...makes ya think..? Geographical weighting
Discussion
Don't look at the lending behind those stocks then.
Most of those 'equities' have reduced themselves to just being debt plays.
More concerning is how would the U.K. possibly survive any U.S. tech equity bursting that was sufficient to trigger the debt default of the lenders?
It's the biggest potential mess since the GFC and looks to be magnitudes larger and well beyond supporting prime banks. What corner can actually escape the lending exposure if the margin calls began?
Swiss index was always the equity hedge for tech.
There are loads of ETFs that track other sectors and/or other geographies.
e.g.
- FTSE Developed Europe ex UK
- MSCI EM Latin America
- MSCI Emerging Markets ex China
- MSCI Europe Consumer Staples
- MSCI Japan
- MSCI World Industrials
- S&P500 Materials
- S&P US Consumer Staples
- STOXX Europe 600 Industrial Goods & Services
Or, with "no trading fees" platforms, you can just pick a basket of individual stocks.
e.g.
- FTSE Developed Europe ex UK
- MSCI EM Latin America
- MSCI Emerging Markets ex China
- MSCI Europe Consumer Staples
- MSCI Japan
- MSCI World Industrials
- S&P500 Materials
- S&P US Consumer Staples
- STOXX Europe 600 Industrial Goods & Services
Or, with "no trading fees" platforms, you can just pick a basket of individual stocks.
DonkeyApple said:
Don't look at the lending behind those stocks then.
Or Circular Funding For anyone even slightly interested in valuations, earnings concentration, circular funding etc listen to this from onwards https://youtu.be/SJY64rmbiNQ?t=1959
Most of my ETFs are of the global equity MSCI/FTSE variety. Even though I could 'diversify' by using an ex-USA etf + US+ regional/sector tilts wouldn't the rest of the global equities market be impacted too? That's the part I question...whether the additional faff and trading fees incurred diversifying will actually help during a significant event....
Edited by VR99 on Thursday 27th August 11:39
Honestly, unless you are willing to take an active approach and move back to a global weighting if/when a fall comes, I wouldn’t bother. All/most equity indexes will initially take a fisting if the US takes one, the difference might be in the recovery. If you’re going to diversify do it into other assets / cash.
VR99 said:
Most of my ETFs are of the global equity MSCI/FTSE variety. Even though I could 'diversify' by using an ex-USA etf + US+ regional/sector tilts wouldn't the rest of the global equities market be impacted too?
Yes... but.... So much of the US market is driven by AI and tech company hype (will increase when OpenAI and Anthropic go public), then the US index is becoming a big bet on AI and computing. If this proves to be a bubble, or not as profitable as expected, those valuations are going to get hammered a lot more so than (say) Tesco or Vodafone which, AI or no AI will have similar future earnings (in theory).
By buying ex-US ETFs you're reducing your exposure to AI. Obviously there will be some impact - South Korea is another market very heavily exposed to AI - but in theory any correction will be much less. Any correction is unlikely to cause 2008 style repercussions around the world, and the market will very quickly reallocate capital to where it is most efficient.
The flip side is obviously if AI does transform the world and generates trillions in value for the labs, chip suppliers and hardware owners then you miss out on most of that gain.
I've been investing in a private pension for 25 years now, taking a fairly standard approach, as a layman, low cost, trackers etc... I started work in 1996 and started my private pension just as the dot com boom happened.
I've never been more confused about what to do, ive got a younger colleague who's banking on his crypto and "Pelosi" tracker returning double digits for the foreseeable future, I'm watching media commentators/experts like Patrick Boyle being fairly non commital on the real AI bubble risk
https://youtu.be/wTiYaWFP59Q?is=mrdE6tg8mEHaLT_6
Meta's business model is falling apart and could well be litigated into oblivion, social media looks to be on the slide and my gut is telling me to run for the hills and move everything into cash as the whole world is going to burn...
America is politically and socially increasingly unstable, the man in charge is a grade A lunatic, where the feck are these valuations coming from? Even if AI provides the efficiencies it promises I just can't see how the valuations make any sense.
Anyway, nevermind.
I've never been more confused about what to do, ive got a younger colleague who's banking on his crypto and "Pelosi" tracker returning double digits for the foreseeable future, I'm watching media commentators/experts like Patrick Boyle being fairly non commital on the real AI bubble risk
https://youtu.be/wTiYaWFP59Q?is=mrdE6tg8mEHaLT_6
Meta's business model is falling apart and could well be litigated into oblivion, social media looks to be on the slide and my gut is telling me to run for the hills and move everything into cash as the whole world is going to burn...
America is politically and socially increasingly unstable, the man in charge is a grade A lunatic, where the feck are these valuations coming from? Even if AI provides the efficiencies it promises I just can't see how the valuations make any sense.
Anyway, nevermind.
