r00lish67
Member of DD Central
Posts: 2,691
Likes: 4,048
|
Post by r00lish67 on Jun 18, 2020 11:04:35 GMT
The problem with crazy events is that markets don’t have time to rebalance before the shutters go down. Ratesetter liquidity freeze is a classic example. Using the EMH to price political risk is like saying nobody ever got stuck on the wrong side of the Berlin Wall as it was being built, because they could have walked across the day before. A crazy event would be Trump deciding that foreigners can’t transfer US assets out of the US. Other markets would certainly be affected, but our US assets would be effectively worthless overnight, because while it wouldn’t be expropriation as such, you would never be able to actually *use* them. Capital controls aren’t exceptional, they are rather normal, and only removed in the U.K. in 1979. I agree that weighting differently to market caps, probably loses a few % expected value over decades. But by limiting maximum per country (USA 25%, China 15% = fraction of world GDP), I ensure that the chance of there being “nothing left” in thirty years is small. It also doesn’t make any sense to use market cap weighting, when much of that represents countries with non- free markets! For example, Chinese companies might make tens of trillions of IPO’s over the next decade, financialising to match the USA - in itself, that’s just an increase of weight, not a rise in the value of your investment. You may consider it justified and rational. But you cannot ignore that the weighting you would be seeing is the policy of the CCP, not the consensus of world capital. This is a good point, I agree with that. I read somewhere that the reason the 'great value' that Emerging markets always has never seems to translate into investor returns is that all of their profit is being effectively siphoned off for other (state) purposes. At the moment though, I'm more immediately concerned with how the health of the stock market at large (in all vicinities, but yes especially the US) seems to be being made into a political football instead of a true measure of value. OK, these measures are far from perfect, but it's nonetheless rather scary that we're in the midst of a pandemic and yet Shiller PE is (as of today) 70.1% higher than average, and the Buffett indicator is ' significantly overvalued'. But as so many have observed - T.I.N.A! Cash returns are zilch, bonds don't look great either. Plus, in the case of the UK, the outlook for Sterling makes global equities still an appealing hold for me (this is more of a hedge for me rather than outright speculation, as I spend in Euros - though if I had to speculate, I'm not positive about it! edit: Oooh, look, yet more QE.
|
|
rscal
Posts: 914
Likes: 503
|
Post by rscal on Jun 18, 2020 17:17:09 GMT
Would a takeover from Metrobank allow Ratesetter to end the interest rate cut early? (Assuming a cash injection to the PF)
|
|
cwah
Member of DD Central
Posts: 949
Likes: 468
|
Post by cwah on Jun 22, 2020 9:58:15 GMT
The problem with crazy events is that markets don’t have time to rebalance before the shutters go down. Ratesetter liquidity freeze is a classic example. Using the EMH to price political risk is like saying nobody ever got stuck on the wrong side of the Berlin Wall as it was being built, because they could have walked across the day before. A crazy event would be Trump deciding that foreigners can’t transfer US assets out of the US. Other markets would certainly be affected, but our US assets would be effectively worthless overnight, because while it wouldn’t be expropriation as such, you would never be able to actually *use* them. Capital controls aren’t exceptional, they are rather normal, and only removed in the U.K. in 1979. I agree that weighting differently to market caps, probably loses a few % expected value over decades. But by limiting maximum per country (USA 25%, China 15% = fraction of world GDP), I ensure that the chance of there being “nothing left” in thirty years is small. It also doesn’t make any sense to use market cap weighting, when much of that represents countries with non- free markets! For example, Chinese companies might make tens of trillions of IPO’s over the next decade, financialising to match the USA - in itself, that’s just an increase of weight, not a rise in the value of your investment. You may consider it justified and rational. But you cannot ignore that the weighting you would be seeing is the policy of the CCP, not the consensus of world capital. This is a good point, I agree with that. I read somewhere that the reason the 'great value' that Emerging markets always has never seems to translate into investor returns is that all of their profit is being effectively siphoned off for other (state) purposes. At the moment though, I'm more immediately concerned with how the health of the stock market at large (in all vicinities, but yes especially the US) seems to be being made into a political football instead of a true measure of value. OK, these measures are far from perfect, but it's nonetheless rather scary that we're in the midst of a pandemic and yet Shiller PE is (as of today) 70.1% higher than average, and the Buffett indicator is ' significantly overvalued'. But as so many have observed - T.I.N.A! Cash returns are zilch, bonds don't look great either. Plus, in the case of the UK, the outlook for Sterling makes global equities still an appealing hold for me (this is more of a hedge for me rather than outright speculation, as I spend in Euros - though if I had to speculate, I'm not positive about it! edit: Oooh, look, yet more QE. I think most people mistake is to look at the PE of today and say stock is overvalued. The stock market is forward thinking, and the question they should be asking is what would be the PE in 1 year time? Market seems so far to think that we'll have significantly recovered from today's downturn rather than stay in the current state with its current PE...
