Macroeconomics, the economy, inflation etc. *likely to be very dull*
Comments
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So they are suggesting that over 20 years, 3/4s of shares, even with dividends reinvested have underperformed gilts?rick_chasey said:Ja
Really not sure where they've got that from.0 -
So the article says the study from 1926 to 2016 that 4% of all stocks account for the entire wealth creation of stocks during that period. That shrinks to 3.4% when extended to 2022.Dorset_Boy said:
So they are suggesting that over 20 years, 3/4s of shares, even with dividends reinvested have underperformed gilts?rick_chasey said:Ja
Really not sure where they've got that from.
It's sayingThe median global stock as an investment has been worse than local cash instruments or dollars in a cookie jar.
If you're not putting your money in those 4%, you should keep it in cash.0 -
Not sure this is helpful advice when looking to invest rather than reflecting on where you should have invested. Hence, diversification is your friend.rick_chasey said:If you're not putting your money in those 4%, you should keep it in cash.
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Sure, but I don't think anyone had thought it was quite so concentrated in quite so few stocks, which is why I thought it was intersting.wallace_and_gromit said:
Not sure this is helpful advice when looking to invest rather than reflecting on where you should have invested. Hence, diversification is your friend.rick_chasey said:If you're not putting your money in those 4%, you should keep it in cash.
For sure over the last few years it's been what, Telsa, Nvidia and Apple, but going back 90 years!0 -
This may be true, but most investors go for diversification and thus are exposed to the 1/4 of shares that are the out-performers. Moral of story = don't try and be a stock picker.Dorset_Boy said:
So they are suggesting that over 20 years, 3/4s of shares, even with dividends reinvested have underperformed gilts?rick_chasey said:Ja
Really not sure where they've got that from.
Annual dividends on the FTSE 100 are typically 3%-4%. Cyclical peak of the FTSE 100 during the dotcom boom was at end 1999 at 6900. So any 20 year period ending recently will have seen at worst, zero capital growth and circa 3%-4% dividends pa. During this period, 1 month gilt rates have been zero for 13 of those 20 years and generally no more than 5% otherwise giving an average return of <2%.0 -
It's not 1/4 shares.wallace_and_gromit said:
This may be true, but most investors go for diversification and thus are exposed to the 1/4 of shares that are the out-performers. Moral of story = don't try and be a stock picker.Dorset_Boy said:
So they are suggesting that over 20 years, 3/4s of shares, even with dividends reinvested have underperformed gilts?rick_chasey said:Ja
Really not sure where they've got that from.
Annual dividends on the FTSE 100 are typically 3%-4%. Cyclical peak of the FTSE 100 during the dotcom boom was at end 1999 at 6900. So any 20 year period ending recently will have seen at worst, zero capital growth and circa 3%-4% dividends pa. During this period, 1 month gilt rates have been zero for 13 of those 20 years and generally no more than 5% otherwise giving an average return of <2%.</p>
it's 1/25.0 -
All 'investors' go for diversification.
Gamblers go for a handful of individual stocks!
Rick's report just doesn't seem realistic as you imply above.
In the last 10 years the S&P500 has become a tech index dominated by the likes of Apple, Microsoft, etc etc, but there are plenty of other companies around the world that have also grown in value, just not to the same extent.
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Well that's why it's an interesting study right? if the conclusion was what we already thought it wouldn't be worth highlighting.0
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Thanks. Same logic applies though. You've got to cover the whole market or you'll miss out much more often than you get lucky.rick_chasey said:
It's not 1/4 shares.wallace_and_gromit said:
This may be true, but most investors go for diversification and thus are exposed to the 1/4 of shares that are the out-performers. Moral of story = don't try and be a stock picker.Dorset_Boy said:
So they are suggesting that over 20 years, 3/4s of shares, even with dividends reinvested have underperformed gilts?rick_chasey said:Ja
Really not sure where they've got that from.
Annual dividends on the FTSE 100 are typically 3%-4%. Cyclical peak of the FTSE 100 during the dotcom boom was at end 1999 at 6900. So any 20 year period ending recently will have seen at worst, zero capital growth and circa 3%-4% dividends pa. During this period, 1 month gilt rates have been zero for 13 of those 20 years and generally no more than 5% otherwise giving an average return of <2%.</p>
it's 1/25.0 -
So the question is whether cash has performed better than exposure to the whole market including the 4% that outperformed?
Taking only the median stock as a comparison is meaningless isn't it?0 -
Of course it's not meaningless. If a large part of your asset allocation strategy is hanging off the performance of a handful of superstar performers, that has risk implications, especially when 3/5 stocks over that period *lost* you money.kingstongraham said:So the question is whether cash has performed better than exposure to the whole market including the 4% that outperformed?
Taking only the median stock as a comparison is meaningless isn't it?
If most, if not all indicies, are reliant on a handful of superstar companies for all their returns, the equity index returns are pretty hard to forecast without really looking at those specific companies, right?
