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  #741  
Old 22.06.2021, 16:54
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Re: Equity Portfolio Advice

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My daughter has 4˝ years left on a liar's loan interest-only mortgage she got 25 years ago from one the big UK banks' building societies since absorbed into the bank. It's fixed to Bank Rate, she is paying 0.39% on a couple of hundred thousand pounds.

She is about to get an inheritance from abroad in that amount. I say she should put it all into FS and see what happens, not pay off the mortgage now.

She is now making so little salary she'd not qualify for a new mortgage; maybe the bank would extend part, maybe not.

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if she has to pay it off in 4.5 years with minimal other income (no ability to remortgage), then she needs to make provisions to be able to do that. dumping it all into the stock market would be very risky.
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  #742  
Old 22.06.2021, 17:32
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Re: Equity Portfolio Advice

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if she has to pay it off in 4.5 years with minimal other income (no ability to remortgage), then she needs to make provisions to be able to do that. dumping it all into the stock market would be very risky.
Put it all in dogecoin.
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  #743  
Old 22.06.2021, 18:38
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Re: Equity Portfolio Advice

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if she has to pay it off in 4.5 years with minimal other income (no ability to remortgage), then she needs to make provisions to be able to do that. dumping it all into the stock market would be very risky.
She actually got a bundle of money from a California estate a couple of years ago and joined with nearly all the other leaseholders to buy the freehold from the Church Commissioners. The rest of the money she used to pay down 100k of the mortgage.

So her present mortgage is 15% of the value of the property today. Does that change your opinion? I can’t imagine FS crashing. And she’ll still be young enough to get a buy-to-let mortgage and live in one of those caravans.

In retrospect she shouldn’t have been so quick to pay down the mortgage but she’d paid no principal in 20 years and there were only 32 years left on the lease. Now there are 999.

She’s a community organiser. Barack Obama played that role into a higher calling as i recall.
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  #744  
Old 22.06.2021, 18:52
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Re: Equity Portfolio Advice

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She actually got a bundle of money from a California estate a couple of years ago and joined with nearly all the other leaseholders to buy the freehold from the Church Commissioners. The rest of the money she used to pay down 100k of the mortgage.

So her present mortgage is 15% of the value of the property today. Does that change your opinion? I can’t imagine FS crashing. And she’ll still be young enough to get a buy-to-let mortgage and live in one of those caravans.

In retrospect she shouldn’t have been so quick to pay down the mortgage but she’d paid no principal in 20 years and there were only 32 years left on the lease. Now there are 999.

She’s a community organiser. Barack Obama played that role into a higher calling as i recall.
The Church Commissioners have been trying to get out of residential property since the 1980 amazed they still hold any freeholds. The had disposed of most in Little Venice / Maida Vale by the time I bought in 1983 setting up each building as a company owned by the long leaseholders..
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  #745  
Old 22.06.2021, 21:15
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Re: Equity Portfolio Advice

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She actually got a bundle of money from a California estate a couple of years ago and joined with nearly all the other leaseholders to buy the freehold from the Church Commissioners. The rest of the money she used to pay down 100k of the mortgage.

So her present mortgage is 15% of the value of the property today. Does that change your opinion? I can’t imagine FS crashing. And she’ll still be young enough to get a buy-to-let mortgage and live in one of those caravans.

In retrospect she shouldn’t have been so quick to pay down the mortgage but she’d paid no principal in 20 years and there were only 32 years left on the lease. Now there are 999.

She’s a community organiser. Barack Obama played that role into a higher calling as i recall.
i think there needs to be clarity on what her goals are. only then can you figure out a way to achieve them.
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  #746  
Old 22.06.2021, 22:19
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Re: Equity Portfolio Advice

If she has all her wealth in London property it could be a good idea to invest in equities long term and FS is a good choice. In 4.5 years & 7% long term avg return on stocks 200kŁ could become 270k, if FS keeps returning 15% then 375k.

