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Prediction about the next crash

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Wasron
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Prediction about the next crash

#263099

Postby Wasron » November 8th, 2019, 9:10 pm

I read this today and wondered what I can possibly do in advance, if the prediction looks like being accurate

https://www.theguardian.com/business/2019/nov/08/how-big-tech-is-dragging-us-towards-the-next-financial-crash

I hold a lot of VWRL and this obviously has a fair chunk of the FAANG stocks, but if corporate bonds are becoming worthless and impacting big tech then the rest of the market might be carnage too.

I wonder what the indicators would be that this was about to happen. In 20 years of investing I’ve never sold everything to sit in cash, but if there were some identifiable canaries in the coal mine you could preserve a heap of your wealth

An interesting read anyway, whether you believe it or not

Wasron

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Re: Prediction about the next crash

#263237

Postby Degsy67 » November 9th, 2019, 3:07 pm

Wasron wrote:I wonder what the indicators would be that this was about to happen. In 20 years of investing I’ve never sold everything to sit in cash, but if there were some identifiable canaries in the coal mine you could preserve a heap of your wealth


Suggest you spend the next 20 years considering this before taking any action. You can thank me for this advice at any point over the next 10 years. I didn’t get paid to write this post. Rana Foroohar however did get paid to write that piece for the Guardian. If her advice was any good then she’d have taken her own advice and retired from her paid job as a journo a long time before now. Nothing against Rana as an individual. Someone has to write opinion for newspapers otherwise we wouldn’t have anything to wrap up our fish and chips in tomorrow.

Degsy

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Re: Prediction about the next crash

#263259

Postby AsleepInYorkshire » November 9th, 2019, 5:07 pm

Wasron wrote:I read this today and wondered what I can possibly do in advance, if the prediction looks like being accurate

https://www.theguardian.com/business/2019/nov/08/how-big-tech-is-dragging-us-towards-the-next-financial-crash

I hold a lot of VWRL and this obviously has a fair chunk of the FAANG stocks, but if corporate bonds are becoming worthless and impacting big tech then the rest of the market might be carnage too.

I wonder what the indicators would be that this was about to happen. In 20 years of investing I’ve never sold everything to sit in cash, but if there were some identifiable canaries in the coal mine you could preserve a heap of your wealth

An interesting read anyway, whether you believe it or not

Wasron

I've tried to read this article twice. Both times I lost the will to live. It was written by Rana Foroohar.

Rana has written a book. It's called "Don't be Evil". For those interested in reading a little more about the book and how Rana views the rise of tech companies there's a link below.

https://www.ranaforoohar.com/dontbeevil-1
“Rana Foroohar’s urgent message, “Yes, we really are living in the Matrix,” and it’s time to rise up and resist our algorithmic overlords. This books shows us how.”

Whilst I have one particular opinion of the "urgent message" Rana conveys I'm not going to share it. We're all grown adults and we can all have our own opinions on Rana's book and the message within.

I'd like, though, if I may, to make one extremely small observation. Analogously of course. There is a very large company based in Hull called Arco. The company sells safety equipment. And judging from the size of their warehousing in Hull they seem to be doing quite well at their chosen subject. Many local people are ware of the acronym Arco and it's origin. Arco stands for the Asbestos and Rubber Company.

AiY

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Re: Prediction about the next crash

#263279

Postby andyalan10 » November 9th, 2019, 6:29 pm

AsleepInYorkshire wrote:[

Whilst I have one particular opinion of the "urgent message" Rana conveys I'm not going to share it. We're all grown adults and we can all have our own opinions on Rana's book and the message within.

AiY


Thank you for not sharing your opinion based on not having read the article.

As she starts her article by citing Peter Drucker who said that it is the darlings of the previous boom that generally bring about the following crash and as we saw that in 2000-2003 and 2008-2009 with technology and finance then I would have thought that was plenty to start a discussion on around the original poster's question.

Andy

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Re: Prediction about the next crash

#263281

Postby AsleepInYorkshire » November 9th, 2019, 6:50 pm

andyalan10 wrote:
AsleepInYorkshire wrote:[

Whilst I have one particular opinion of the "urgent message" Rana conveys I'm not going to share it. We're all grown adults and we can all have our own opinions on Rana's book and the message within.

