Incidentally, if you are genuinely concerned about an imminent bout of hyper-inflation, then you should brace yourself for a corresponding uptick in interest rates. I recall from a previous thread that you have significant property-related debt and I would suggest that this is where you should really be directing your fears.
Stock market correction or bear market/crash? Either way I bailed.
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As far as i can see the only real worrying thing that happened in the last few months was the chinese market shocks. But there has been huge outflows of money from emerging markets, commodities, now european markets because of VW. It seems that any small thing is causing markets to move hugely way more than you would logically calculate the effect of each bit of news. It seems that there is hypersensitivity so a small move causes a cascade of momentum trading. But when you look at it there was no reason for it. I think it is impossible for the average investor to decipher anything from it. The whole of august we were told that the markets were worried about the fed raising interest rates in september so markets fell because of this. Then when interest rates did not rise there was a big drop because they did not rise, now they are falling because they are worried of interest rate rise in december. Therefore there is no real logic to it
There's probably always going to be good reasons not to invest , I really don't think it's worth reading too much , if you google it you will get thousands of result and arguments on why the stock market will crash now or rise now. That's because nobody knows for sure.
I just look at the facts of what we know for sure , the stock market has proven to be one of the better places to keep your cash , this is because companies make profit and pay dividends they increase prices so you don't lose out to inflation , I don't give any time to megaphone charts, humans are terrible decision makers and look for patterns , I've read some good books on why we suck at decisions " thinking fast and slow " and some other book "fooled by randomness " I think it was called .
I don't think the majority of people are cut out for investing as I think dealing with losses and losing money is a skill in itself , as I say humans are terrible at these things and have an obsession with charts and looking for patterns , I see it in gambling , people are fooled by random events , 10 reds in a row on roulette get on black next , the mega phone chart is perfect for human mind as it's simple they can see clearly oh yeah this is going down now , the stock market crashed 8 years ago and another 8 years and another 8 years these are all random events , it's hard but block out the chart from your mind , I personally don't view charts of anything I but I don't care what price it was last month or last year or 5 years ago , I find it easy to let others decide the price in general any time you buy a liquid asset your not going to be too far off the true price this saved me a lot of time trying to value everything myself , short term volitility means checking your prices daily will drive yourself mad and your as likely to see a stock down as up but over the long term the stock market should have a positive return.
I don't think you should think of gold or equities or properly Or cash , you can have them all as part of a balanced portfolio.
The experts say gold goes up when equities go down as it is a safe haven but I'm not sure that had happened of late , I would not be keen on gold myself for similar reasons buffet mentioned and sarenco.
I just look at the facts of what we know for sure , the stock market has proven to be one of the better places to keep your cash , this is because companies make profit and pay dividends they increase prices so you don't lose out to inflation , I don't give any time to megaphone charts, humans are terrible decision makers and look for patterns , I've read some good books on why we suck at decisions " thinking fast and slow " and some other book "fooled by randomness " I think it was called .
I don't think the majority of people are cut out for investing as I think dealing with losses and losing money is a skill in itself , as I say humans are terrible at these things and have an obsession with charts and looking for patterns , I see it in gambling , people are fooled by random events , 10 reds in a row on roulette get on black next , the mega phone chart is perfect for human mind as it's simple they can see clearly oh yeah this is going down now , the stock market crashed 8 years ago and another 8 years and another 8 years these are all random events , it's hard but block out the chart from your mind , I personally don't view charts of anything I but I don't care what price it was last month or last year or 5 years ago , I find it easy to let others decide the price in general any time you buy a liquid asset your not going to be too far off the true price this saved me a lot of time trying to value everything myself , short term volitility means checking your prices daily will drive yourself mad and your as likely to see a stock down as up but over the long term the stock market should have a positive return.
I don't think you should think of gold or equities or properly Or cash , you can have them all as part of a balanced portfolio.
The experts say gold goes up when equities go down as it is a safe haven but I'm not sure that had happened of late , I would not be keen on gold myself for similar reasons buffet mentioned and sarenco.
What exactly are you talking about???? Glencore is not something you invest in for a start... DB is involved in many different derivative products, so which ones in particular are you concerned about????
The long term correlation of gold and equities is basically zero - it's not significantly negative - so you generally can't rely on gold to ride to the rescue if your stocks are tanking. The diversification benefits of holding gold are hugely overstated IMO.
Thanks Sareno.....good point.
I woulnt say I am worried about "imminent" hyper inflation, but I beleive it could be on the horizon. Fortunately I like to think that I have a hedge against rising ECB rates affecting my ECB tracking investment mortgages, in that when ECB rates rise, my currently massive (rental) tax bill will reduce (75% of the mortgage interest can be offset.....)
However I do appreciate what you said in an earlier post regarding the benefits of paying off debt.
Fair enough but don't forget that, currently, 25% of you interest payments are non-deductible. Also, there is no guarantee that this tax treatment will not be changed to your detriment in the future - look at the recent changes introduced by Mr Osbourne in the UK on the tax treatment of BTLs for example.
Whats your end game landlord? Get as rich as possible or retire early or preserve your wealth from inflation. If you have a few buy to lets your probably well set up for the future. My goal is save to 1 million by 40 then relax ( probably not going to happen!) . I really don't think it should be an either or decision about stock market you probably just went in too hard , maybe dollar cost average just for peace of mind is the way to go you , you could start buying every couple of months and let it grow that way.
Hi Fella....I got your PM the other week and did reply to it...not sure if you saw my reply?
