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Weekend reading: Looking down when the tide goes out

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What caught my eye this week.

Sensible readers who passively invest and so haven’t been following the gyrations in the markets this past week, please jump to the links below.

Oi! That includes you, Accumulator!

Right. I presume I’m now addressing only those readers who have ignored our exhortations to invest purely into index funds like Saint Accumulator – those who instead get up to naughty active activities like yours truly.

In which case, I’m curious: How was it for you?

Ooft!

For my part I’ve had one of the toughest 10 days or so that I can remember, investing-wise.

At the worst point my portfolio was down by nearly 10% in barely a week.

That’s not the end of the world – I’ve seen far worse – but what was infuriating is that I’m running the lowest equity exposure in my tracked portfolio since, well, forever.1

True, I was still well over 70% in pure equities. Ben Graham – who advocated 75% at the most bullish times and 25% at the least – would have frowned, given that I have slowly been decreasing my exposure to shares partly on account of my nervousness about the rampant complacency others were showing concerning the risks of shares. (Especially in the US, but also here whenever we made a case for cash or bonds.)

Still, I’d hoped mine would prove to be a pretty eclectic 70% collection of shares, as it had in the past, and hence it wouldn’t simply shadow the market down. That proved optimistic.

Most times over the years when markets fall 5-10% quickly, I’ve owned some small caps or thinly-traded larger companies that don’t move much at first. Many a pleasant 30 minutes I’ve spent trying to grind out a few points of gains or risk reduction by rejigging between them in a sell-off.

This time, none of that. Almost everything was down – on Thursday in some cases by 7-10% on the day.

Had underlying markets become more (or less?!) efficient since the last lurch down? Was I unlucky? Or was there something different going on with this fall?

One aspect wasn’t a mystery. I knew I was running some chunky additional risk with my active stock selection.

If I were marketing my portfolio as a fund, I’d perhaps spin it as a ‘barbell’ approach of low volatility assets mixed with ‘strong conviction holdings in global disruptors’.

But what it boils down to is I own several outsized shareholdings in tech shares that have multi-bagged. They are taking forever to whittle down, because I own them outside of tax shelters for historical reasons. And that, as I’ve written before, is a massive pain.

There are paperwork hassles. There are capital gains taxes to consider. Also, I am trying harder not to sell my winners too soon, because sins of omission have cost me much more over the years than sins of commission. (That is, I’ve forgone big gains by selling too soon and putting the money raised into some turkey.)

I knew this risky exposure was there. It was another reason why I’d been de-risking the portfolio where I could inside my tax shelters. But clearly I miscalculated somewhere because when the markets fell, I still went down with it.

Remember – I felt I was running less risk versus the market because I held fewer equities.

What’s more, historically my portfolio has been less volatile than my underlying equity benchmarks – even with the concentration risk and sector risk I manage, and even when I’ve been near-100% in shares.

Hence I really felt it in the nads when it all came to naught in the falls.

It’s not a disaster. I was nicely up against three of my four benchmarks year-to-date (YTD) when the rout started, and I’m still ahead of each of those by several percentage points. I remain down against the world index YTD, but the gap didn’t really widen. I’m underweight the US/dollar, and I think the under-performance here in the last couple of years will probably reverse if and when pound recovers.

We’ll see, but anyway I know I shouldn’t feel too bad that a bit of mean reversion has caught up with me.

So why do I?

Partly I think it’s because my purposeful risk reduction hasn’t paid off.

This slightly gives me the willies.

Lord make me a passive investor, but not yet

I have an existentially bleak view about active investing. In fact I’d bet I see active investing as far harder than almost any active investor you’ve met, despite what I feel is my creditable record.

In the middle of last week’s sell-off I described what I believe is required to even try to beat the market nowadays to a friend asking for advice on Facebook. He persisted even after I told him my only advice was – as ever – to invest in some select index funds every month from his salary and come back in 30 years.

He said he’d seen the news, and wanted to know if it was a “buying opportunity” because in his opinion the market had been too calm before.

Didn’t I have anything clever insights, he wanted to know? As usual I got the impression he felt I was blowing him off by urging him into passive funds. Keeping the good stuff to myself!

Eventually I snapped. Me in blue:

(Click to enlarge)

Often I tell friends I won’t know if I was a successful active investor for another 40 years, whatever my track record is to-date. It’s that uncertain, and luck is so hard to disentangle from skill.

As that renowned day trader Sophocles wrote:

“One must wait until the evening to see how splendid the day has been.”