AiY


Thank you for not sharing your opinion based on not having read the article.

As she starts her article by citing Peter Drucker who said that it is the darlings of the previous boom that generally bring about the following crash and as we saw that in 2000-2003 and 2008-2009 with technology and finance then I would have thought that was plenty to start a discussion on around the original poster's question.

Andy

You're welcome. Thank you also for completely misquoting me.

AiY

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Re: Prediction about the next crash

#263290

Postby andyalan10 » November 9th, 2019, 7:26 pm

Sorry that I misunderstood your saying "I tried to read the article twice" as meaning you hadn't succeeded. Normally if I say I tried to do something it would mean that I hadn't actually done it.

Andy

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Re: Prediction about the next crash

#263295

Postby AsleepInYorkshire » November 9th, 2019, 8:12 pm

andyalan10 wrote:Sorry that I misunderstood your saying "I tried to read the article twice" as meaning you hadn't succeeded. Normally if I say I tried to do something it would mean that I hadn't actually done it.

Andy

I didn't realise that I was going to be quoted "verbatim" [and out of context] for everything I write. However, I will take onboard your excellent constructive critique and ensure I make immediate improvements.

AiY

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Re: Prediction about the next crash

#263335

Postby simoan » November 10th, 2019, 9:44 am

Wasron wrote:I read this today and wondered what I can possibly do in advance, if the prediction looks like being accurate

https://www.theguardian.com/business/2019/nov/08/how-big-tech-is-dragging-us-towards-the-next-financial-crash

I hold a lot of VWRL and this obviously has a fair chunk of the FAANG stocks, but if corporate bonds are becoming worthless and impacting big tech then the rest of the market might be carnage too.

I wonder what the indicators would be that this was about to happen. In 20 years of investing I’ve never sold everything to sit in cash, but if there were some identifiable canaries in the coal mine you could preserve a heap of your wealth

An interesting read anyway, whether you believe it or not

Wasron

I wouldn't worry too much if I were you. It's a shame that some decent points she makes about the use of data and privacy concerns are obliterated by the hyperbole and some rather silly assertions. I have only just stopped laughing at the assertion that Apple is at the very heart of the price deflation caused by technology - has she not seen the price of a new iPhone 11? Who would have thought 20 years ago that ordinary people would be paying £1000 for a mobile phone?

And of course, in true Guardian fashion they include a completely superfluous picture of Tim Cook shaking hands with Donald Trump! How more blatant can they try to make this connection seem than it really is? This idea that most technology company CEO's have anything but contempt for the man and what he represents is laughable.

Apart from anything else there are far too many uses of the conditional tense in the article. I counted 13 "coulds", 7 "mights", 5 "mays", a possibly and a probably. Talk about hedging your bets...

All the best, Si

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Re: Prediction about the next crash

#263359

Postby Wasron » November 10th, 2019, 3:52 pm

Degsy67 wrote:Suggest you spend the next 20 years considering this before taking any action. You can thank me for this advice at any point over the next 10 years. I didn’t get paid to write this post. Rana Foroohar however did get paid to write that piece for the Guardian. If her advice was any good then she’d have taken her own advice and retired from her paid job as a journo a long time before now. Nothing against Rana as an individual. Someone has to write opinion for newspapers otherwise we wouldn’t have anything to wrap up our fish and chips in tomorrow.

Degsy


Does that mean you wouldn’t place any value on anything written by someone who was paid to write it?

I wasn’t smart enough to sell my bank shares in the run-up to GFC. I wasn’t reading the Fool then either. Perhaps if I was I’d be significantly better off. And that’s my point really, do the points about the complex interconnected bond holdings in an unregulated industry matter?

And if they do, what would be the possible indicators that the situation was deteriorating in such a manner that one might wish to be proactive about it?

The second half of the article gets away from the economics and into a political position that I’m less interested in discussing here.

