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Johan De Silva
Posted: 23 February 2025 09:18:09(UTC)
#47

Joined: 22/07/2019(UTC)
Posts: 4,409
Rookie Investor;335471 wrote:
Thrugelmir;335468 wrote:
Johan De Silva;335467 wrote:
Thrugelmir;335466 wrote:
Tom 123;335458 wrote:

The S&P 500 is overvalued but at least diversified.



Sector breakdown of S&P500

https://worldperatio.com...0diversified%20portfolio.

I disagree financials being "Overvalued" as it's relative to 20 year period much of it during low rates. P/E of 16.64 and one can overweight the sector index along side a world index.


HSBC Holdings: 9.01 P/E
NatWest Group: 8.15 P/E
Banco Santander: 6.86 P/E
Lloyds Banking: 10.48 P/E
Barclays PLC: 8.490 P/E

No great surprise there's increasing interest in listed UK stocks.


PEs by themselves are meaningless, and even more so for cyclicals like banks.

What are these banks return on capital vs. cost of capital - and what are the forecasts for this in future? What about price to NAV/BV? These will tell you a bit more about valuation and what upside there is vs. downside.

I was fine with these simple relative P/E values since I owned the sector (PCFT sold into XWFS) and assumed NTI would lead to higher earnings and some multiple multiple expansion of a future higher rate environment persisting. However, looking back, my significant buys in STAN and HSBC in the FTSE 100 for the in-laws outperformed my basket-based strategy. In this case, multiples may have mattered. Certainly geopolitics did not play much of a factor given that Europe was out of favour for this period. It had to be lower P/E.

I understand that it's too basic for bottom-up stock pickers, but for a basket of stocks, it can be helpful to highlight where there's more upside than downside.

A world index tilt into XWFS should still provide some outperformance 2 years running if history of outperforming sectors holds true. This is taking an active bet on NTI rather than simply buying RAFI index as some have been doing as Value investing via an index does not seem sensible to me as I can not see anyone being attracted to stocks like Vodafone.
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The Spanish Inquisition
Posted: 23 February 2025 09:19:14(UTC)
#49

Joined: 02/04/2014(UTC)
Posts: 231
Currently I'm very heavily overweight US, its more a bet against cable. This anti growth, no idea, taxation addicted government is the gift that keeps on giving.....
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Mike ...
Posted: 23 February 2025 09:41:13(UTC)
#50

Joined: 16/03/2023(UTC)
Posts: 39

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I can see the arguments around valuations and concentration risk within passive indexes.

I don’t know if they’re going to be proved correct or not.

What I do know with certainty is that there are millions of investors, both professional and private, who know more than me.

So I’ll stick with the passives.


40/60 allocation.

30% HSBC All World Index
10% Vanguard Global Small Cap Index
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7 users thanked Mike ... for this post.
Harry Gloom on 23/02/2025(UTC), Micawber on 23/02/2025(UTC), Zach F on 23/02/2025(UTC), Thrugelmir on 23/02/2025(UTC), Cm258 on 23/02/2025(UTC), dlp6666 on 24/02/2025(UTC), Andrew59 on 28/02/2025(UTC)
Harry Gloom
Posted: 23 February 2025 10:16:14(UTC)
#53

Joined: 01/12/2022(UTC)
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From Berkshire Hathaway's just published letter on 2024 results:

"Despite what some commentators currently view as an extraordinary cash position at
Berkshire, the great majority of your money remains in equities. That preference won’t change.
While our ownership in marketable equities moved downward last year from $354 billion to
$272 billion, the value of our non-quoted controlled equities increased somewhat and remains far
greater than the value of the marketable portfolio.
Berkshire shareholders can rest assured that we will forever deploy a substantial majority
of their money in equities – mostly American equities although many of these will have
international operations of significance. Berkshire will never prefer ownership of cash-equivalent
assets over the ownership of good businesses, whether controlled or only partially owned."
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12 users thanked Harry Gloom for this post.
NPH on 23/02/2025(UTC), Sheerman on 23/02/2025(UTC), Raj K on 23/02/2025(UTC), Jed Mires on 23/02/2025(UTC), Sara G on 23/02/2025(UTC), Guest on 23/02/2025(UTC), Johan De Silva on 23/02/2025(UTC), Jay P on 23/02/2025(UTC), ben ski on 23/02/2025(UTC), Jesse M on 23/02/2025(UTC), dlp6666 on 24/02/2025(UTC), Andrew59 on 28/02/2025(UTC)
smg8
Posted: 23 February 2025 10:46:12(UTC)
#54

Joined: 26/04/2020(UTC)
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The doom mongers have been out in force on this forum for some time, prominently since 2021.

My portfolio is up over £400k since then, so I’m glad I haven’t paid too much attention.

One thing that’s interesting is that it’s the doom mongers who are the most repetitive in their assertions. I imagine some are seeking confirmation bias around the portfolio decisions they’ve made that are costing them 10’s/100’s of thousands of pounds a year.

We all know the market will go down at some point, it’s investing 101. I’ve can’t recall seeing anyone post on here that they think they're gonna go up non stop, that the US is undervalued, that they are all in on the M7 etc etc.
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7 users thanked smg8 for this post.
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NPH
Posted: 23 February 2025 10:55:05(UTC)
#29

Joined: 26/01/2014(UTC)
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Harry Gloom;335486 wrote:
L.P.;335477 wrote:
Thrugelmir;335444 wrote:
Harry Gloom;335437 wrote:
I think Vanguard may be on to something...