But 4.5years is not long term stocks could half or worse and if she doesn’t have another way to finance her mortgage she could have to rent out her home or face a forced sale and have to leave London / live in a caravan like you say

Only she can decide if she takes the trade off. Can she find another way to cover the mortgage in 4.5 years ?
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  #747  
Old 23.06.2021, 09:30
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Re: Equity Portfolio Advice

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Its a bit of a Reddit Wall Street Bets share. Here is what Motley Fool had to say about it:

"I feel that I should remind investors that out here in the real world, the bull case for Workhorse is somewhere between thin and nonexistent. The company, which has struggled for years to find and act on a viable business model, recently began small-scale production of an electric package-delivery van.

A year ago, Workhorse's electric van seemed like an intriguing bet. But now, with both Ford Motor Company (NYSE:F) and General Motors (NYSE:GM) set to begin shipping electric commercial vans of their own before the end of the year, and with a potential U.S. Postal Service contract going to a rival, Workhorse's chances of gaining market traction (much less of delivering the "disruption" that Redditors once hoped for) seem slim. Trade this one carefully."

Basically I would avoid.
Thanks! Guess I'll stick to Ford stock.
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  #748  
Old 24.06.2021, 13:06
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Re: Equity Portfolio Advice

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Interesting to keep in mind that there is overlap between NASADAQ and quality metrics: 6 of Fundsmith's top 10 holdings are in NASDAQ (Paypal, Microsoft, Idexx, Facebook, Intuit, Stryker). Apple, Alphabet & Nvidia are in NASDAQ and MSCI Quality's top 10
That's the problem I have with the various shades of MSCI World ETFs (ofc likewise with the Swiss SMI). The index has one third in the top ten positions, and of course they're (almost) all US household names most people are probably already (over-)invested in. And as long as the recent trend persists the concentration will keep increasing.

With something like 2/3 invested in US stocks there's far from enough diversification away from the US, personally I'd rather pick focused products and spread the money the way I want. An index or product that's supposed to reflect the world should invest far more broader.
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  #749  
Old 24.06.2021, 13:41
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Re: Equity Portfolio Advice

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Thanks Jim. Do you have a 10 year performance handy? (I would do myself but I get the distinct impression you are significantly more competent!) I ask because my impression is FS was nigh on unstoppable in the early half of the 2010s, vs pretty average for a quality fund in the latter half (as demonstrated by more or less equalling the quality index from 2017).
justetf.com present their ETF data in your currency, whichever corresponds to your location. You can have them rebase the data to the new currency of choice by switching it. I didn't do many checks, but the few I did confirmed the correctness of their data (with reasonable margins for rounding and other imprecisions). Pretending to be an insitutional investor should increase the number of ETFs available.

So, if you find a cheap ETF on your index, ideally with divi reinvestment, you could use those data as a (marginally unprecise) proxy and spare yourself the trouble with the errorprone calculations. Annualising returns should be simple enough, and you can always use the Rule of 72 (*) for a quick plausibility check in the head.


(*) The quick explanation what the Rule of 72 is:
72 = t * r
with t = time and r = interest rate or performance. Resolve for either variable and do the calculation.
For instance to answer the question "what is the interest rate r that, with compounding, doubles my investment during t=24 years?" you resolve for r and divide 72 by those 24 years, thus the annual interest is ~3%. This works marvelously well up to 12-15%. Of course it's not precise, but pretty damn close for an easy calculation in the head.
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  #750  
Old 24.06.2021, 19:35
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Re: Equity Portfolio Advice

Tesla seems to be on a bit of a roll at the minute. Up 10% in the last two days.
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  #751  
Old 25.06.2021, 11:57
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Re: Equity Portfolio Advice

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That's the problem I have with the various shades of MSCI World ETFs (ofc likewise with the Swiss SMI). The index has one third in the top ten positions, and of course they're (almost) all US household names most people are probably already (over-)invested in. And as long as the recent trend persists the concentration will keep increasing.

