S&P500 at record highs - time to stay in or pull out?
Discussion
Inflation is the process of prices going up right?
Which affects earnings and profits and company valuations
So without trying to pick individual winners, the value of the market as a whole should be considered to be essentially index linked
So global trackers should take account of inflation
Then you have growth in the global gdp from general development, advances in tech and engineering, the growth of the global population etc.
So it seems to me that a global tracker is essentially an index linked bet on humanity as a whole.
Viewed like that it seems a pretty reasonable place to park your money for the long term.
Which affects earnings and profits and company valuations
So without trying to pick individual winners, the value of the market as a whole should be considered to be essentially index linked
So global trackers should take account of inflation
Then you have growth in the global gdp from general development, advances in tech and engineering, the growth of the global population etc.
So it seems to me that a global tracker is essentially an index linked bet on humanity as a whole.
Viewed like that it seems a pretty reasonable place to park your money for the long term.
Edited by anonymous-user on Saturday 16th May 11:48
Inlineonline said:
So it seems to me that a global tracker is essentially an index linked bet on humanity as a whole.
Viewed like that it seems a pretty reasonable place to park your money for the long term.
I would argue its a bet on capitalism, not a bet on humanity as a whole. Viewed like that it seems a pretty reasonable place to park your money for the long term.
Arguably the reasons valuations are so detached from reality is that capitalism has become detached from reality. You have companies making decent profits as American's are increasing their credit card debts to simply pay for food and fuel. The growth in wealth is concentrated very much in the top 1%, while those on lower incomes are seeing their living standards fall.
Inlineonline said:
Inflation is the process of prices going up right?
Which affects earnings and profits and company valuations
So without trying to pick individual winners, the value of the market as a whole should be considered to be essentially index linked
So global trackers should take account of inflation
Then you have growth in the global gdp from general development, advances in tech and engineering, the growth of the global population etc.
So it seems to me that a global tracker is essentially an index linked bet on humanity as a whole.
Viewed like that it seems a pretty reasonable place to park your money for the long term.
This is broadly my view too. Inflation is bad for stocks in the short term (I think that’s general consensus) but long term how can it be? Everything a company does inflates. Including its costs of course but also its valuation. Profits, etc as you sayWhich affects earnings and profits and company valuations
So without trying to pick individual winners, the value of the market as a whole should be considered to be essentially index linked
So global trackers should take account of inflation
Then you have growth in the global gdp from general development, advances in tech and engineering, the growth of the global population etc.
So it seems to me that a global tracker is essentially an index linked bet on humanity as a whole.
Viewed like that it seems a pretty reasonable place to park your money for the long term.
Edited by Inlineonline on Saturday 16th May 11:48
Condi said:
I would argue its a bet on capitalism....
Agreed, although let's not forget that back in the 1920s (and/or 1970s) people made bets on "capitalism" and got taken to the cleaners. There are are no prizes for 100 or 50 years later saying it all worked out fine in the end. Many people had their financial lives completely destroyed by the downturns and humans have a strictly limited lifespan.I can't help thinking the "blind following the blind" approach to investment is a bit like putting a bet on every horse in a horse race and saying "I'm bound to be on the winner".
As always, don't get me started on Premium Bonds. "Well, it might be gambling but at least you don't lose your stake". No, your stake just gets eaten by inflation which is pretty much the same thing as losing it.
Relentless diversification has served me well. And I don't consider buying a simple index or market to be diversification.
Panamax said:
Condi said:
I would argue its a bet on capitalism....
Agreed, although let's not forget that back in the 1920s (and/or 1970s) people made bets on "capitalism" and got taken to the cleaners. There are are no prizes for 100 or 50 years later saying it all worked out fine in the end. Many people had their financial lives completely destroyed by the downturns and humans have a strictly limited lifespan.I can't help thinking the "blind following the blind" approach to investment is a bit like putting a bet on every horse in a horse race and saying "I'm bound to be on the winner".
As always, don't get me started on Premium Bonds. "Well, it might be gambling but at least you don't lose your stake". No, your stake just gets eaten by inflation which is pretty much the same thing as losing it.