My goal is to most efficiently handle the debt on my ECB tracker mortgages. I am paying off capital on two of them at quite a high rate, 4 are on interest only and I have no mortgage on the last. There is approximately 16 years left on the term of the mortgages. My negative equity situation has improved in the last year due to property price rises and paying down capital. However I am conscious of the fact that I will be liable for the remaining capital in 16 years time, which is a long enough window to invest a portion of my savings. I have most definitely not been put off by this recent experience and would definitely go in again when I see better value. Not sure about dollar cost averaging (for someone with a lump sum)...makes perfect sense if you havnt quite reached the bottom, but not if you are at the start of a bull run. But for my own sanity maybe it's worth while!!
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I am concerned about our own budget and the impact of possible residential rental price controls. I am hoping that there will be some kind of rental tax relief, for those who do not raise rents for a period of time.
I DON'T GET IT.........
The last couple of days has seen a huge rally on the stock markets.
You would think this is a reflection of improved world growth, employment and fiscal confidence.
BUT NO.......
The Fed reported on Friday the September jobs report, which said the economy created a disappointing 142,000 new jobs last month, following an even meagre increase in August. Wall Street had been expecting a gain of 200,000. This was seen apparently as a very "ugly" report.
A downgrade from the World Bank for China was reported. Amongst other general economic bad news.
Yet as far as I can tell all this bad news for world growth is great news for the stock market because it potentially means a delay on the Fed rate rise and possibly more world central bank stimulus/QE-Quantitive Easing
Surely a possible analogy to this would be a long term drug addict (The stock market), desperate for his (practically free 0--interest rate) injections of methadone. (QE). The drug addict's health is gradually getting worse and worse and his addiction to this free methadone has become insatiable and has fuelled a mega high. So much so that extra stimulus is required, HEROINE or (a new super sized QE).
How long can this high continue?
(For what it's worth due to the stock market rally over the last couple of trading days I am now worse off for bailing!!)
The last couple of days has seen a huge rally on the stock markets.
You would think this is a reflection of improved world growth, employment and fiscal confidence.
BUT NO.......
The Fed reported on Friday the September jobs report, which said the economy created a disappointing 142,000 new jobs last month, following an even meagre increase in August. Wall Street had been expecting a gain of 200,000. This was seen apparently as a very "ugly" report.
A downgrade from the World Bank for China was reported. Amongst other general economic bad news.
Yet as far as I can tell all this bad news for world growth is great news for the stock market because it potentially means a delay on the Fed rate rise and possibly more world central bank stimulus/QE-Quantitive Easing
Surely a possible analogy to this would be a long term drug addict (The stock market), desperate for his (practically free 0--interest rate) injections of methadone. (QE). The drug addict's health is gradually getting worse and worse and his addiction to this free methadone has become insatiable and has fuelled a mega high. So much so that extra stimulus is required, HEROINE or (a new super sized QE).
How long can this high continue?
(For what it's worth due to the stock market rally over the last couple of trading days I am now worse off for bailing!!)
Yep, the "bad news is good news" dynamic for equity markets has been with us for some time now. Your drug addict analogy is spot on but don't forget that bonds and real estate should tank (at least in the short term) when rates do eventually rise. All valuations are relative - money has to flow somewhere.
Incidentally, if you are interested in the behavioural aspects of investing I would recommend reading pretty much anything written by Jason Zweig (Wall Street Journal).
http://www.jasonzweig.com
Incidentally, if you are interested in the behavioural aspects of investing I would recommend reading pretty much anything written by Jason Zweig (Wall Street Journal).
http://www.jasonzweig.com
But I see the problem again that your trying to time the market or predict what will happen nobody can do that , your better off been pure ignorant and admit you know nothing like me 
, the stock market could rally now for 10 years while your waiting for this next crash. Remember everything you know and read the market knows also and is factored in , it is what it is it is a fair value now based on all known information and there will be fed increases rates potential factored in also. Your goal is 10year investment plan and to me your trying to find the bottom of the market for all we both know you have may have missed it.
, the stock market could rally now for 10 years while your waiting for this next crash. Remember everything you know and read the market knows also and is factored in , it is what it is it is a fair value now based on all known information and there will be fed increases rates potential factored in also. Your goal is 10year investment plan and to me your trying to find the bottom of the market for all we both know you have may have missed it.But I see the problem again that your trying to time the market or predict what will happen nobody can do that , your better off been pure ignorant and admit you know nothing like me
Hi Fella...
Actually I think I am just trying to avoid the top of the market (not find the bottom), but you are correct there is definitely an element of timing the market involved in my approach and yes I probably should just admit that what I understand about the stock market I could write on the back of a postage stamp.
Also to be fair, since I have bailed, I am probably devoting more time to looking for the bear than the bull!!
I think you make good points fella about the need to able to handle losses, but also to actually sell at a loss. I was lucky back in 2006 in that the investments I made were the ones that recovered strongly after the initial crisis. The thing that is different now compared to 2007 is that everyone was very optimistic then, there was little doom mongering, you really had to search for it. Now there is so much pessimism, everyone is waiting for the big crash .Therefore if everyone believes the same thing it's usually wrong
Ive made the point here about computer algorithms distorting the underlying normal movements in stock markets especially in the last month. From an article I read today I learned that the average holding period for stocks in 1965 was 7 years, in 1995 it was 2 years, now it is months. The reason for this computer trading and algorithms programmed to follow trends thereby reinforcing a small and maybe insignificant trend that without computers would have just petered out. Therefore computers in themselves may have caused a huge move like in august which was not justified by fundamentals.
When you were selling your equities, I was piling fresh cash into mine, delighted by the discounted price. It is perfectly normal for markets to hit new highs every so often. You are wrong to conclude that there's little to no value in equities, especially European and Emerging equities.