What is going on today? - Megathread

Last March (2020) you had silence from the investing world with media, analysts & all that shouting no way a V shape recovery no way.

Pretty much silence from the sectors regarding investing.

Now mid-way into 2021 you have this scenario with Etoro, Stake, legacy platforms, adverts, fund managers, individual portfolio investors, youtube analysts, multiple email letters, Apple stocks noise, webinars, sales funnels, paid newsletters from any random with an iPhone, the ‘it’s only entertainment not financial advice’ video & podcast crowd, all spouting out buffet quotes 1000’s of times over…

BUT.

This has been the most un-Buffet event, total detachment of stock valuations from a fundamentals perspective.

Two major points for the most recent investors to consider & understand:

1. Stimulus money will stop.
2. Can interest rates stay this low for a 5+ years?

Those two points can have a significant blow to current hysteria.

Everyone has done incredibly well since March ‘20, some gaining a decade of net-worth in the space of a single year. 75% S&P 500 returns is unheard of in that short period.

Having seen this unfold in such detail I wanna make two personal points, both of which are just my two cents:

  1. I want to see what environment the west & east enter before making large purchases of any asset for a while.
  2. I am 80% cash.

I see an environment where the risk does not out-way the reward or sustainability. Purely because of stimulus & interest rates going forward.

Back to the Buffet environment, March / April 2020 was a great time to begin long term portfolios or add to them. There is no hindsight, the S&P fell 38%, that’s a freaking buy in anyone’s eyes.

2021 seems so freakin gnarly yet all the investment hype is suggesting to invest now? It’s like, now? You’re saying that now is the time? Where were these views in March 2020?

I feel the newcomers pulled-in by the adverts & online media should strongly consider both stimulus & interest rate environment first.

None of the hype is making it clear that it was March 2020 & October 2020 where the risk/reward strongly favoured risk assets.

WAY UP YOUR RISK REWARD.

I am hearing a small bunch of highly experienced investors speaking on a small scale regarding their appetite for risk because there is about a 50% unclear view on what is approaching around the corner. This is not market timing, this is securing your risk profile.

Cash may be trash, but holding a few equities sectors which correct 50% is worse.

Current unchartered water is in full flow. Though what we do know is many areas of the market are not at sustainable, stomach relaxing valuations.

Liquidity is off the rails high. This is a risky inflationary environment supported by immense stimulus, posing as a safe environment where assets only go up.

The globe was shut down for 15 months. This seems like a conveyor belt heading towards the edge of the Alps.

You must posses a strong stomach to be 100% invested in equities atm.

Not negative, simply looking at perspectives.

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I’m still almost 100% invested, although I’m not buying any more at the moment.

It is looking a bit choppy, but S&P 500 is still making new highs, and I think the secular bull market is still intact

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The US market in particular has hit all time highs on almost every measure. Other markets like the UK or EM are less overvalued, so a bit safer, but the stimulus over the last decade which then went into overdrive in times of coronavirus has IMO caused massive distortion in markets and an unprecedented asset bubble.

Cash and bonds don’t look great places to be either, but what happens when they have to raise interest rates, or worse leave them at 0 forever, and stop buying bonds and start repaying debt? If governments want to get rid of the truly extraordinary debt they have racked up, the simplest most expedient policy is inflation, so I do expect a policy of sustained inflation in the coming decades.

Long term investors will probably be fine (though see Japan for an example of what can happen after a bubble - a decades long bear market), but a lot of people are taking a lot of risks at present with leverage, unregulated assets, and passive investing in indexes which are hyper concentrated in a few big names and sectors.

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All the above is correct and it is obviously a opinions game regarding futures but there are some bargains out their. Especially for companies/funds that have taken over failing/in debt companies at a bargain price due to the climate at the moment. Obviously many are failing but I am actually optimistic but I am highly diversified and not expecting stupidly high gains.

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Interesting post but I would think having 80% in cash at the moment also requires a strong stomach. Each to their own, some ‘experts’ might be right, others will be wrong - the markets will reveal all in time!

Edit: I’m 90% in equities

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Catching the ridiculous upward market of which I thought would take 2-3+ years to recover provided gains of 80% - 120% in one year. The way I invest this is basically a decade of passive returns.

For simplicity I am moving things about to automate some investments, which means juggling platforms.

Super basic FreeTrade holdings, only holding 2 of these now.

• VEVE
• IWDP
• BGSC
• IEM

• Alphabet
• Target
• MasterCard
• Jpm
• Crispr

(Plus the joke £75 made from a 15 minute amc participation just to say I took part :cold_face:).

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Since people are taking about debt here u go

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This is a crime against data viz, like if I wanted to make something intentionally hard to read I think I’d struggle to come up with something this bad.

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:pirate_flag:

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Not much of an insight :roll_eyes:

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Debt is really an irrelevance if you look at it from a Modern Monetary theoretical perspective. Fiat currency can just be printed into existence and governments don’t need to rely on taxation to fund government programmes. The NHS runs a deficit year after year yet still runs. The Pandemic costs are likey to be more £200billion yet was paid for with money which doesn’t really exist.

I’m sure someone out there in the community could explain it better than I could but in other words modern developed economies rely on debt and leverage

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True to an extent but this is usually what an opposition party say to attack a government when not spending. In fact it isn’t possible to just keep printing money willy nilly as you will lose your credit rating as a nation and then your country quickly collapses. :+1:

Obviously there is some truth to the theory but you would then need to cut yourself off from the world to continue printing etc. We may value the printed money but others wouldn’t and things would get very expensive indeed for us.

It’s a political theory to gain votes rather than a sensible way to run your country or every party would just come in and do it. Hell like him or not Boris would just give everyone what they wanted to look good and be popular :joy:

One way to look at it is we pay the same to service our debt each year as the whole cost of the armed forces £46Billion and that was PRE-pandemic. Debt is unavoidable even if you are a Fiat country as Labour knew when they left power leaving the note “All the money has gone” :joy: :man_facepalming:

It’s basically fine until a country’s tax system can’t make interest payments on it. Then it’s fooooked.

I agree

Here is credit rating instead.

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This is for 2008 crisis

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Didn’t know where to post this but for anyone wanting to see the big picture of what is going on with Chinese equities, and possibly the knock-on effects on US big tech, this is a really good read:

https://www.bloomberg.com/news/articles/2021-07-27/china-tech-crackdown-xi-charts-new-model-after-emulating-silicon-valley

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We only had to wait 3 days :sweat_smile:

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Ouch :face_with_head_bandage:

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Any reason the whole market is down not just Chinese stock?

Earnings of the major players. Lots of volatility and reshuffling. Does not mean a bad sentiment, just lots of volatility.

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