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Thrugelmir
Posted: 07 January 2025 13:17:19(UTC)
#39

Joined: 01/06/2012(UTC)
Posts: 5,317

Thanks: 3253 times
Was thanked: 7876 time(s) in 3263 post(s)
Newbie;330271 wrote:
Whilst I am with there is likely to be a slowdown in 2025, it is interesting to see so many doomsters saying its will crash citing the two good years in a row reason.

It is the due to two good 2 years (that too being backward looking) that appears to be the justification

Yet when we look backwards for say the last 75 years - the 4 occasions that we had 2, 20%+ years in the S&P, 3 came back the following year with a double digit positive return the other came back with a 2.6%, still positive return.


I could have said far more in my post that simply highlighted some facts. Interesting how the post got jumped on and assumptions made. The research I was reading was actually far more comprehensive in nature. Covered far more than just the past 2 years.

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Carl blue nose on 07/01/2025(UTC)
Mr TIPS
Posted: 07 January 2025 14:27:28(UTC)
#43

Joined: 12/12/2020(UTC)
Posts: 123

Thanks: 361 times
Was thanked: 451 time(s) in 93 post(s)
Johan De Silva;330283 wrote:
Mr TIPS given your outcomes you could instead of reduce gearing, switch your equity holdings in 3x Leverage Index and increase your cash allocation so you have the same equity exposure but more cash ready to deploy.


Thanks for the suggestion. However if by "Leverage Index" you mean buying an ETF like ProShares Ultra S&P 500 which follows the S&P 500 with 3x leverage. That is not for me. These things are not what they seem on the surface. For instance this ETF lost ~40% of its value between January and March of 2020 due to the way compounding works in volatile markets. That was far more than the index itself declined.

https://www.investopedia...rst%20half%20of%202020.

1. Triple-leveraged (3x) exchange-traded funds (ETFs) come with considerable risk and are not appropriate for long-term investing.

2. Compounding can cause large losses for 3x ETFs during volatile markets, such as U.S. stocks in the first half of 2020.

3. 3x ETFs get their leverage by using derivatives, which introduce another set of risks.
Since they maintain a fixed level of leverage, 3x ETFs eventually face complete collapse if the underlying index declines more than 33% on a single day.

4. Even if none of these potential disasters occur, 3x ETFs have high fees that add up to significant losses in the long run.
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4 users thanked Mr TIPS for this post.
You have to change your life on 07/01/2025(UTC), Guest on 07/01/2025(UTC), Dexi on 07/01/2025(UTC), Micawber on 07/01/2025(UTC)
Newbie
Posted: 07 January 2025 14:41:09(UTC)
#40

Joined: 31/01/2012(UTC)
Posts: 3,816
Thrugelmir;330287 wrote:
Newbie;330271 wrote:
Whilst I am with there is likely to be a slowdown in 2025, it is interesting to see so many doomsters saying its will crash citing the two good years in a row reason.

It is the due to two good 2 years (that too being backward looking) that appears to be the justification

Yet when we look backwards for say the last 75 years - the 4 occasions that we had 2, 20%+ years in the S&P, 3 came back the following year with a double digit positive return the other came back with a 2.6%, still positive return.


I could have said far more in my post that simply highlighted some facts. Interesting how the post got jumped on and assumptions made. The research I was reading was actually far more comprehensive in nature. Covered far more than just the past 2 years.


What / which post ?

My comment was about a general observation.

In terms of facts - does the fact that "on the 4 out of 4 occasions when the S&P delivered back to back 20% plus returns result in the following year also returning positive returns" count as a fact and is there for anyone to verify ?
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JohnW
Posted: 07 January 2025 15:52:11(UTC)
#46

Joined: 14/01/2012(UTC)
Posts: 582
No changes for me. In the main I'm happy. I only have one IT which I'm a little concerned about. It lost last year but has really marked time or made a little over the last couple of months, so I'm in no rush, and it has a dividend arriving in a month or two, so unless things change I'll wait for the dividend before making any decisions. As for everything else, there is nowhere else I'd rather be.
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Trev DIYer
Posted: 07 January 2025 16:31:23(UTC)
#47

Joined: 04/06/2017(UTC)
Posts: 121
I planned to reduce my ITs (BUT and JGGI) and add to my global trackers and/or SMIF & CVCG to reduce volatility and lower equity exposure.

However, BUT has lost 4% YTD, half of it today. Don't know whether to wait and see if it recovers or cut my losses? Should have paid more attention to the reducing discount which must be part of the problem.
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Malcolm Fulcher
Posted: 07 January 2025 16:57:34(UTC)
#50

Joined: 14/01/2020(UTC)
Posts: 11
Cvcg the investment charges are quite high compared to smif
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Newbie
Posted: 07 January 2025 17:04:09(UTC)
#48

Joined: 31/01/2012(UTC)
Posts: 3,816
Trev DIYer;330307 wrote:
I planned to reduce my ITs (BUT and JGGI) and add to my global trackers and/or SMIF & CVCG to reduce volatility and lower equity exposure.