Unsurprisingly history has a strange habit of repeating it itself. The often quoted words. Will eternally stand the test of time.

"The four most dangerous words in investing are: 'this time it's different.'" - Sir John Templeton


Lots of that in here judging by the posts and even a forecast by NPH that “they won’t crash”.

Vanguard, GS or anybody else out there cannot know if and when the markets will crash but, if yields on 10year treasures begin edging up anywhere close to 6% then it definitely won’t be “different this time”.

To believe that because they got it wrong last time that they will be wrong this time is a dangerous stance to take and to base one’s investing strategy on that assumption is akin to taking tips from a taxi driver.


I do not and have never based my investing strategy on anything reported by Vanguard, Goldman Sachs, Morningstar, posts on this forum, or any other forum whether it was from 2017 or yesterday. Why would you think that i have?

I made my simple investing decisions many years ago and have stuck to them since and they will remain as set for the foreseeable future, quite possibly the rest of my life and hopefully continue with my children when I am gone.

I have no illusions that this time will be different, in fact, I sense many on here are fearful, despite Thugelmir's oft repeated and tedious assertions that he believes some us think the stock market is an ATM, we read it on social media, we're following the herd, etc, etc.

The point in my post, by quoting fear mongering stories from 2017, that just as readily apply today, demonstrate how difficult, no, make that impossible, it is to forecast what will happen in the stock market.

Yet, countless hours of analysis of valuations, p/e ratios, blah, blah, and thousands and thousands of words are written proclaiming to do just that which is ultimately pointless. People shift their portfolios around tilting this way and that in response to their own “expert” analysis, but there really is no need and ultimately their chances of being correct or successful over the long term is slim. In fact, these actions may be detrimental to their long term goals.

I fully expect a crash in US equities which will have global repercussions, several times over the coming decades and as my portfolio has a high US equities content, a bit higher than the global index, I am ready with my finger on the trigger to immediately take action when it happens.

That action will be to do nothing, apart from perhaps deploy some cash to buy more US equities when they are sharply down.


Thanks HG. It amazes me on these threads how quickly we move away from the original question posed into lengthy and arcane analysis and arguments without any answers.
The Vanguard report was only ever a starting point, and I think few would dispute US valuations are high by historical standards. We don't need to get diverted into Vanguard's methodology.
Buying and holding a cheap global tracker has been hugely successful for the last 10 years, it may well continue to be so.
At the same time, there are reports today of Berkshire Hathaway raising cash to buy big in Japanese equities, an example of diversification beyond the US.
I don't pretend to have a crystal ball, I just wondered if current conditions had people reconsidering their allocations.
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5 users thanked NPH for this post.
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Thrugelmir
Posted: 23 February 2025 10:56:30(UTC)
#51

Joined: 01/06/2012(UTC)
Posts: 5,316
Mike ...;335490 wrote:
I can see the arguments around valuations and concentration risk within passive indexes.

I don’t know if they’re going to be proved correct or not.

What I do know with certainty is that there are millions of investors, both professional and private, who know more than me.

So I’ll stick with the passives.


40/60 allocation.

30% HSBC All World Index
10% Vanguard Global Small Cap Index



Discussion not argument.

MSCI alone operate over 200,000 passive indexes on behalf of clients.

This isn't an active or passive debate either.

Mllions of investors who do exactly the same thing can only drive market momentum in one direction. Behavioural finance is a topic in itself.
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Jed Mires
Posted: 23 February 2025 11:08:09(UTC)
#55

Joined: 04/04/2023(UTC)
Posts: 337

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Was thanked: 634 time(s) in 224 post(s)
Equities are the growth engine in your portfolio and a great way to access equities is to hold a cheap global tracker. I hold 30% of my portfolio in global and 30% in SP500 and I'm sticking to what works for me. Of course there will at some point in the future be a correction but for now its certainly doing its job and bringing home the bacon.
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Harry Gloom
Posted: 23 February 2025 11:57:47(UTC)
#30

Joined: 01/12/2022(UTC)
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NPH;335495 wrote:



Thanks HG. It amazes me on these threads how quickly we move away from the original question posed into lengthy and arcane analysis and arguments without any answers.
The Vanguard report was only ever a starting point, and I think few would dispute US valuations are high by historical standards. We don't need to get diverted into Vanguard's methodology.
Buying and holding a cheap global tracker has been hugely successful for the last 10 years, it may well continue to be so.
At the same time, there are reports today of Berkshire Hathaway raising cash to buy big in Japanese equities, an example of diversification beyond the US.
I don't pretend to have a crystal ball, I just wondered if current conditions had people reconsidering their allocations.

[/quote]

According to BH's recent filings their stake in the "sogo shosha" is around 6% of their portfolio as at year end 2024. Not sure I would describe these acquisitions as "buying big" it's more a fringe bet currently.

The overwhelming majority of their portfolio remains US.

https://www.cnbc.com/berkshire-hathaway-portfolio/.
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Robin B
Posted: 23 February 2025 12:01:19(UTC)
#56

Joined: 01/04/2024(UTC)
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Short answer: No.

Long answer: Nope.
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1 user thanked Robin B for this post.
Guest on 25/02/2025(UTC)
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