But cash isn't down, just its buying power is down.

Same thing IMHO.

With 10% inflation and investment growth of zero, your £100 is effectively £90.

With zero inflation and investment fall of 10%, your £100 is also £90.

I see inflation and growth as pulling in opposite directions. For example, inflation 10%, growth 10% - they cancel out, you're back where you started. People can dress it up with as many fancy words as they like, but ATEOTD it's the bottom line that counts.


IIRC I predicted 10% some while back. Do I win a teddy bear? I'm going for 14% by year end.

Not this again.

If your cash is to buy stocks/shares, then all that matters is stock/share 'inflation'... which is negative right now. Or deflationary.


Goods/services inflation/deflation /= asset price inflation/deflation.


Now if you have a load of cash sat there, and you're thinking 911 Turbo or stocks/shares... then yes maybe the rate of inflation is important.

But given 911 Turbo are more like an asset than a CPI comparable good/service, it's probably reasonable to expect 911 Turbo prices to drop shortly too.

Ron (posting above) has a similar mindset to me. The only reason to invest is to make cash grow into a larger amount of cash.

If you have a desire to buy something now and can afford it - buy it now. It will probably increase in price faster than your investments will, so will get further out of reach.

In the past, things were different, investments were growing faster than inflation. If you could afford a 911SC now, you could invest and hope to get a 911 Turbo in a few years.

Now if you can afford a 911 Turbo, you can invest and may be able to afford a 911SC in a few years.


Personally, I'd rather be able to afford a 911 Turbo, and invest so that I can afford to buy the 911 Turbo when I want. Now might not be convenient, but I'd like the option to buy one in the future as well.

Hence my comments about defensive funds being too volatile. I'd expect investments to keep up with, or slightly trail, inflation. Not be dropping 6% when inflation is 10%.

[tighnamara]

Mr Whippy said:

Not this again.

If your cash is to buy stocks/shares, then all that matters is stock/share 'inflation'... which is negative right now. Or deflationary.


Goods/services inflation/deflation /= asset price inflation/deflation.


Now if you have a load of cash sat there, and you're thinking 911 Turbo or stocks/shares... then yes maybe the rate of inflation is important.

But given 911 Turbo are more like an asset than a CPI comparable good/service, it's probably reasonable to expect 911 Turbo prices to drop shortly too.

What 911 turbos is dropping in price, 993.997,991,992 or all of them ?

[Ron-ski]

Simpo Two said:

Same thing IMHO.

With 10% inflation and investment growth of zero, your £100 is effectively £90.

With zero inflation and investment fall of 10%, your £100 is also £90.

But its not, if your £100 cash effectively becomes £90 cash, then your £100 investment falls to £90, you withdraw your £90 investment, but your £90 has 10% less buying power, so is effectively £81

Simpo Two said:

I see inflation and growth as pulling in opposite directions. For example, inflation 10%, growth 10% - they cancel out, you're back where you started. People can dress it up with as many fancy words as they like, but ATEOTD it's the bottom line that counts.

If inflation is 10% and growth is 10% then they cancel out, but growth is NEGATIVE, say at the end of the year my investments are down 10%, when you add inflation that's 20% difference, it only cancels out if growth is positive.

At least Pingu can see what I'm getting at.

[Simpo Two]

Ron-ski said:

Ultimately we hope the market recovers, and out performs inflation, but all the time markets are loosing money faster than inflation surely cash is better, the catch comes to when you put it back in, which is why I'm still invested.

My Department of First Principles tells me that as long as you buy for less than you sold, you're ahead. It's the inverse of the more obvious 'sell for more than you buy.' I see it as the only way to beat the roller-coaster - ie of watching 3 years' gains evaporate so you're back where you started.

As mentioned before, I would like a managed fund to view cash as a valid part of the investment mix. Because when everything else is going down, at least you're going down slower in cash. It is all very well trotting out 'Time in the markets' but we don't live for ever, and the more volatile the markets, the more the opportunities that pass by un-taken. That's what was great about PHR - a specific answer to a situation that was delivered fast enough to be useful.

Ron-ski said:

If inflation is 10% and growth is 10% then they cancel out, but growth is NEGATIVE, say at the end of the year my investments are down 10%, when you add inflation that's 20% difference, it only cancels out if growth is positive.

Yes.

Edited by Simpo Two on Thursday 23 June 19:31

[Mr Whippy]

tighnamara said:

Mr Whippy said:

Not this again.

If your cash is to buy stocks/shares, then all that matters is stock/share 'inflation'... which is negative right now. Or deflationary.


Goods/services inflation/deflation /= asset price inflation/deflation.


Now if you have a load of cash sat there, and you're thinking 911 Turbo or stocks/shares... then yes maybe the rate of inflation is important.

But given 911 Turbo are more like an asset than a CPI comparable good/service, it's probably reasonable to expect 911 Turbo prices to drop shortly too.

What 911 turbos is dropping in price, 993.997,991,992 or all of them ?

The more they made, the more they’ll fall I suppose.
Supply and demand.

PH 911T fund is required if you believe differently

[tighnamara]

Mr Whippy said:

The more they made, the more they’ll fall I suppose.
Supply and demand.

PH 911T fund is required if you believe differently

I get you , a lot of unknowns.

Better check I haven’t invested in PH 911T

[Mr Whippy]

Exactly if you’ve been averaging in for say 5 years then you’ll be doing ok.

If you bought in a big chunk during 2021, then oops.
Though I’m sure right up until a few months ago people were saying lump sums should be invested right away and it’s always better than averaging in.