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  #61  
Old 13.07.2018, 13:01
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Re: Are you happy to lose 50%-80% of your wealth?

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cryptocurrencies?

but aren't real estate, farms, companies, works of arts and commodities also denominated in fiat currencies?
Kind of... but if fiat currencies all collapse (but somehow social order remains and we carry on as usual), those assets should theoretically keep their ‘value’ in whatever we choose to measure ‘value’ in

Edit
Sorry I re-read your post and it’s not really what you were referring to :P
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  #62  
Old 13.07.2018, 13:04
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Re: Are you happy to lose 50%-80% of your wealth?

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Wrong.
You did not do a backtest, did you?

Here you go.
Portfolio 1: 100% us stocks
Portfolio 2: 80% us stocks + 20% gold , rebalanced annualy
Attachment 133832
You did not go from 1979/80 when gold hit $850, repeat & you get a different result. More than 20% better with stocks, rebalancing increased underperformance. Such a shame your tool only goes to 1972
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  #63  
Old 13.07.2018, 13:07
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Re: Are you happy to lose 50%-80% of your wealth?

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You did not go from 1979/80 when gold hit $850, repeat & you get a different result.
Why choose the exact date of a price peak? To prove your point? How about we check year 2000. After all, Nasdaq seems to be heading in a very familiar direction.

you-happy-lose-50-80-your-wealth-backtest2.png

Same as previously, Portfolio 1 is 100% stocks, Portfolio 2 is 80%/20% stocks/gold
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  #64  
Old 13.07.2018, 13:15
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Re: Are you happy to lose 50%-80% of your wealth?

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cryptocurrencies?

but aren't real estate, farms, companies, works of arts and commodities also denominated in fiat currencies?
Maybe "denominated" is the wrong word. What I mean is, if present day fiat currencies do a Wiemar style disappearance act such things as real estate, farms, companies, works of arts and commodities would still retain their value for what they are, but would not be expressed in said fiat currencies which would go to zero
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Old 13.07.2018, 13:21
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Re: Are you happy to lose 50%-80% of your wealth?

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Why choose the exact date of a price peak? To prove your point? How about we check year 2000. After all, Nasdaq seems to be heading in a very familiar direction.
I sold my tiny gold holding in 1980 aged 18 & started to look at the stock market
I never invested in Nasdaq, first tech stock I ever bought was BIDU on 31 March 06. I got heavily into Apple in early to mid 2013 as my posts at the time will confirm. Most of the forum thought I was an idiot then, some still do however, it enabled me to retire within 18 months, most people were picking gold then IIRC.
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Old 13.07.2018, 13:28
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Re: Are you happy to lose 50%-80% of your wealth?

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I sold my tiny gold holding in 1980 aged 18 & started to look at the stock market
I never invested in Nasdaq, first tech stock I ever bought was BIDU on 31 March 06. I got heavily into Apple in early to mid 2013 as my posts at the time will confirm. Most of the forum thought I was an idiot then, some still do however, it enabled me to retire within 18 months, most people were picking gold then IIRC.
So you timed the market correctly. Congratulations. Statistically, even professional investors have problems with that. The majority will be better off keeping a regularly balanced portfolio of safe assets and stocks to smooth out the bumps.
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Old 13.07.2018, 13:34
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Re: Are you happy to lose 50%-80% of your wealth?

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So you timed the market correctly. Congratulations. Statistically, even professional investors have problems with that. The majority will be better off keeping a regularly balanced portfolio of safe assets and stocks to smooth out the bumps.
That depends on your goals, I was preferred to take a risk, balancing prevents from upside as much as from downside, as a long term investor the downside risk is very low.
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  #68  
Old 13.07.2018, 14:29
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Re: Are you happy to lose 50%-80% of your wealth?

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Maybe "denominated" is the wrong word. What I mean is, if present day fiat currencies do a Wiemar style disappearance act such things as real estate, farms, companies, works of arts and commodities would still retain their value for what they are, but would not be expressed in said fiat currencies which would go to zero
essentially buy stuff that has intrinsic value.
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Old 13.07.2018, 14:32
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Re: Are you happy to lose 50%-80% of your wealth?

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I sold my tiny gold holding in 1980 aged 18 & started to look at the stock market
I never invested in Nasdaq, first tech stock I ever bought was BIDU on 31 March 06. I got heavily into Apple in early to mid 2013 as my posts at the time will confirm. Most of the forum thought I was an idiot then, some still do however, it enabled me to retire within 18 months, most people were picking gold then IIRC.
Are we now down to market timing and stock picking by hobbyist just because you got lucky?

Can we get back on topic now?

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That depends on your goals, I was preferred to take a risk, balancing prevents from upside as much as from downside, as a long term investor the downside risk is very low.
The downside is low for an individual tech stock (your apple purchase)???

