Gold - worthwhile in the current climate? (LTD Co)

[Derek Chevalier]

BorkBorkBork said:

[As I’ll reiterate, I see it as an hedge mainly against stagflation. We’re not there yet, but it depends if you think stagflation is less or more likely. Like all investments, there’s no certainty either way.

Agreed there's no certainty. I'll put something up on the sustainable withdrawal thread on the impact of gold on the portfolio during the 70s and beyond.

[Derek Chevalier]

Scootersp said:

When it's surged in the past, mustn't it mean that people, funds etc rotate into it rebalance their portfolio? ie en masse those that have none or already have some buy into it more?

That to me wouldn't be rebalancing (assuming I've understood what you are saying). When something goes up in price you would tend to sell to keep the % constant.

I'd see it more as performance chasing.

Edited to add: My belief is that portfolios should be designed from the outset to work reasonably in as many scenarios as possible, and other than periodic rebalancing, tinkering should be kept to a minimum.

Focusing on one potential outcome (e.g. stagflation/inflation etc) to the detriment of 95% of the other scenarios might not be optimal.

Edited by Derek Chevalier on Friday 1st July 09:45

[Scootersp]

Derek Chevalier said:

That to me wouldn't be rebalancing (assuming I've understood what you are saying). When something goes up in price you would tend to sell to keep the % constant.

I'd see it more as performance chasing.

Edited to add: My belief is that portfolios should be designed from the outset to work reasonably in as many scenarios as possible, and other than periodic rebalancing, tinkering should be kept to a minimum.

Focusing on one potential outcome (e.g. stagflation/inflation etc) to the detriment of 95% of the other scenarios might not be optimal.

Edited by Derek Chevalier on Friday 1st July 09:45

Performance chasing must in part be what all these funds do to a degree? Their efforts to get returns makes their fund attractive and 'safe/steady/low volatility' for us, their skills/wisdom we can be 'sold' and they get their slice. One mans tinkering is perhaps another's performance chasing?

I spose what I'm saying from my inexperienced view is I've heard of the old 60:40 split, then you have index trackers, so Dow/FTSE etc and then you drift down to funds that range from very broad holdings to those with more and more specificity ie towards that growth fund a US lady runs (name of both escape me) that has been very volatile.

My argument would be that a fund, does rebalance between some sectors, it can't rest on it's laurels can it? It must look for value to buy and overextended stuff to sell?

[isleofthorns]

how about using the cash to fund a sass / sip and then buy gold based etfs or gold mining stocks.

at least this way you'll get a value uplift on day 1 rather than a value loss buying physical.

[Derek Chevalier]

Scootersp said:

Derek Chevalier said:

That to me wouldn't be rebalancing (assuming I've understood what you are saying). When something goes up in price you would tend to sell to keep the % constant.

I'd see it more as performance chasing.

Edited to add: My belief is that portfolios should be designed from the outset to work reasonably in as many scenarios as possible, and other than periodic rebalancing, tinkering should be kept to a minimum.

Focusing on one potential outcome (e.g. stagflation/inflation etc) to the detriment of 95% of the other scenarios might not be optimal.

Edited by Derek Chevalier on Friday 1st July 09:45

Performance chasing must in part be what all these funds do to a degree? Their efforts to get returns makes their fund attractive and 'safe/steady/low volatility' for us, their skills/wisdom we can be 'sold' and they get their slice. One mans tinkering is perhaps another's performance chasing?

I spose what I'm saying from my inexperienced view is I've heard of the old 60:40 split, then you have index trackers, so Dow/FTSE etc and then you drift down to funds that range from very broad holdings to those with more and more specificity ie towards that growth fund a US lady runs (name of both escape me) that has been very volatile.

My argument would be that a fund, does rebalance between some sectors, it can't rest on it's laurels can it? It must look for value to buy and overextended stuff to sell?

Valid points. It really depends on which viewpoint you are taking - the success of the fund or the investor. I posted on this previously - if an active fund manager created a well-diversified portfolio that broadly followed the markets and sat mid-table in the performance rankings, it's unlikely to attract the same level of investor flow as a fund that held a concentrated position/performance chased and got lucky (for a while).

[paddy1970]

Go and see a financial advisor. They will be able to advise how to invest in a diversified portfolio that match your personal circumstances. This is not the time to invest randomly. There are great opportunities at the moment but you could loose a lot of money too. Definitely don't invest on PH recommendations...

[TobyTR]

such high volatility from Gold this year...

[Derek Chevalier]

TobyTR said:

such high volatility from Gold this year...

Not sure it's too dissimilar to relative historical levels - much higher than global bonds and a tad more than global equities (annualised vol over last 6 months). Am I misunderstanding your point?

[TobyTR]