With something like 2/3 invested in US stocks there's far from enough diversification away from the US, personally I'd rather pick focused products and spread the money the way I want. An index or product that's supposed to reflect the world should invest far more broader.
I agree with your conclusion, just to point out that MSCI factsheets show where companies are listed whilst exposure for an investor is more closely linked to revenues (sales).

In 2014, MSCI World's country of listing exposure was 60% North America. Using the more relevant measure of revenues, exposure was a bit less concentrated at ~40% NA. See paper below. I think NA is ~20-25% of global GDP so your point is still absolutely valid

An alternative would be MSCI ACWI which captures companies listed in developing markets with NA revenue exposure ~30%. However, you then own companies listed in countries which might not all have accounting and governance in line with "developed" country standards.

Summary in Exhibit 2 on page 6
https://www.msci.com/documents/10199...3-15b7dbea5999

Last edited by jim1; 25.06.2021 at 11:58. Reason: clarification
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  #752  
Old 25.06.2021, 17:38
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Re: Equity Portfolio Advice

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I agree with your conclusion, just to point out that MSCI factsheets show where companies are listed whilst exposure for an investor is more closely linked to revenues (sales).
That sounds good, and it may work on the theoretical level, but it does't really stand the test of reality: when the US markets tank, the developed markets around the world tank. Of course there are variations, but if Wallstreet drops 25% you won't find too many developed markets that don't react, the typical drop will be in the same ballpark region.

Emerging markets may differ occasionally, but all too often they tank even more.
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  #753  
Old 28.06.2021, 16:11
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Re: Equity Portfolio Advice

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I reckon the value is not determined by how many shares are outstanding. The price could go down.
They didn‘t, I was right, they‘re shooting up…. (NVDA)
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  #754  
Old 28.06.2021, 16:53
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Re: Equity Portfolio Advice

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They didn‘t, I was right, they‘re shooting up…. (NVDA)
About 20% gain in the month. Its a lot, but there are numerous other high growth companies that have posted that sort of figure. Illumina, Nio, Moderna. And some with significantly more - Xpeng, Li auto.
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  #755  
Old 28.06.2021, 17:13
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Re: Equity Portfolio Advice

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About 20% gain in the month. Its a lot, but there are numerous other high growth companies that have posted that sort of figure. Illumina, Nio, Moderna. And some with significantly more - Xpeng, Li auto.
It's a crazy market. You have to really try in order to lose money (for now....)
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  #756  
Old 28.06.2021, 18:34
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Re: Equity Portfolio Advice

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It's a crazy market. You have to really try in order to lose money (for now....)
Moderna's YTD is 96%

After they went up 600% last year...
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  #757  
Old 28.06.2021, 21:51
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Re: Equity Portfolio Advice

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Moderna's YTD is 96%

After they went up 600% last year...
Lonza is a very attractive medium- and long-term bet. IMHO of course.
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  #758  
Old 28.06.2021, 22:20
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Re: Equity Portfolio Advice

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It’s a big deal this week with NVDA 4:1 split, do you reckon it will go up in value much?
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I reckon the value is not determined by how many shares are outstanding. The price could go down.
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They didn‘t, I was right, they‘re shooting up…. (NVDA)
We'll never know if you were right or not, you only asked a question

The price went up but what about the value... The price is arbitrary. The value is fundamental.
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  #759  
Old 28.06.2021, 22:25
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Re: Equity Portfolio Advice

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The price went up but what about the value... The price is arbitrary. The value is fundamental.
The value of the business does not increase just because you give shareholders 4 new shares for every 1 they held before.

If the price went up & the income stream remained the same the value dropped, this seems to be missed by many new investors & will cost them dearly as they pay too much.
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Old 28.06.2021, 22:27
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Re: Equity Portfolio Advice

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The value of the business does not increase just because you give shareholders 4 new shares for every 1 they held before.

If the price went up & the income stream remained the same the value dropped, this seems to be missed by many new investors & will cost them dearly as they pay too much.
Exactly.
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