Australian (ASX) Stock Market Forum

Will be in Cash 100% 12th July 2019

Jump to new
Value Collector said:
No, I don’t want to own any low interest government bonds.

——-

If interest rates rose, it would not have a massive effect on the USA’s ability to pay, because loans stretch out over 30 years of fixed interest.

It may actually give them a chance to by back the bonds issued in the last 10 years at well below face value also.
Click to expand...
Yeah man, let's stay away from these. Why take the risk for low returns.
 
Gringotts Bank said:
A recession lasting years. Sorry, minor ommision.

The other advice they are giving to their clients is the usual "be prepared to sit it out because there will be opportunities later on".
Click to expand...

I asked where their money goes. He said the rich will just sit in various fixed interest products because they get offered such generous terms. Banks will offer them way above the going rate and the best performing bond funds will often be closed shop arrangements. For those who are business owners, they just pump money into their business, R&D etc.
 
Gringotts Bank said:
I asked where their money goes. He said the rich will just sit in various fixed interest products because they get offered such generous terms. Banks will offer them way above the going rate and the best performing bond funds will often be closed shop arrangements. For those who are business owners, they just pump money into their business, R&D etc.
Click to expand...
A scary proposition for those not able to access these sort of safe harbours, GB. Where will those who are relying on equities for their wealth creation plan retreat to? I suspect many millennials who have deferred saving up to buy a property are weighted heavily into the equities markets whether directly or via ETF's and managed funds. Those with mortgages can switch to paying loans down. Self funded retirees might switch to more term deposits, perhaps?
 
kenny said:
Where will those who are relying on equities for their wealth creation plan retreat to?
Click to expand...

You don’t have to retreat if you don’t want, you can just hold a portfolio of good equites through the cycle, you don’t have to pay attention the the madness except for when you want to buy extra shares.

For example, let’s say bought CBA for $50 a few months before the GFC, you would have seen it drop to $23, and that would make a lot of people panic.

But, the fact it the dividend still got paid, and if you just continued to hold it you would now have an $80 share, that’s paid Almost paid you your entire original $50 back in dividends.

Sure some one could of beaten your return by trading in and out perfectly, but who cares, you would have a totally credible result.

My Mum bought her CBA shares in 1996, for $12, the dividends have paid here back multiple times, she never had to retreat anywhere, just collect the dividends and hold tight.

You can do the exact same thing holding index’s.
 
Gringotts Bank said:
A recession lasting years. Sorry, minor ommision.

The other advice they are giving to their clients is the usual "be prepared to sit it out because there will be opportunities later on".
Click to expand...

I assume this is related to the debt risk problem and a financial collapse of some sort?

There has been talk for some time about the debt risk is now far beyond anything we saw for the GFC.

Of course there needs to be a trigger of some sort to get the show on the road and no one really understands where this will come from.
 
Think about it, the market low during the GFC that caused people to cry, was the all time Market High just 4 years earlier, and there was loads of dividends paid over those 4 years.

It’s important to keep things in perspective.

Unless they piled all their funds into the market right before crash, people would have been fine, most of the people that got hurt were people that panic sold, or got scared of the market and instead headed for TD’s
 
As with anything, if you have a long term plan, it should just take tweaking to ride through and still be smiling at the end.
Most people are investing to either produce a wage replacement income, or to purchase a house, houses are falling in price so maybe one should be considering moving some money from one to the other.
The one thing that does happen, everyone runs out of time, eventually.
 
Value Collector said:
you don’t have to pay attention the the madness except for when you want to buy extra shares.
Click to expand...

VC don't mean to quote you out of context here but just to point out some of the biggest opportunities in investing occur during the major market crashes of course you need cash to take advantage.
 
IFocus said:
VC don't mean to quote you out of context here but just to point out some of the biggest opportunities in investing occur during the major market crashes of course you need cash to take advantage.
Click to expand...