I know I’ve not been obsessed over the past nine months, if I’m honest. I’ve spent countless weekends shopping for home furnishings. It’s ages since I read an annual report in bed gone midnight – something I used to do more weekday nights than not.

I thought about putting everything into a Vanguard LifeStrategy 60/40 when I bought the flat near the start of the year, and taking a year out. Perhaps, on this evidence, I should have.

Home alone

I guess I also have to acknowledge that the mortgage I’m now running to sit in this flat that I’m typing from has probably turned some of my dials to new settings.

For as long as I’ve been investing, I’ve had a relatively monstrous buffer between me and the streets. Long-time readers might even recall that I really started actively investing when I decided to put my house deposit to work in equities, rather than in property, way back in 2003.

Don’t get me wrong, there’s still a big buffer in place. I feel secure… a healthy monthly cash flow from earnings in the front line, cash deposit ramparts, NS&I saving certificate moats, and a five-year fixed rate mortgage that means I’m safely inland from raids from along the coast. My assets well outweigh my debts.

Still, mine is not the fortress balance sheet it once was.

Effectively, like anyone with an investment portfolio and a mortgage, I can consider my portfolio to be levered up. (Because I could instead use the portfolio to pay down the debt.)

This was by design, but it would be foolish to deny there’s a price to pay.

Losing loadsamoney

Finally, while I’m sharing, there’s also the fact that while I’ve suffered bigger percentage losses in a week – far greater in the financial crisis – this was the biggest in cash terms.

I’m ten good years on from 2008, and hence I have more money exposed to the shredder. It’s harder to be as gleeful at the prospect of a bear market as I used to be.

Perhaps that’s why my back pain returned on Thursday. Like George Soros’ gnomic spine, mine tells me when I’m stressed, which is handy because I seldom feel stressed much.

I felt it this week.

A warning to recalibrate before the big one? Or have I just got to get my money-losing muscle memory back?

Something to ponder.

How was it for you?

From Monevator

Preparing for retirement: Finding a path to a flexible income and lower taxes – Monevator

From the archive-ator: Volatility, inflation, and asset class returns – Monevator

News

Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!2

Will Chancellor Philip Hammond cut pension tax relief in the Autumn Budget? – MoneyWise

High Street sales decline for eighth month in a row – ThisIsMoney

Brexit uncertainty has crushed the housing market, says RICS – Guardian

Treasury weighing up tax break for landlords who sell to young adults – JW Hinks

This Texas finance professor sifts data for signs of rigged markets – Bloomberg

Residential retail bubbles around the world [Graphic and analysis]Visual Capitalist

A million-plus Britons live in “food deserts” [Surely shops respond to demand?]Guardian

Treasury admits ‘no consensus’ for wholesale changes to pension tax breaks – ThisIsMoney

The death of the IPO – The Atlantic

In essence, holding gold is a bet on a weaker dollar – Capital Spectator

Products and services

Natwest and RBS launch 1.5% savings rates, with a catch – ThisIsMoney

Lenders slash buy-to-let interest rates as demand falls – ThisIsMoney

Profits slide at big six energy firms as 1.4m customers switch – Guardian

You’ll get £100 [and I’ll get a cash bonus] if you invest £1,000 with RateSetter for a year – Ratesetter (or see this article for more on the risks and rewards)

Comment and opinion

Time horizons Vs endurance – Morgan Housel

Latest from the 89-year old founder of Vanguard Jack Bogle – Humble Dollar

Is the best predictor of future stock market returns useless? – Of Dollars and Data

What everybody is getting wrong about FIRE – Mr Money Mustache

Diversification pros and cons in three slides [Geeky but excellent]Alpha Architect

Why stock pickers must hunt for ‘extreme returners’ – James Anderson

Great discussion about hard money, gold, and Bitcoin – Invest Like The Best

Meet the FI Family: Mr and Mrs Young FI Guy interviewed [Podcast]UK FI Pod

Just another panic attack in the market [For investing nerds]Calafia Beach Pundit

John McDonnell is not offering workers real share ownership – Guardian

What should you consider in a ‘forever home’ [US but relevant]Morningstar

What would you do with £1 million? – FIREStarter, indeedably, Quietly SavingMs ZiYou, Saving Ninja

Is Hargreaves Lansdown’s dividend yield too low for income investors? – UK Value Investor

Life advice: Don’t follow your passion – Scientific American

Brexit

Hammond says double bonus from Brexit deal would bolster Budget [Search result]FT