Relentless diversification has served me well. And I don't consider buying a simple index or market to be diversification.
Because they speculated on margin.
That’s a sure fire way to lose
Panamax said:
Agreed, although let's not forget that back in the 1920s (and/or 1970s) people made bets on "capitalism" and got taken to the cleaners.
Fancy a bet on "socialism"?Has anyone tried to escape from a capitalist country to socialist one? (And that reminds me of the one where the top East German pole-vaulter suddenly became the top West German pole-vaulter...)
Simpo Two said:
Fancy a bet on "socialism"?
Not for me, thanks.If you fancy a socialist gamble, you can punt your 50p on either Wes "EU" Streeting or Andy "Brexit" Burnham. In this particular instance my diversification strategy suggests "none of the above".
We'll need some decent investment returns to pay their increased taxes whichever way the cookie crumbles.
Panamax said:
... Relentless diversification has served me well. And I don't consider buying a simple index or market to be diversification.
Obvious diversification is an easy sell, when the investment funds advertise.
"Oh you need a fund in USA, Europe and one in the exciting Emerging Markets."
The buyers say sign me up to all three funds, without even considering how dreadfully the 'emerging markets' have performed.
Real but far less obvious diversification, are the huge FTSE 100 businesses, which trade in over 160 countries around the world. Wide geographic and currency diversification, within just a single company.
A tracker fund is a very sensible starting point, but for the long-term big money, some individual selection becomes necessary, as investors become more experienced.
Even selecting sectors is not that difficult. My starting point for a life without requiring many portfiolio changes, was simply to avoid the cyclical sectors. I have made one exception though - Oil and Gas. The managements of those businesses have shown that they are able to manage the regular downturns and keep dividends flowing.
Here are three examples.
Edited by Jon39 on Monday 18th May 09:46
“ A tracker fund is a very sensible starting point, but for the long-long-term big money, some individual selection becomes necessary, as investors become more experienced”
Can you elaborate here? I think it’s completely incorrect but happy to understand why I may be wrong. Perhaps our versions of big money differ but I still fail to see how something that works at one level doesn’t at another.
Can you elaborate here? I think it’s completely incorrect but happy to understand why I may be wrong. Perhaps our versions of big money differ but I still fail to see how something that works at one level doesn’t at another.
okgo said:
A tracker fund is a very sensible starting point, but for the long-long-term big money, some individual selection becomes necessary, as investors become more experienced
Can you elaborate here? I think it s completely incorrect but happy to understand why I may be wrong. Perhaps our versions of big money differ but I still fail to see how something that works at one level doesn t at another.
Agreed entirely.Can you elaborate here? I think it s completely incorrect but happy to understand why I may be wrong. Perhaps our versions of big money differ but I still fail to see how something that works at one level doesn t at another.
simon800 said:
Jon39 said:
A tracker fund is a very sensible starting point, but for the long-term big money, some individual selection becomes necessary, as investors become more experienced.
DaveA8 said:
simon800 said:
Jon39 said:
A tracker fund is a very sensible starting point, but for the long-term big money, some individual selection becomes necessary, as investors become more experienced.
PeteTaylor99 said:
DaveA8 said:
simon800 said:
Jon39 said:
A tracker fund is a very sensible starting point, but for the long-term big money, some individual selection becomes necessary, as investors become more experienced.
okgo said:
A tracker fund is a very sensible starting point, but for the long-long-term big money, some individual selection becomes necessary, as investors become more experienced
Can you elaborate here? I think it s completely incorrect but happy to understand why I may be wrong. Perhaps our versions of big money differ but I still fail to see how something that works at one level doesn t at another.
Me too.Can you elaborate here? I think it s completely incorrect but happy to understand why I may be wrong. Perhaps our versions of big money differ but I still fail to see how something that works at one level doesn t at another.
Are you saying that you can predict the markets?
In which case why bother with a tracker at all, actively pick your entire portfolio surely?
Except we know that the vast majority of amateur and professional stock pickers do worse this way.
What does the size of the investment have to do with any of this?
Genuinely curious. I'm pretty experienced, but sanguine about my ability to beat the historical stats.
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