Sara G;330881 wrote:I suspect that the current nervousness (aside from the usual concerns about some 'overvalued' stocks in the US) is related to bond yields getting towards 5%, which have perhaps risen due to nervousness around Trump, so there is a bit of a doom loop going on, which threatens the bull run in stocks. But if things get really bad, interest rates will presumably be cut, which you'd expect to put a floor underneath any falls. But outside of all of that, a shock can happen at any time and will likely be triggered by something we're only peripherally aware of (or not at all). But Trump 2.0 is coming, for good or ill, and I'm not sure Harris 1.0 would have made me feel any less nervous TBH, possibly the reverse.
What to do... once again Gilt yields are rising just at the point that one of my fixed term accounts is due to mature, so there will be a temptation to lock in a decent yield for a few years while everything else plays out. As far as risk is concerned, I am drip-feeding tiny amounts into a US tracker in my small long term SIPP, and will use my ISA allowance, if that is still possible come April. I'm unlikely to add more equities to my GIA for various reasons.
It's down to debt issuance we're expecting under Trump – he wants to raise the debt ceiling to avoid a default, then there's spending plans. So we sell debt when we expect future rates to be higher – in this case due to supply and inflationary policies.
Keeping stocks up – if OpenAI or Google officially crack AGI, that's potentially $15 quadrillion in value creation. Like Elon Musk, I think they already have. I pay £20 a month for something I could value at £200,000 a month.
Thinking about why people are so bad at market timing. In 2000, it was all about valuations. And we all became hyperaware of CAPE ratios and PEs. In 2008, it was all about macroeconomics. And since then, we've been focusing on macro and valuations. This time, it's all about AI. I don't think it would make much difference if CAPE was 100 and rates 10%.