On Brexit, Tory ‘ultras’ are gaslighting half the country – Guardian

No-deal Brexit will leave households facing higher food prices, restricted travel, medical shortages and curbed consumer rights, Which? warns – ThisIsMoney

Brexit as revolution [Transcript, PDF]Sir Ivan Rogers (Former UK ambassador to the EU)

HMRC chief faced death threats after opining on customs costs – Civil Service World

Polls suggest many Leavers want Brexit whatever the outcome – YouTube

Kindle book bargains

The Templars: The Rise and Fall of God’s Holy Warriors by Dan Jones – £0.99 on Kindle

Over and Out: My Innings of a Lifetime by Henry Blofeld – £0.99 on Kindle

You Are a Badass: How to Stop Doubting Your Greatness by Jen Sincero – £0.99 on Kindle

Way of the Wolf: Straight line selling by Jordan Belfort – £0.99 on Kindle

Off our beat

Amazon owes Wikipedia big-time – Slate

Off our beat: Environment special

Why you have (probably) already bought your last car – BBC

What would real ambition in tackling dire climate warnings look like? – Vox

We need to act now on climate change, or we’re screwed – DIY Investor UK

47-year old plastic soap bottle washed up on beach still looks brand new – BBC

The biggest threat to long-term wealth [Oldie from me!]Monevator

And finally…

“In my view, risk is primarily the likelihood of permanent capital loss. But there’s also such a thing as opportunity cost: The likelihood of missing out on potential gains. Put the two together and we see that risk is the possibility of things not going the way we want.”
– Howard Marks, Mastering the Market Cycle

Like these links? Subscribe to get them every Friday!

  1. Or less glibly since 2007. But in those days I treated my entire net worth as one big investment pot, so it’s not really like-for-like. []
  2. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. []

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{ 86 comments… add one }
  • 51 Moongrazer October 14, 2018, 7:38 am

    Is it sadistic of me to have wanted a bigger rout, to make buying in cheaper? I confess I haven’t felt much of anything seeing my portfolio take a 10% hit since it’s peak in the last few months. Partly I think it’s because I’m still up on what I’ve put in. But I’m also nowhere near wanting to withdraw, so I feel quite disconnected from what the magic number says just now.

  • 52 Fatbritabroad October 14, 2018, 8:23 am

    This is kind of how I feel. The numbers don’t really seem real at the moment. Not sure if I’d feel the same with a 50% drop!

  • 53 PC October 14, 2018, 8:51 am

    I love Mr Money Mustache. That is all. Thanks for the link

  • 54 Keith October 14, 2018, 9:05 am

    For those interested in the Ivan Rogers speech, there is a follow-up interview/podcast here: https://soundcloud.com/catherine-barnard/2903cb-no-9-sir-ivan-rogers-former-uk-ambassador-to-the-eu

  • 55 PendleWitch October 14, 2018, 9:48 am

    Re: Calafia Beach Pundit – says nothing to worry about; move along. His chart #1, Vix/10yr yield supports your view of complacency. Those spikes have been getting smaller recently. Personally, I have to stick to passive, since I don’t want to have to understand what the rest of those charts might indicate, especially when mixed in with human psychology. Good luck to those who do!

  • 56 ZXSpectrum48k October 14, 2018, 11:12 am

    @Mathmo. FX hedging policies vary across funds. Often the hedge is rolled every month. As the fund receives subscriptions and redemptions, say on a daily basis, or the NAV changes due to asset price moves, then this hedge will need to be rebalanced. Most funds tolerate some hedging error to reduce transaction costs/operational complexity.

    You basically have three transactions: a spot transaction (sell GBP/buy USD), a 1-month forward outright (buy GBP/sell USD) and the purchase of the assets (USTs). The spot and forward outright transactions together form an FX swap. An FX swap has no FX risk (hence why it hedges your FX risk). Synthetically, this swap results in you lending for 1-month term in the UK, borrowing for 1-month term in the US i.e. it’s an interest rate position. The cost is the rate differential for that term, which compounds up on each roll.

    Post hedging, the fund NAV should have minimal exposure to FX risk and a very small exposure to money-market rates in the UK and US (1-month duration). So if US 1-month rates move 10bp higher the fund NAV would increase by 10bp*1/12=0.8bp i.e. negligible. It’s primary exposure will be to asset price moves, in this case US bond yields. The fund’s bond duration will drive NAV changes. So if bond yields rise 10bp, and the fund’s duration is 6, then the NAV will fall 60bp.