|
|
|
Post by Deleted on Jun 22, 2020 11:40:20 GMT
I think most people mistake is to look at the PE of today and say stock is overvalued. The stock market is forward thinking, and the question they should be asking is what would be the PE in 1 year time? Market seems so far to think that we'll have significantly recovered from today's downturn rather than stay in the current state with its current PE... I think the markets already include some of the value of a recovery, even though it's not happened yet and there is a lot more bad news to come eg when the furlough scheme ends.
|
|
cwah
Member of DD Central
Posts: 949
Likes: 468
|
Post by cwah on Jun 22, 2020 12:05:33 GMT
I think most people mistake is to look at the PE of today and say stock is overvalued. The stock market is forward thinking, and the question they should be asking is what would be the PE in 1 year time? Market seems so far to think that we'll have significantly recovered from today's downturn rather than stay in the current state with its current PE... I think the markets already include some of the value of a recovery, even though it's not happened yet and there is a lot more bad news to come eg when the furlough scheme ends. Yes definitely. But will all these bad news coming in the next quarter still be relevant in 1 year time? I think that's how you gotta think about it.
|
|
|
Post by Harland Kearney on Jun 22, 2020 12:54:16 GMT
Markets don't always track logical economic sense in such short time spans, often when it reflects unemployment too. A increase in unemployment from those sectors under furlough does not always equate to the stock value of PayPal, or Microsoft as a example. Long as Central Banks are pumping out trillion of dollars as they are currently, stocks will continue to see volatility both upwards and downwards. Watching the market over this period has been interesting, one of the largest rally streaks in terms of % was found on the news of record breaking unemployment. Why, because another 2 trillion dollars is going to be pumped as a result. Follow the Central Banks.
For my own investments, its got to a point where there are very very few alts to Stocks & Shares for the retail market for investments. I can't sell my investments because where am I going to put swaths of cash? I think many investors share this view at this time.
The market is following the money from the Central Banks, there is no sign of this stopping & even a possbility of it to continue on its current course. If indeed unemployment soared in the UK, this could signal the Central Banks to pump futher stimulus thrus very likely increasing stock value, once again. This doesn't mean the economy is doing well, but stocks dont' track economys whole heartedly.