Last edited by EPMike; 13.07.2018 at 14:43.
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Old 13.07.2018, 14:44
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Re: Are you happy to lose 50%-80% of your wealth?

So far we have:

1. Yes, I'm happy because I think the risk of it happening is low
2. Classical stock/bond balanced portfolio to reduce risk
3. Invest into real estate or other alternative assets to reduce SM exposure
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  #71  
Old 13.07.2018, 14:51
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Re: Are you happy to lose 50%-80% of your wealth?

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Are we now down to market timing and stock picking by hobbyist just because you got lucky?

Can we get back on topic now?
I did not see any luck with Apple, the PE was around 6 after cash & the biggest brand in the world valued at 0. More common sense that the market often lacks.

I stay fairly fully invested in equities & don't look to market time, I will change allocations when the market makes it obvious it's a good thing to do, I already held 100 Apple (700 after split) before increasing my exposure 2013. Of course Fundsmith is up 150% in GBP over the same time period with less volatility, which is why my largest investment is Fundsmith.
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  #72  
Old 13.07.2018, 16:33
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Re: Are you happy to lose 50%-80% of your wealth?

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1)

3)Gold produces zero income & does not grow organically so hardly something to bother with. It's not been a good store of value over the last 10 years either.
If you back test a 20-year periods during the last 150 years, you do have to have a bit of gold for the periods of high inflation.
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  #73  
Old 13.07.2018, 16:35
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Re: Are you happy to lose 50%-80% of your wealth?

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I don't see gold as a good investment now. I thought about it but decided I'm too late. In my opinion it can only drop (within my lifetime).
You have gold in your portfolio to balance periods of high inflation.
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  #74  
Old 13.07.2018, 16:39
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Re: Are you happy to lose 50%-80% of your wealth?

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Based on what many pundits think it would seem to me that there is an increasing risk of holding wealth in anything that is denominated in fiat currencies.
That leaves real estate, agricultural farms, participation in industrial companies (but not shares), works of art and physical commodities.

Did I leave anything out?
And if the currency drops, do you think that your real estate will hold its value?
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Old 13.07.2018, 16:43
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Re: Are you happy to lose 50%-80% of your wealth?

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He will always hold 50 billion in cash for insurance claims, even 50 billion won't make a huge difference as he has hugely underperformed Fundsmith over the last 5 years.
That's a terrible comparison.
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Old 13.07.2018, 17:45
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Re: Are you happy to lose 50%-80% of your wealth?

I started buying shares about two years ago. Current valuation is 150% of what I've invested. It's nice, but it's meaningless. What matters is how much it is worth in 20 years time when I'm probably thinking about stopping working.
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Old 13.07.2018, 19:53
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Re: Are you happy to lose 50%-80% of your wealth?

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I started buying shares about two years ago. Current valuation is 150% of what I've invested. It's nice, but it's meaningless. What matters is how much it is worth in 20 years time when I'm probably thinking about stopping working.
The last 10 years since the financial crisis had great stock market returns. I wish it would continue like that, just don't get used to double-digit returns.
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Old 13.07.2018, 22:19
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Re: Are you happy to lose 50%-80% of your wealth?

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The last 10 years since the financial crisis had great stock market returns. I wish it would continue like that, just don't get used to double-digit returns.
Indeed, except for the remaining years of the current boom, many expect that achieving even the historical '8%' return is highly unlikely:

https://www.economist.com/buttonwood...are-inevitable
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Old 14.07.2018, 00:24
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Re: Are you happy to lose 50%-80% of your wealth?

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Indeed, except for the remaining years of the current boom, many expect that achieving even the historical '8%' return is highly unlikely:

https://www.economist.com/buttonwood...are-inevitable
Plenty of articles about Fundsmith going back 5 years saying the performance could not continue & it was time to jump ship, £100 became £250 & the record still plays every week. Don't buy crap in an attempt to diversify would be my advise.If you had bought an FTSE 100 tracker you would not have come close to 8% for either the last 5 or 10 years. 26.56% over 5 years or 39.08% over 10 years.
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Old 14.07.2018, 20:39
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Re: Are you happy to lose 50%-80% of your wealth?

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Plenty of articles about Fundsmith going back 5 years saying the performance could not continue & it was time to jump ship, £100 became £250 & the record still plays every week. Don't buy crap in an attempt to diversify would be my advise.If you had bought an FTSE 100 tracker you would not have come close to 8% for either the last 5 or 10 years. 26.56% over 5 years or 39.08% over 10 years.
Clearly fundsmith will be at the mercy of the market, just like everybody else. He’s not a magician.

He may continue to beat the market (which you might say is the FTSE100), but that could mean negative 5% instead of negative 10%. We are still in a bull market for the moment. He mostly invests in non-cyclicals which I think is a good thing.

The FTSE100 is a very bad index to buy imo. Too full of cyclicals - mining, oil&gas, housebuilders...
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