  • 57 SemiPassive October 14, 2018, 11:56 am

    Thanks ZXSpectrum48k for the currency hedging calcs. Incidentally Hargreaves Lansdown have been holding back many currency hedged bond ETFs from being traded due to the lack of transparency on these costs from the providers to retail investors.
    I hold one GBP hedged global high yield bond ETF but will bin it if the true net yield is no better than, say SLXX (investment grade corporate GBP). Easy enough to calculate by summing distributions through the year.

    As for the market I’ve taken a 3% hit in the last week and maybe 5% in the last couple of months from a majority high yield income portfolio.
    I was about 70% in equities a year ago, now its more like 55% + 10% in UK REITs. Plenty risky enough for me. Rest in mixed duration corp bonds and cash, and my work pension is drip feeding into a short dated bond fund (close to cash) so will be derisking over time until equities make up no more than 50% of portfolio.
    If I was The Investor I would sell enough unwrapped equity to pay off my mortgage and sleep easy.
    I won’t be buying anymore equities for a while unless the market drops 20% further, but that will be more down to rebalancing according to my asset allocation than active market timing decisions.

  • 58 weenie October 14, 2018, 2:50 pm

    It’s been really tempting to check my accounts but using a bit of willpower, I’m going to wait til the end of the month to see what the damage is. I’m over 80% in equities so it might not look pretty but perhaps things might have settled down too.

  • 59 Naeclue October 14, 2018, 3:17 pm

    I only really look at our accounts in detail each January when I rebalance and decide how much to draw from our SIPPs for the year, so not really sure how we got on last week. Our equity investments are split across multiple trackers and accounts, but weighted according to the FTSE World Index, so since the beginning of the year, we should be a smidgen up on a total return basis. After many years of rising prices, a perfectly satisfactory result.

    My only area of active management is with cash deposits, where I admit to being somewhat obsessive about getting the best returns I can. Just opened a couple of Marcus accounts, which are by far the best instant access deals out there right now.

    There is no way I would want to pore over company reports and announcements or read active managers lame excuses as to why they have underperformed. Passive investing is wonderful. Invest and forget as you can rest assured you are getting market returns at the lowest possible price and lowest risk.

    I don’t invest in corporate bonds as I prefer to take a more barbell approach of a higher equity allocation and less gilts/cash. ZXSpectrum48k has illustrated why it is somewhat pointless to invest in hedged bond funds, unless you want to speculate on relative movements between yield curves. You are not going to get a higher return simply because US treasuries currently yield more than gilts. I do hold some US Treasuries though, but via unhedged ETFs. I think of these as my version of gold. When the world gets into a dangerous place, US Treasuries and the dollar often do very well.

  • 60 Hospitaller October 14, 2018, 3:26 pm

    @ZXSpectrum48K

    Thanks. Yes, I am aware that GBP-hedging reduces the effective yield. But broader issues and context come into play for me – for example, it is a very personal opinion but I have some difficulty viewing gilts as a true safe haven asset at this time (too many Brexit extreme views around – not even very confident that the UK will exist as the same components in two years time if things have unintended consequences). I also think Treasury 10-year yields may over the next year march higher and as I said I am drip-feeding into those increases. I also have at the back of my mind that the US might do some more serious QE down the track while I am unsure the UK has much of a starting point for that.

  • 61 Learner October 14, 2018, 5:24 pm

    Just checked, about 5% down. I’ve seen far bigger falls so this one barely registered. It feels like there is too much good news in the US (unemployment, rates, tax cuts) and cheap money sloshing around for a vanilla correction. Like bitcoin, people will buy the dip.

    There’s unease about time and valuations, but no-one is fearing for their job right now – quite the opposite.

    This week has prompted me to revise my position. My total wealth consist of 20% emergency cash, 20% retirement, 60% saving for house deposit. Half of that 60% is invested, half in cash. I should probably liquidate the invested part ASAP since I intend to spend it some time in the next few years. It’s daft to leave it at risk. Going to be 80% cash, 20% slow & steady! Good grief.

  • 62 Grislybear October 14, 2018, 6:29 pm

    How was it for you?. Cash ok, global equities and bonds mild downturn, VUKE got the usual hard kicking.

  • 63 Mathmo October 14, 2018, 8:45 pm

    @zxspectrum — bless your rubber keys — that’s outstanding work. Thank-you for the patient explanations.