The big 7 in the US, which accounts for 25% of stock valuations, didn't even exist 30 years ago, so how do you evaluate a longer term view, beyond stonks go up.
Most large investors make their biggest decisions at asset allocation level, but if the equity allocation is so reliant on a handful of companies, then no wonder the long term forecasts are so poor; it's a strategic decision on what is really a tactical problem, that just happens to have strategic implications!0 -
So what's the answer to my question?rick_chasey said:
Of course it's not meaningless. If a large part of your asset allocation strategy is hanging off the performance of a handful of superstar performers, that has risk implications, especially when 3/5 stocks over that period *lost* you money.kingstongraham said:So the question is whether cash has performed better than exposure to the whole market including the 4% that outperformed?
Taking only the median stock as a comparison is meaningless isn't it?
If most, if not all indicies, are reliant on a handful of superstar companies for all their returns, the equity index returns are pretty hard to forecast without really looking at those specific companies, right?
The big 7 in the US, which accounts for 25% of stock valuations, didn't even exist 30 years ago, so how do you evaluate a longer term view, beyond stonks go up.
Most large investors make their biggest decisions at asset allocation level, but if the equity allocation is so reliant on a handful of companies, then no wonder the long term forecasts are so poor; it's a strategic decision on what is really a tactical problem, that just happens to have strategic implications!
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No obviously it hasn't.
We all know that. That's why the fact that over that 90 year period only 4% of stocks contributed to that performance is remarkable.0 -
surely it is not that remarkable?rick_chasey said:No obviously it hasn't.
We all know that. That's why the fact that over that 90 year period only 4% of stocks contributed to that performance is remarkable.
The 74% that make the underperformers will by definition not be worth much whereas the stellar performers will be a large % of the total. If you buy tracker funds then you negate the problem of the 74%.
I will repost this helpful graph from DB
https://www.vanguard.co.uk/content/dam/intl/europe/documents/en/vanguard-2022-index-chart-uk-en-end.pdf0 -
Simple. Active management.rick_chasey said:
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The big 7 in the US, which accounts for 25% of stock valuations, didn't even exist 30 years ago, so how do you evaluate a longer term view, beyond stonks go up.
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No investment fund invests in a stock and just lets it sit there for 30 years. Do they?The above may be fact, or fiction, I may be serious, I may be jesting.
I am not sure. You have no chance.Veronese68 wrote:PB is the most sensible person on here.0 -
No not even passivepblakeney said:
Simple. Active management.rick_chasey said:
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The big 7 in the US, which accounts for 25% of stock valuations, didn't even exist 30 years ago, so how do you evaluate a longer term view, beyond stonks go up.
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No investment fund invests in a stock and just lets it sit there for 30 years. Do they?
Anyway, I thought it was interesting, and so did CTI's ex Head of Asset Allocation did.
I guess you lot don't.0 -
It's interesting, but not hugely useful beyond highlighting the benefits of diversification (which we all appreciate already) as you only know the under / overperforming stocks "after the fact".rick_chasey said:
No not even passivepblakeney said:
Simple. Active management.rick_chasey said:
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The big 7 in the US, which accounts for 25% of stock valuations, didn't even exist 30 years ago, so how do you evaluate a longer term view, beyond stonks go up.
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No investment fund invests in a stock and just lets it sit there for 30 years. Do they?
Anyway, I thought it was interesting, and so did CTI's ex Head of Asset Allocation did.
I guess you lot don't.
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Buffett sheds a lot of stock and buys Treasuryshttps://www.thestreet.com/investing/warren-buffett-just-dumped-8-billion-in-stocks-heres-why-economists-are-worried
According to disclosures this August, Buffett's Berkshire Hathaway (BRK.A) - Get Free Report (BRK.B) - Get Free Report shed $8 billion of stock. That's a 13% rise in his cash position (which now totals some $147 billion).
Over the past three quarters, Buffett has sold $33 billion of stocks, which amounts to $38 billion more cash in his reserves, ostensibly for a rainy day.
Stephen Hanke, professor of applied economics at Johns Hopkins, says this signals bad news.
The selloff signals Buffett's "anticipation of a recession and the fact that stocks are currently pricey," he said.
"It's also consistent with his long track record of piling up cash in anticipation of storm clouds ahead with the capacity to pounce on bargains once the storm hits."0 -
Can somebody explain the terminology and math to me?focuszing723 said:Buffett sheds a lot of stock and buys Treasuryshttps://www.thestreet.com/investing/warren-buffett-just-dumped-8-billion-in-stocks-heres-why-economists-are-worried
According to disclosures this August, Buffett's Berkshire Hathaway (BRK.A) - Get Free Report (BRK.B) - Get Free Report shed $8 billion of stock. That's a 13% rise in his cash position (which now totals some $147 billion).
