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Tom 123
Posted: 24 February 2025 21:08:53(UTC)
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zone key;335672 wrote:
Always interesting to look at how a global index fund handled the bursting of the greatest of all bubbles - Japan in the early 90s.



Much depends on what is happening in other equity markets. If poor returns from the US act as a drag on other markets then everyone suffers. If instead, capital flows head elsewhere then maybe global returns will be ok. The chart above could have looked quite different if the dot-com boom hadn't happened.


Hi Zone Key. Where is the data from very interesting.

I think after the 90s Japan bust it took around 3.5 years of flatlining. However the US boom of the 90s took over. Can China today replace a large drawdown in the US now? I'm not so sure. What takes its place at the same rate of any hypothetical US crash? I cant see it.

After the 2000 crash, the world index flatlined for a decade. Perhaps divis equalled inflation but it was a bad decade to own the world cap weighted.

So hypothetically the US crashed next 12 months, say 30% down. I cant see a corresponding market / country / sector filling the void quickly enough. Maybe over a decade something else comes in to replace it but it could be a slow grind back.
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L.P. on 25/02/2025(UTC)
JCAS
Posted: 24 February 2025 22:01:49(UTC)
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According to this article on global investment trusts and their performance over 30 years (the article was published in 2020), the world index did 2.5% annually during the bearish 2000's.

https://www.itinvestor.c...stment-trusts-compared/

During that same period the best performing global trusts were:

Hansa (HAN) 14.1% (pa)
AVI Global (AGT) 12.2%
Caledonia (CLDN) 11.8%
Capital Gearing (CGT) 11.8%

Personally I am expecting a bear market quite soon (if it hasn't arrived already!) so am holding approx 50% of my SIPP in PNL/CGT/MMF, and plan to add some gold (and possibly commodities) soon. The hope is that these assets will provide reasonable returns over any extended bear market however I will continue to hold, and add, to my tracker alongside these.

I've thought long and hard about having a part of my portfolio that offers something complimentary/different to global tracker and and the above is the best I can think of for now, though I have considered ditching the active funds (CGT/PNL) and just having gold and/or commodities. I am also wary of costs and want to keep things as simple as possible - the fewer holdings the better!
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Micawber on 25/02/2025(UTC), L.P. on 25/02/2025(UTC), S Dobbo on 25/02/2025(UTC), Sheerman on 25/02/2025(UTC)
L.P.
Posted: 25 February 2025 06:46:30(UTC)
#94

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Did not want to start a new thread so put it in here.

This mornings FT:

“Pre-product AI start-up now valued at $30billion.”

https://www.ft.com/conte...ion:daily-email:content

Just to clarify.. they have no product and therefore no revenue and to top it all, they have no visibility as to when they will actually launch anything.
Quote “SSI focuses on developing safe AI systems. It isn’t generating revenue yet and doesn’t intend to sell AI products in the near future.”

Did someone on here somewhere say that this is nothing like the dot.com boom?

“Here are a few examples you can buy for under $30billion:
United Airlines, Société Générale, Maersk, Pernod Ricard, Publicis, Commerzbank, Ryanair, Prudential, Vodafone, Legal & General, Pearson, Reddit, EQT, Martin Marietta, Tradeweb, Warner Bros, Estée Lauder”. 
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Guest on 25/02/2025(UTC), Peter61 on 25/02/2025(UTC)
zone key
Posted: 25 February 2025 06:48:02(UTC)
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Tom 123;335673 wrote:


Hi Zone Key. Where is the data from very interesting.

I think after the 90s Japan bust it took around 3.5 years of flatlining. However the US boom of the 90s took over. Can China today replace a large drawdown in the US now? I'm not so sure. What takes its place at the same rate of any hypothetical US crash? I cant see it.

After the 2000 crash, the world index flatlined for a decade. Perhaps divis equalled inflation but it was a bad decade to own the world cap weighted.

So hypothetically the US crashed next 12 months, say 30% down. I cant see a corresponding market / country / sector filling the void quickly enough. Maybe over a decade something else comes in to replace it but it could be a slow grind back.