  • 64 dearieme October 14, 2018, 8:59 pm

    “the US might do some more serious QE down the track”: the attempt to leave the QE/ZIRP/etc era is bound to include at least one episode of ‘oh my Gad, we gotta go into reverse’. I wonder whether these tricks will work a second time. Or if they’ll work in the sense of depression avoided but stagflation invited.

    I’m wondering about an ETF or fund of TIPS – I have been, though, for quite a while. Any recommendations?

  • 65 Jimmy brown October 14, 2018, 9:09 pm

    I am 100% in equities.

    Overweight towards USA and tech .

    I took massive beatings last week down circa 10%.

    I am beginning to question the geographic diversification.

    The entire global follows America’s lead

    I might just put my entire core holding in a US equity index fund and do away with Europe and UK etc .

    Then have satellites thematic such as small cap and tech , healthcare etc to support the core.

  • 66 Jimmy brown October 14, 2018, 9:22 pm

    Just opened my son’s JISA. He is two weeks old. His elder brother is 20 months old and is ISA is bias towards tech ,small cap, emerging markets and bio tech .

    Will pump some money into their ISA this week before the markets creep back up .

    I am hoping they do not need to touch the money until at least 2060 and they will remain invested after 18 and continue to contribute.

  • 67 Gareth October 14, 2018, 11:22 pm

    Hi

    Track my investments very carefully. Postioned for dividends as in drawdown phase. Taken a beating as the market is down over 10% which is correction territory, but knew it would happen at some point. Been there before and expect to be there again. Will just keep taking the dividends inline with the strategy and the capital will eventually sort it itself out

  • 68 Thomas October 15, 2018, 6:00 am

    Sir Ivan Rogers’ speech must be the best thing I’ve read on Brexit yet. Not only an engaging read but also sensible, with a good dose of realism, facts on how the EU operates, all of it. If only he had made these comments prior to the vote! If only someone in government had the sense to put forth these eloquent arguments and facts..! If only we would have listened! Thank you for linking to this great piece.

  • 69 dearieme October 15, 2018, 1:19 pm

    @Thomas: “If only someone in government had the sense …” – my dear sir, do you seek to imply that it is unthinkable that anyone in the Opposition would have sense?

    Perhaps a Partei of anti-semitic socialists isn’t where you look for sense.

  • 70 The Investor October 15, 2018, 1:58 pm

    @Thomas @dearime — Let’s leave the party political stuff there please. Further will be deleted. Thanks!

  • 71 ermine October 15, 2018, 2:51 pm

    > Is it sadistic of me to have wanted a bigger rout, to make buying in cheaper?

    Nah, just greedy, but in this respect metoo and all that. And I am an old git with zero human capital left, but a decent wodge of cash. And a fair lump of gold ETFs, bacause I thought things were sky-high… In my ISA, because wool had to be gathered when I did that, FFS. Gold should be outside, the barbarous relic pays no return.

    This ain’t a crash. Yet. It needs to become a rout. People need to start talking about back five years, ten might be overly greedy, and lead to other trouble in the wider world and pain, hurt and destruction that I don’t actually wish on my fellow countrymen, despite that rush of blood to the head in 2016. I look at iweb and think meh, red ink a plenty but nothing worth really buying yet. It’s not even a 10% bend for me yet. It’s random noise, so far, but one can live in hope…

  • 72 Mathmo October 15, 2018, 3:00 pm

    With optimists like @ermine around, who needs Monday morning?! 😉

  • 73 George Windsor October 15, 2018, 3:02 pm

    The line about keeping the “good stuff” to yourself resonated. I think people believe there’s some get rich quick scheme but all they need to do is follow Buffett’s advice to get into index funds to avoid fee costs. I’m trying to figure out whether the tax-loss harvesting of robo-advisors offsets the fees sufficiently to make their management fees worthwhile. For example does the 2.66% boost Betterment claims (https://investormint.com/investing/betterment-vs-sp-500-comparison) offset the annual fee and then some? Would be very keen to know the answer.

  • 74 Vince October 15, 2018, 5:39 pm

    On the “What would you do with a £million” thought experiment, the bloggers taking part have a varied approach, though most have predictably gone with sticking a reasonably large part of it in index trackers to draw the income starting now or a bit later on. Investing in one lump sum a month ago would now look like a bad idea. Not going all-in 5 years ago also now looks like a bad idea. A compromise of x% per month for the next xx months, but what should x and xx be?

    For those with a wad of cash that needs a home to generate a reasonable income (say 5%) and in the context of this week’s movements, what sort of strategy would you take?