Over the past three quarters, Buffett has sold $33 billion of stocks, which amounts to $38 billion more cash in his reserves, ostensibly for a rainy day.
Stephen Hanke, professor of applied economics at Johns Hopkins, says this signals bad news.
The selloff signals Buffett's "anticipation of a recession and the fact that stocks are currently pricey," he said.
"It's also consistent with his long track record of piling up cash in anticipation of storm clouds ahead with the capacity to pounce on bargains once the storm hits."
If you shed $8bn of stock how does that rise your cash position 13% to $147bn?
How does selling $33bn of stock amount to $38bn more cash?0 -
No idea, I assume there's a reason. It does detract from his predicted stance though.surrey_commuter said:
Can somebody explain the terminology and math to me?focuszing723 said:Buffett sheds a lot of stock and buys Treasuryshttps://www.thestreet.com/investing/warren-buffett-just-dumped-8-billion-in-stocks-heres-why-economists-are-worried
According to disclosures this August, Buffett's Berkshire Hathaway (BRK.A) - Get Free Report (BRK.B) - Get Free Report shed $8 billion of stock. That's a 13% rise in his cash position (which now totals some $147 billion).
Over the past three quarters, Buffett has sold $33 billion of stocks, which amounts to $38 billion more cash in his reserves, ostensibly for a rainy day.
Stephen Hanke, professor of applied economics at Johns Hopkins, says this signals bad news.
The selloff signals Buffett's "anticipation of a recession and the fact that stocks are currently pricey," he said.
"It's also consistent with his long track record of piling up cash in anticipation of storm clouds ahead with the capacity to pounce on bargains once the storm hits."
If you shed $8bn of stock how does that rise your cash position 13% to $147bn?
How does selling $33bn of stock amount to $38bn more cash?0 -
I don't think it does detract from his predicted stance but it does cast doubt upon the validity of the articlefocuszing723 said:
No idea, I assume there's a reason. It does detract from his predicted stance though.surrey_commuter said:
Can somebody explain the terminology and math to me?focuszing723 said:Buffett sheds a lot of stock and buys Treasuryshttps://www.thestreet.com/investing/warren-buffett-just-dumped-8-billion-in-stocks-heres-why-economists-are-worried
According to disclosures this August, Buffett's Berkshire Hathaway (BRK.A) - Get Free Report (BRK.B) - Get Free Report shed $8 billion of stock. That's a 13% rise in his cash position (which now totals some $147 billion).
Over the past three quarters, Buffett has sold $33 billion of stocks, which amounts to $38 billion more cash in his reserves, ostensibly for a rainy day.
Stephen Hanke, professor of applied economics at Johns Hopkins, says this signals bad news.
The selloff signals Buffett's "anticipation of a recession and the fact that stocks are currently pricey," he said.
"It's also consistent with his long track record of piling up cash in anticipation of storm clouds ahead with the capacity to pounce on bargains once the storm hits."
If you shed $8bn of stock how does that rise your cash position 13% to $147bn?
How does selling $33bn of stock amount to $38bn more cash?0 -
ONS revisions today mean that the UK GDP WAS above pre pandemic levels by end of 2021.0
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Which prepandemic reference point is being used?kingstongraham said:ONS revisions today mean that the UK GDP WAS above pre pandemic levels by end of 2021.
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Somewhat to my surprise, this was reported in the Guardian slightly before it was in the Telegraph. The the Torygraph does report it as the "ONS admits GDP..." as though the ONS has been part of the Tofo-eating set that has conspired to make the government look competent than it thinks it is, rather than a politically neutral statistics body dealing with imperfect data.kingstongraham said:ONS revisions today mean that the UK GDP WAS above pre pandemic levels by end of 2021.
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2019 Q4TheBigBean said:
Which prepandemic reference point is being used?kingstongraham said:ONS revisions today mean that the UK GDP WAS above pre pandemic levels by end of 2021.
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2% of GDP is a lot to find down the back of the sofa. It's apparently similar to the GDP of Slovenia.0
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An interesting thread from Dan Neidle on taxing wealth:
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Think the first 2 or 3 tweets in that thread answer RC's idea in the other thread. The increase in value of property is not realised until it's sold, so the only way to pay it would be to sell the property.briantrumpet said:An interesting thread from Dan Neidle on taxing wealth:
I'd guess that if that appreciation were taxed as Murphy suggests, that value would quickly evaporate. It would be a good way to crash the property market.1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
Pinnacle Monzonite
Part of the anti-growth coalition0 -
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Yes. Someone else's equity release scheme is delaying my project. Client has wasted 3 months as the vendor has a £40k penalty on their ER scheme unless they transfer directly to another property and they can't find another property.rick_chasey said:Not heard of equity release?
Though I’m not arguing 33% tax on wealth gains either tbh.
ER is a good way for lenders to cream off a percentage though.1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
Pinnacle Monzonite
Part of the anti-growth coalition0