However, BUT has lost 4% YTD, half of it today. Don't know whether to wait and see if it recovers or cut my losses? Should have paid more attention to the reducing discount which must be part of the problem.

Depends on what what BUT has done overall and what your position size is.
If it is up overall by 100% and the holding size is £10k then a 4% drop is not a big issue
However if your position is £500k then it is a different matter.
Either way something like TFIF is likely to give that back in divi's. It also helps if it is a risk reducing along with a re-balancing action.
BUT has not done badly last year.
FWIW - I have both and topped up SMIF (&TFIF) today.
I am up to the limit on BUT (my target was £50k input this year ie not including returns), if I was not I would have topped up today.
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Trev DIYer
Posted: 07 January 2025 17:16:56(UTC)
#49

Joined: 04/06/2017(UTC)
Posts: 121
Newbie;330315 wrote:
Trev DIYer;330307 wrote:
I planned to reduce my ITs (BUT and JGGI) and add to my global trackers and/or SMIF & CVCG to reduce volatility and lower equity exposure.

However, BUT has lost 4% YTD, half of it today. Don't know whether to wait and see if it recovers or cut my losses? Should have paid more attention to the reducing discount which must be part of the problem.

Depends on what what BUT has done overall and what your position size is.
If it is up overall by 100% and the holding size is £10k then a 4% drop is not a big issue
However if your position is £500k then it is a different matter.
Either way something like TFIF is likely to give that back in divi's. It also helps if it is a risk reducing along with a re-balancing action.
BUT has not done badly last year.
FWIW - I have both and topped up SMIF (&TFIF) today.
I am up to the limit on BUT (my target was £50k input this year ie not including returns), if I was not I would have topped up today.


Thanks for the perspective. BUT is 9% of AUM and has done well, it's just a bit annoying that I was planning to reduce it but hadn't got round to it.
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Newbie
Posted: 07 January 2025 18:43:56(UTC)
#51

Joined: 31/01/2012(UTC)
Posts: 3,816
Is the reduction more to do with the fact that it has gone up or was it a broader re-balance issue.
BUT is essentially run for the benefit of the Brunner family and to ensure that their wealth managed effectively and passed down accordingly through the generations.

So in essence - it is a true all weather portfolio as they state unlike the likes of CGT which focuses on diversification (Brunner adopt diwosification - they don't believe that you need to hold everything to diversify).

As such it has some sensible holdings and yet, keeps up with the mag 7 heavy global trusts and indices.

It seems to have been set and run since 1927 and the Brunner family are still rich so the all-weather claim and diwosification has held up to an extent. I appreciate that it has not been run by the same team or in the same way since 1927 but for something to manage the wealth a rich and powerful company and still deliver one has to take a really hard look at the likes of CGT which IMO seems to be run for the benefit of PS himself.

I digress but it seems to beat the likes of VWRL over 1, 3, 5 10 years. (cannot say the same for CGT)
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2 users thanked Newbie for this post.
Jon.Snow on 07/01/2025(UTC), Trev DIYer on 13/01/2025(UTC)
Johan De Silva
Posted: 07 January 2025 19:59:25(UTC)
#44

Joined: 22/07/2019(UTC)
Posts: 4,412
Mr TIPS;330296 wrote:
Johan De Silva;330283 wrote:
Mr TIPS given your outcomes you could instead of reduce gearing, switch your equity holdings in 3x Leverage Index and increase your cash allocation so you have the same equity exposure but more cash ready to deploy.


Thanks for the suggestion. However if by "Leverage Index" you mean buying an ETF like ProShares Ultra S&P 500 which follows the S&P 500 with 3x leverage. That is not for me. These things are not what they seem on the surface. For instance this ETF lost ~40% of its value between January and March of 2020 due to the way compounding works in volatile markets. That was far more than the index itself declined.

https://www.investopedia...rst%20half%20of%202020.

1. Triple-leveraged (3x) exchange-traded funds (ETFs) come with considerable risk and are not appropriate for long-term investing.

2. Compounding can cause large losses for 3x ETFs during volatile markets, such as U.S. stocks in the first half of 2020.

3. 3x ETFs get their leverage by using derivatives, which introduce another set of risks.
Since they maintain a fixed level of leverage, 3x ETFs eventually face complete collapse if the underlying index declines more than 33% on a single day.

4. Even if none of these potential disasters occur, 3x ETFs have high fees that add up to significant losses in the long run.

Point 3 is a little worrying, I'll check that one out.

If markets continue to rise, the large losses experienced during a crash tend to mean revert more quickly. Over the long run, this can lead to outperformance. The primary risk, however, lies in investor psychology during market crashes where you now have more deployable cash.

Video on the pros of leverage for the long run https://www.youtube.com/...esktop&v=kl9SoXjS0_I
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