|
|
cwah
Member of DD Central
Posts: 949
Likes: 468
|
Post by cwah on Jun 22, 2020 13:14:50 GMT
Markets don't always track logical economic sense in such short time spans, often when it reflects unemployment too. A increase in unemployment from those sectors under furlough does not always equate to the stock value of PayPal, or Microsoft as a example. Long as Central Banks are pumping out trillion of dollars as they are currently, stocks will continue to see volatility both upwards and downwards. Watching the market over this period has been interesting, one of the largest rally streaks in terms of % was found on the news of record breaking unemployment. Why, because another 2 trillion dollars is going to be pumped as a result. Follow the Central Banks.For my own investments, its got to a point where there are very very few alts to Stocks & Shares for the retail market for investments. I can't sell my investments because where am I going to put swaths of cash? I think many investors share this view at this time. The market is following the money from the Central Banks, there is no sign of this stopping & even a possbility of it to continue on its current course. If indeed unemployment soared in the UK, this could signal the Central Banks to pump futher stimulus thrus very likely increasing stock value, once again. This doesn't mean the economy is doing well, but stocks dont' track economys whole heartedly. If you think there's too much cash, why don't you buy gold then? would make more sense than overinflated stock
|
|
|
Post by Harland Kearney on Jun 22, 2020 15:24:49 GMT
Markets don't always track logical economic sense in such short time spans, often when it reflects unemployment too. A increase in unemployment from those sectors under furlough does not always equate to the stock value of PayPal, or Microsoft as a example. Long as Central Banks are pumping out trillion of dollars as they are currently, stocks will continue to see volatility both upwards and downwards. Watching the market over this period has been interesting, one of the largest rally streaks in terms of % was found on the news of record breaking unemployment. Why, because another 2 trillion dollars is going to be pumped as a result. Follow the Central Banks.For my own investments, its got to a point where there are very very few alts to Stocks & Shares for the retail market for investments. I can't sell my investments because where am I going to put swaths of cash? I think many investors share this view at this time. The market is following the money from the Central Banks, there is no sign of this stopping & even a possbility of it to continue on its current course. If indeed unemployment soared in the UK, this could signal the Central Banks to pump futher stimulus thrus very likely increasing stock value, once again. This doesn't mean the economy is doing well, but stocks dont' track economys whole heartedly. If you think there's too much cash, why don't you buy gold then? would make more sense than overinflated stock I do, as a balancer. However, I've always viewed Gold as a long term investment, arguably sometimes as long as stocks. (for the past 10 years of performance) Not ideal for dipping in and out of. Cash is King when it comes to picking up fleeing investors in global crisis. Usally Gold falls aslong side stocks (as it did this crisis). Making it diffcult to liquidate when you must need your top up money. I prefere equities in the time frame Gold needs for ideal investments. Also, buying Gold currently, would be the same as buying Stocks in the sense of valuation entry points, both are "arguably" over valued. Personally, I don't market time so I dont' wanna go all speculative since its only my oppuion and not a fact. I think we will see more violent volatility ahead in all markets and commodties. Note that that could be down, or up!
|
|
|
Post by diversifier on Jun 22, 2020 19:28:18 GMT
If you think there's too much cash, why don't you buy gold then? would make more sense than overinflated stock I do, as a balancer. However, I've always viewed Gold as a long term investment, arguably sometimes as long as stocks. (for the past 10 years of performance) Not ideal for dipping in and out of. Cash is King when it comes to picking up fleeing investors in global crisis. Usally Gold falls aslong side stocks (as it did this crisis). Making it diffcult to liquidate when you must need your top up money. I prefere equities in the time frame Gold needs for ideal investments. Also, buying Gold currently, would be the same as buying Stocks in the sense of valuation entry points, both are "arguably" over valued. Personally, I don't market time so I dont' wanna go all speculative since its only my oppuion and not a fact. I think we will see more violent volatility ahead in all markets and commodties. Note that that could be down, or up! Plus, Gold isn’t always a counter-cyclical investment. As a physical object, it’s main use is in fine jewellery and little bit electronics. Bond Street jewellers are in dire straits right now. Electronics goods arent going to get physically larger and use physically more raw materials at the circuit board level. And platinum catalysts used for internal combustion engines are going to slowly die, and can replace use of some gold as price drops. But yes, own small amounts of lots of commodities, as things tend to balance out.
|
|
beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
Posts: 670
Likes: 322
|
Post by beagle on Jun 23, 2020 15:27:46 GMT
With the level of experience and expertise we all seem to possess we might as well start our own bank and conquer all Forum Finance... who's in...
|
|