It's from an old bogleheads thread, but i agree with you - i can't see it either. I guess that's the reality of equity markets - nobody can see the big changes. If the US flatlines it won't need bubble-like performance elsewhere in order to deliver a decent overall return for a global tracker. Value could make a long-overdue comeback. Japan and Europe could have a great 10 years. Or we could be looking at a decade of miserable global returns while a tracker slowly adjusts. Given all the scenarios, I think there is a good case to slightly underweight the US and mega-cap tech given the run just experienced. And to stay diversified across your portfolio of assets.
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Micawber on 25/02/2025(UTC), L.P. on 25/02/2025(UTC), Cm258 on 25/02/2025(UTC), Johan De Silva on 25/02/2025(UTC), Sheerman on 25/02/2025(UTC), NPH on 25/02/2025(UTC)
Johan De Silva
Posted: 25 February 2025 07:28:39(UTC)
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There are many ways to stay diversified.

For growth investors I would underweight big tech but would not underweight tech as a sector. In this scenario there are other ways to get tech exposure such as mid caps with actives like ATT to spread cap exposure and private equity like HGT or technology infrastructure like PINT with some China tech an some value tech like cap weighted Google and Micron

Tech and Comms sector make up about just over 35% of an growthy index and this should be the minimum exposure.
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Sheerman on 25/02/2025(UTC), Newbie on 25/02/2025(UTC)
Wave Action
Posted: 25 February 2025 09:08:13(UTC)
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More on the above chart. A detailed blog post in 3 parts from 2020 . Worth a bookmark.

https://www.bogleheads.o...ng-in-the-world-part-1/

Updated chart from 2024. The 1990's turned out to be a boom period with no recession and the dotcom era. Peak in 2000 was halted by the rate rise to 6% which has been a constant lid on valuations for over a century. Ballpark 100/6 = 16 . Why buy equity on a high valuation when 6% on cash ? We're a long way off that at the moment but it's in the background. Note India and China have taken up a greater allocation since 2010. The allocation under " Others " is still very significant.



https://pbs.twimg.com/me...at=jpg&name=900x900

Note the rest of the world didn't follow the valuations of Japan.



https://pbs.twimg.com/me...ormat=png&name=small
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Sheerman on 25/02/2025(UTC)
Peanuts
Posted: 25 February 2025 09:48:01(UTC)
#97

Joined: 16/02/2019(UTC)
Posts: 1,476
I don't know how to post an image but saw one from BofA that said the "S&P 500 Price-to-Book Ratio has now surpassed the Dot Com Bubble High"...


I'm sure it's nothing.
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Wave Action
Posted: 25 February 2025 12:33:00(UTC)
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Peanuts;335694 wrote:
I don't know how to post an image but saw one from BofA that said the "S&P 500 Price-to-Book Ratio has now surpassed the Dot Com Bubble High"...


I'm sure it's nothing.


From any link that has a chart, table ,etc right click on it and open in new tab.

https://www.bogleheads.o.../viewtopic.php?t=317538

chart..

https://www.bogleheads.o...ds/2017/02/23g2qerh.jpg

Copy the above into the space provided. Select Upload by URL. Resize 640 x 480 ( for message boards ) . No expiration.

https://postimages.org/web

once accepted copy the link from Hotlinks for forums .

narrow it down to [img]........................[img]

post it on the forum.

EDIT..the one you've been looking at.

https://pbs.twimg.com/me...at=jpg&name=900x900

another of many..

https://pbs.twimg.com/me...mat=jpg&name=900x900
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Rory Barr
Posted: 25 February 2025 13:38:18(UTC)
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Peanuts;335694 wrote:
I don't know how to post an image but saw one from BofA that said the "S&P 500 Price-to-Book Ratio has now surpassed the Dot Com Bubble High"...


I'm sure it's nothing.


It's not nothing but I suspect it's extremely carefully chosen words for sensationalization purposes.

The constituents that have driven the S&P higher recently are nowhere near the multiples that the equivalents were (Cisco etc) during the dot com. Not by a very long way.
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Rookie Investor on 25/02/2025(UTC)
Rookie Investor
Posted: 25 February 2025 13:43:22(UTC)
#99

Joined: 09/12/2020(UTC)
Posts: 2,081
Rory Barr;335723 wrote:
Peanuts;335694 wrote:
I don't know how to post an image but saw one from BofA that said the "S&P 500 Price-to-Book Ratio has now surpassed the Dot Com Bubble High"...


I'm sure it's nothing.


It's not nothing but I suspect it's extremely carefully chosen words for sensationalization purposes.

The constituents that have driven the S&P higher recently are nowhere near the multiples that the equivalents were (Cisco etc) during the dot com. Not by a very long way.


And P/B is not even as meaningful as it once was, given so much value is derived from intangibles.

R&D costs are expensed fully rather than amortized/depreciated such as what physical assets would, so multiples will look higher than otherwise say 20 years ago.

P/B is NOT a good way to value a business, misses so much.
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