  • 75 ermine October 15, 2018, 8:56 pm

    > For those with a wad of cash that needs a home to generate a reasonable income (say 5%) and in the context of this week’s movements, what sort of strategy would you take?

    Three to five years, VWRL as recommended by Lars

    Go with the index. But accept that timing matters. Some time over the next three years will probably hit the jackpot enough.

    > a reasonable income say 5%

    I am sorry to say that a SWR of 20x is probably overoptimistic at current valuations, but that could change 😉

  • 76 ermine October 15, 2018, 8:59 pm

    > Three to five years

    Pound cost averaged steadily into the market on a monthly basis what I meant to say. Obviously if you can arrange to lump it all into the market at the low-water mark that is all to the good, but the trouble is determining that point. PCA is your friend in the absence of such occult precognition.

  • 77 Vanguardfan October 16, 2018, 7:33 am

    @georgewindsor – are you in the US? Tax rules are very different there. That puff piece doesn’t give enough information about the algorithms to make much of a judgement imo.
    In the UK, most people should be able to shelter their investments in pensions or ISAs so no need for further action to mitigate taxes.

  • 78 Boltt October 16, 2018, 9:52 am

    Hi, I just checked some of my investments and was surprised to see my preferences shares back down to late 2015 level. Seems a bit rough given the general drop in the FTSE 100.

    Have I missed anything particular to PS’s (apart from Aviva’s rude attempt to cancel at par)?

    Since dividends are unaffected I will try to ignore the noise.

    B

  • 79 The Investor October 16, 2018, 1:06 pm

    @Boltt — I wouldn’t dismiss the impact of the Aviva farce. It has revealed an under-appreciated flaw in the case for what everyone (perhaps lazily, but including me) presumed were to all practical intents irredeemable securities. I know Aviva reversed course (I saw the CEO has even left) and the FCA has had words but the ambiguity remains. For some risk-averse private investors – perhaps investing a substantial portion of their retirement nest egg for income, wisely or not – the case has changed dramatically.

    All that said, I have bought back into a few at these lower prices. 🙂

    In addition I think deflation worries have abated and inflation is back on the agenda, with yields rising. That’s not a great combination for very long duration fixed income.

  • 80 Matthew October 16, 2018, 9:44 pm

    Investor, some time ago you turned me onto Preference shares. On your advice I made time tidy profits with LLPC and managed to sell out just before recent market jitters. However, I still have a considerable number of NWBD – hoping that would provide income and diversification – however they have taken a beating and I’m 7% down on those. Any ideas as to why the global bond rout would affect them so badly?

    In other parts of my portfolio I suppose I’m down 3% I’ve got a mixture of bond funds, income equity funds, property funds and some disasters like SSE that dropped like a stone as soon as I bought them.

  • 81 Vince October 17, 2018, 11:26 am

    Thanks Ermine. 3 – 5 years is what I have been working to, but am ready to increase inflows if prices drop significantly (its a long story as to why I wasn’t able to invest gradually over time). Been going 2 years so far so was starting to get nervous that I would run out of cash before the best opportunities present themselves… I take your point on the 5% – was thinking of this as a target return rather than a draw down rate.

  • 82 The Investor October 17, 2018, 12:01 pm

    @Matthew — I haven’t got much more to say about Prefs than what I wrote to @Boltt above to be honest (it would just be a more involved version of the same! 🙂 ). If you haven’t read up in the fallout from the Aviva move then the discussion threads at the “Lemon Fool” or “Fixed Income Investments” sites could be worth reading up on.

  • 83 Nick October 17, 2018, 1:52 pm

    FT seem to be churning out anti passive investing articles recently https://www.ft.com/content/99147cb2-cff0-11e8-a9f2-7574db66bcd5

  • 84 George October 17, 2018, 7:00 pm

    @Vanguardfan thank yeah that makes sense for retirement plans especially. For the plain vanilla taxable account I’m wondering if a study has been done to compare fees on managed accounts compared to tax impact (or more specifically can active management with consideration to lowering taxes offset the cost of fees).

  • 85 MrOptimistic October 17, 2018, 8:24 pm

    @Hospitaller, thanks just noticed your post. I am adding to that self same fund, it was pointed out to me on this site, may even have been you!

  • 86 PendleWitch October 22, 2018, 2:19 pm

    @ZXSpectrum48K
    Thanks for the details on FX and bonds. Does currency hedging make sense for equities? Today I noticed that my company pension global equity fund is a ‘Currency Hedged Global Equity Index’.

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