Of course, but I am speaking about the people who are making decisions based on fear of losing, rather than those few trying to position them selves for opportunity.

My point is simply that some people avoid being in the market at all because of fear of a crash, this type of fear is completely unnecessary, when you could just dollar cost average into an index so you make sure you don’t buy at the exact top, and then just hold it.

————
 
Last edited:
All seem to agree on one thing at least based on the comments above and in previous pages. That is not to go in 100% equity market at the moment.

Perhaps the original post of this thread by GG got us all concerned a bit but I think the market has been running hot and as GB mentioned we have not had a recession in decades. We even avoided a recession during the GFC thanks to the mining boom which was followed by stimulus money followed by baby bonus followed by paid maternity leave. So it's good to at least prepare for what happens when the music stops i.e. a recession type scenario.

I am in neither extreme: not 100% cash and not 100% in shares. I have both, but heavyweight towards cash/fixed income which is pathetic at the moment earning around 1% per annum. It's tempting to go chasing better yield but I'll take my time with such decisions. So far this thread has been thought provoking for me.
 
kenny said:
A scary proposition for those not able to access these sort of safe harbours, GB. Where will those who are relying on equities for their wealth creation plan retreat to? I suspect many millennials who have deferred saving up to buy a property are weighted heavily into the equities markets whether directly or via ETF's and managed funds. Those with mortgages can switch to paying loans down. Self funded retirees might switch to more term deposits, perhaps?
Click to expand...
Possibly long/short managed funds or so-called 'balanced' funds. Or a short (inverse) EFT.

For traders, mean reversion systems do better than trend following in a bear market. I hope to keep trading unless there's a steep sell off.

It's possible we just get a 'blah' market like 2011 if interest rates stay low.
 
Last edited:
Logique said:
As IF said, it needs a catalyst for trend change. This can creep up on you, so I understand the talk of 2020. Technically XAO is nowhere near as extended above the LT trend as in 2008
View attachment 96162
Click to expand...
I would assume the Perth house price bar graph, will look very similar to that ASX graph, I'm a great believer in things returning to the long term trend.
 
The way the average Joe hurts them selves by being fearful reminds me of the story of the ships crew that avoided Fiji.

Basically, their ship was damaged and their nearest island was Fiji so the captain started limping the ship in that direction, until a deck hand said that there was cannibals in Fiji and they would be eaten.

So they turned the ship and sailed away from Fiji, until finally they were lost at sea and had to become cannibals them selves and start eating each other.

The analogy is that irrational fear can lead you to make dumb decisions, and push you towards the very risk you are scared of, eg low returns
 
Value Collector said:
The way the average Joe hurts them selves by being fearful reminds me of the story of the ships crew that avoided Fiji.

Basically, their ship was damaged and their nearest island was Fiji so the captain started limping the ship in that direction, until a deck hand said that there was cannibals in Fiji and they would be eaten.

So they turned the ship and sailed away from Fiji, until finally they were lost at sea and had to become cannibals them selves and start eating each other.

The analogy is that irrational fear can lead you to make dumb decisions, and push you towards the very risk you are scared of, eg low returns
Click to expand...
Good analogy.

Shoulda just sailed to Fiji, obviously... But had their muskets charged and ready for any contingencies.
 
Value Collector said:
The way the average Joe hurts them selves by being fearful reminds me of the story of the ships crew that avoided Fiji.

Basically, their ship was damaged and their nearest island was Fiji so the captain started limping the ship in that direction, until a deck hand said that there was cannibals in Fiji and they would be eaten.

So they turned the ship and sailed away from Fiji, until finally they were lost at sea and had to become cannibals them selves and start eating each other.

The analogy is that irrational fear can lead you to make dumb decisions, and push you towards the very risk you are scared of, eg low returns
Click to expand...
Capt. Cook would have agreed.

Let's pop into Hawaii chaps !!!

gg
 
Top