Reply to: Pension ex.USA

[willendure]

During the 2008 to 2012 bear market I did this with most of my pensions and managed to stop a substantial loss. Scottish Widows and Royal London pension documentation shows they went down a lot in those years, whereas I lost almost nothing of my pension. I want to avoid a repeat of this now that the USA has gone crazy.

Serious replies only. I didn't expect it to be this hard to diversify and am particularly concerned about Scottish Widows being so against diversification from the USA. They essentially make it impossible.

Since you already did it in 2008 to 2012 it sounds like you are capable of doing it again. Yes, I would get out of US equities for a while. Big pension funds simply cannot be nimble in their allocation. Even though they can see it coming, their strategy remains unchanged. A lot of pension money is in bonds, and a lot is in longer term bonds. Its been great for the last 40 years, does it seem like it will be for the next 10?

We are still in inflation - high yield corp bond spread is low (it did spike to 4 in recent crash though), and treasury bond spread is flat. Which is why inflation assets such as gold are doing well. This phase could move in 2 direction, back to growth or deflationary shock (a big crash). Back to growth you want to get back into equities again, deflationary shock you ideally want to be in bonds and cash. Which direction do you think we are headed in?

I am hedging my bets on a deflationary shock which will naturally be followed up by yet another massive injection of liquidity from central banks - after all, what else can they do? My timing signal for getting back into equities will be when the high yield corp bond spread goes over 6.5%, spikes, and then comes back down below 6.5%.

Currently at 30% precious metals, 70% cash, but only so much cash as I have not taken the time to invest it yet - this is money from a house sale that my wife and I have been arranging for our pensions. I think I would like to get to 30% precious metals, 10% gold mining equities, 40% short duration govt bonds, and 20% cash, in anticipation of the next big move down in stocks.

I have another smaller ISA fund which is about 60% invested in Heliostar Metals, got in at 30 cents, and currently around $1. Gold mining as a business makes sense to me as a contractor, because I am aware that I have certain costs per day, and a day rate, and even if I can push up my day rate a little, beyond my costs basis, any extra is basically free money. Gold miners have a cost/oz to extract gold, and that might be something like $1800/oz, obviously depends on the mine and company and jurisdiction. When gold surges, the growing difference is free money, so long as inflation on diesel costs does not push up their costs basis too much. Its a very periodic industry with exagerated boom/bust cycle. Also quite hard to invest in because you need to find out who the good companies and managers are. Anyway, HSTR is worth a look, and sign up to some gold investment newsletters such as Brian Lundins if you are interested.

Short duration government bonds are paying 4.5% right now. Might as well take it. The opportunity will evaporate at the short end if central banks have to push interest rates down - but that will very slightly increase the value of those bonds and you won't lose money. If interest rates go up, you can reinvest and get the higher rate. Win win for capital preservation vs upside potential. But don't go to the long end because that could potentially blow out again and the bonds will lose value. I'm talking 3 month t-bills.

I also have about £30K in bitcoin, which is for my children mostly. My Ltd is just getting started putting spare cash into bitcoin also, at a rate of £500/month. I don't think bitcoin will go nuts like it has in the past, those days are gone, but I do expect it to remain a very hard asset and for it to constantly appreciate over time.

We're not panicking yet!


Good luck!

[Smartie]

Given what is happening in the USA now, and the likelihood of a major recession or even a depression, I would like to limit or remove my exposure to the US stock markets in one of my pensions.

I was looking for a global index ex-US tracker about 6 months ago but concluded it wasn't possible as there aren't any available in major SIPP providers.

This one is available in the US at least https://etf.dws.com/en-gb/IE0006WW1T...-ucits-etf-1c/

It's possible to put something together yourself but couldn't be bothered, unfortunately.
I did however pull 15% out of my investments to keep in cash against my offset mortgage, so could have been worse.

My suggestion is to ride it out if you're a few years away from retirement. If not, you were reducing your exposure to equities over the past few years weren't you? ;-)

[jamesbrown]

The inverse scootie signal is money in the bank.

[WTFH]

I'm not going to start investing in the US yet.
I thinker's got a few more Tesla-esque crashes to come, and let's see how many Boeings get sent back.

Once Scooter comes on here saying it's time to sell, then I'll start buying.

[sadkingbilly]

I may be a git, but I'm not so bad that I'd make it as a politician.

I didn't say 'successful' politician

[ladymuck]

not contradictory at all.
you should be a politician .

I do believe they may relate to different periods of time. One being in January and the other being three months later

[sadkingbilly]

When everyone is selling - buy! That's what I'm doing.

Buy and hold.

I sold half my stock (needs must, not to game the market) just after the orange Mussolini took office. 3 months later - £30000 less.

not contradictory at all.
you should be a politician .

[woody1]

I wouldn't necessarily advocate Gold, although it is a useful portfolio diversifier when combined with stocks, bonds, property etc. Even a small allocation to Bitcoin (or a proxy like MSTR, given that BTC and its derivatives can't be held in a SIPP/ISA) might serve a similar purpose.

However, what Gold is doing at the moment may be a worrying bellwether of not so good things to come.

[Dorkeaux]

NotAllThere, Woody1 and ChimpMaster are in the right of it, most good investors stay invested and don't try to time the market.
Instead they use dollar cost averaging, a fancy term for dribbling money into your investments evenly over time.

This has always worked over time, but corrections and "Black Swan" events can be unnerving.
Also, your appetite for volatility should change the closer you get to retirement.

This is my case. I'm getting close to retirement, and bailed out of all the stock markets (as much as I was able to) a week into the recent US stock market fall.
I lost a pile, but not nearly as bad as it would have been had I remained fully in.

I'm now buying back in, about 40% UK ETFs, 40% US ETFs, 20% individual stocks, mainly UK and European. Slowly…

[sadkingbilly]

I moved the US part of my SIPP elsewhere when that twat got elected.
I've always been a bit germoline*, anyway.


*antiseptic.

[woody1]

When everyone is selling - buy! That's what I'm doing.

Buy and hold.

This (with certain caveats).

To some extent it depends how far off needing the money you are (how long to retirement). General advice seems to be to scale out of equities the closer you get.

It's rare to get a 10-year period where the market is lower at the end than the beginning but it does happen. If you'd bought (and held) in the late 20s or mid-60s, it would have taken 30 years to get back to breakeven.

https://www.macrotrends.net/1319/dow...storical-chart

With Trump at the helm, who knows. I also can't help feeling that investors may have got a bit complacent. For the past 15 years, the stock market (particularly in the US) has been pretty much a one-way bet. Every time it's gone down, it's fairly quickly recovered.

[eek]

Look at historical movements in markets: the US will ALWAYS recover and will outperform UK by a significant majority.

Past Performance may not reflect future returns especially with Trump in charge...

[ChimpMaster]

Look at historical movements in markets: the US will ALWAYS recover and will outperform UK by a significant majority.

[woody1]

Surprised this is the case, as many providers offer a wide range of geographical/sector/thematic funds.

Do you have a link showing what funds you can invest in?

[northernladuk]

I've been watching my pension sink through the floor not knowing what to do. Usually I panic sell, miss the bounce and buy back in for more than I sold. Im useless at investing so I decided to swallow hard and keep hold. I must admit I thought we were past the worst of it and near bottom. It's people saying what you are that gets me stressed again so I'm really not sure what to do myself TBH. Too late to sell? Just hang on now or are we at the bottom so pump whatever spare I have in to it? Not a clue. When I decide to do something I'll tell you so you can do the opposite