ColinsCornflakes said:
I've never been more confused about what to do,
If its any consolation I put all my savings (ie not pension), into cash about 15/18 months ago just after Trump took office, and it's easily cost me 15-20%, which while not a life changing sum of money, would have bought a new motorbike or decent second hand car! If you're likely to need it then take the money off the table, if you can wait for the wheel to turn then leave the money in and ride the ups and downs. Time in the market beats timing the market.
MadCaptainJack said:
There are loads of ETFs that track other sectors and/or other geographies.
e.g.
- FTSE Developed Europe ex UK
- MSCI EM Latin America
- MSCI Emerging Markets ex China
- MSCI Europe Consumer Staples
- MSCI Japan
- MSCI World Industrials
- S&P500 Materials
- S&P US Consumer Staples
- STOXX Europe 600 Industrial Goods & Services
Or, with "no trading fees" platforms, you can just pick a basket of individual stocks.
There's always a trading fee. And if the broker doesn't tell you what it is then it's bigger than most realise. e.g.
- FTSE Developed Europe ex UK
- MSCI EM Latin America
- MSCI Emerging Markets ex China
- MSCI Europe Consumer Staples
- MSCI Japan
- MSCI World Industrials
- S&P500 Materials
- S&P US Consumer Staples
- STOXX Europe 600 Industrial Goods & Services
Or, with "no trading fees" platforms, you can just pick a basket of individual stocks.
The problem with sectoral ETFs is working out their dollar, IT/AI, US capital market or raw material exposures. It's genuinely difficult these days.
Whats MSCI's exposure to the yen carry trade if that breaks down further? What's the MSCI EM LatAm link to Trump political ownership of more SA nations?
We can get more and more clever with our diversification and firstly it taking up vastly more time than it warrants but worse end up doing a Leopold Aschenbrenner and think we are hedging or diversify when in reality we are amplifying.
There are just too many systemic risk spikes that have gone into play. National debts and bond issues, yield spikes, dollar hegemony, energy, the splitting of global influences, the boomer asset release, the political instability of Millenials and GenZ, the U.S. reneging on its global protection in exchange for trade set up. It's a mad time where the catalyst for a rebasing could literally come from almost any direction and frankly I think it is close to impossible to diversify or hedge within traditional markets and be getting it right.
As such the only logical play is to just reduce exposure to these markets to compensate for the elevated risk and this is probably what professionals have been doing as BTC and gold have been rising. People are derisking but not into traditional cash equivalents as there is also a bond crisis building and a currency crisis which is frankly an unbelievable situation. Equity, bonds and currencies all risk spiking simultaneously. I'd wager that land values are also rising in key markets as soil is as good a hedge against this situation as anything else, possibly even the best?
thekingisdead said:
Unless you re planning to drawdown within 5yrs (in which case 100% equities seems aggressive) then the safest bet is usually to stay invested and ride the storm (that may never happen)
IMO
Yes. However, the depth of potential contagion in the markets right now is so immense that a 5 year time horizon is probably far too short. And moving into bonds is a messy call for those investors who should be doing that as part of derisking in late stage retirement. You could come out of some equities and bonds and into cash but then you have the dollar debasement risk on the cash. IMO
In short, it is a f
king mess and all the fault of the retired who have spent a lifetime voting for less taxation and more national debt for kids. They were only doing what anyone else would do presented with the same options but it is why we are here and also why we have the mad political instability of a Jimmy Saville type punter in the WH and some financial scamming door knocker and part time bin wrestler gobbing off in the U.K. with identikit fraudsters being voted up by the moron collective of numerous nations. ColinsCornflakes said:
Meta's business model is falling apart and could well be litigated into oblivion, social media looks to be on the slide and my gut is telling me to run for the hills and move everything into cash as the whole world is going to burn...
I had move a chunk of my sipp into cash, but now put it back into funds. The value of fiat currencies has plummeted and with unsustainable national debts, the money printers have been busy. We now have the US creating short term debt to buy it's long term debt, that others won't touch. The truly wealthy don't have cash, so assets is probably the better protection. But I totally agree, it's so difficult to know what to do for the best.
DonkeyApple said:
and frankly I think it is close to impossible to diversify or hedge within traditional markets and be getting it right.
I think you're right. There's too many mixed signals atm but ultimately all point to a big problem.What are you invested in DA? If i recall you were heavy in the FTSE100 index?
It's IMO misleading to take that chart at face value. Comparing USA with other individual countries doesn't paint a realistic picture. You need to compare, for instance, the whole Eurozone.
Even within that big USA bar on the chart a massive amount of the value lives in just 20 companies. NVIDIA's market value rose nearly $450billion yesterday. That's a lot of belief being deployed at the Church of Wall Street in just one day. Can I get a witness?
Even within that big USA bar on the chart a massive amount of the value lives in just 20 companies. NVIDIA's market value rose nearly $450billion yesterday. That's a lot of belief being deployed at the Church of Wall Street in just one day. Can I get a witness?
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