Wasron

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Re: Prediction about the next crash

#263369

Postby Degsy67 » November 10th, 2019, 5:11 pm

Wasron wrote:Does that mean you wouldn’t place any value on anything written by someone who was paid to write it?

I wasn’t smart enough to sell my bank shares in the run-up to GFC. I wasn’t reading the Fool then either. Perhaps if I was I’d be significantly better off. And that’s my point really, do the points about the complex interconnected bond holdings in an unregulated industry matter?


I place very little value on anything written in a newspaper. Content in a newspaper is simply there to suck in eyeballs for the advertisers.

I place value on things written in books where the author, editor and publishers have taken time and effort to curate worthwhile content from individuals with experience and perspective. Books which provide a long term perspective on global economics and global markets over the past 50 to 100 years are worthwhile where they present data to backup their assertions. Books provide worthwhile opinion as they take time and effort to research and write. Articles in newspapers take relatively little time to write and if they are devoid of facts and are packed full of speculation then they take no time at all to fact check!

Anything which can be paraphrased into “this time things are different because...” in a newspaper is a speculative puff piece which is very easy to write and is lazy journalism. I’ve generated this kind of tosh myself for journos in a work context. It becomes very easy to take their ‘research request’, generate something which is semi-coherent and mildly plausible with an attention grabbing soundbite and to find yourself quoted in a newspaper as the next Mother Shipton. Can be good PR but I wouldn’t bet my retirement funding on anything simply written in a newspaper.

You say you weren’t smart enough to sell your bank shares in the run up to the Great Financial Crisis. Smart enough?! How many smart people working 60-80 hours per week across the global financial services industry who were being paid to spot that didn’t spot it? Do you think if they had simply read more articles in the Guardian, the FT or Motley Fool that they would have seen it coming? How many PhDs work in investment banks?... about half of them!

I used to think that if I simply read more and more about individual companies or sectors or markets that the great truth would be revealed to me and I would become a smarter investor and I’d make more money by beating the market. I used to run a HYP portfolio because I thought I’d discovered the magic secret formula to wealth building and passive income. It took me 10 years to learn and then unlearn everything I thought I needed to know about investing. The best thing that happened to me was being 40% under water as a consequence of the GFC. I was lucky to have lived through it. It taught me a lot. It taught me that sh*t happens when it comes to the global economy and stock markets. There is very little you can do as an investor to spot it, avoid it or to profit from it unless you follow some very very simple rules around global diversification, asset allocation and rebalancing.

By all means keep reading the articles. Everyone has to go through this process of thinking that the magic formula will reveal itself. Every culture has to have it’s equivalent of a shaman cutting up the entrails of animals to divine the future. Our culture has journalists writing on dead trees sprayed with ink.

Search out the wise men who sit on the mountain tops in caves. If you are very lucky, some of them may have received a book deal and have written words of wisdom which are timeless.

Degsy

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Re: Prediction about the next crash

#263370

Postby SalvorHardin » November 10th, 2019, 5:29 pm

Jim Rogers is a fairly well known investor, who used to work with George Soros and wrote the highly entertaining "Investment Biker". He's an expert.

In almost every year since the 2008 financial crisis Rogers has predicted a global stockmarket crash. One day he will be right. In the meantime investors who followed him will have lost a lot by being out of the market. The link below gives some examples:

https://uk.finance.yahoo.com/amphtml/ne ... 47654.html

Peter Lynch: "Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves"

I pay more attention to a prediction if the person making the prediction has put their money where their mouth is. Nassim Taleb says about pundits: "Don't tell me what you think, tell me what you have in your portfolio."

Predict often, trumpet your successes and ignore your failures.

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Re: Prediction about the next crash

#263383

Postby Wasron » November 10th, 2019, 7:39 pm

Degsy67 wrote:I place very little value on anything written in a newspaper. Content in a newspaper is simply there to suck in eyeballs for the advertisers.

I place value on things written in books where the author, editor and publishers have taken time and effort to curate worthwhile content from individuals with experience and perspective. Books which provide a long term perspective on global economics and global markets over the past 50 to 100 years are worthwhile where they present data to backup their assertions. Books provide worthwhile opinion as they take time and effort to research and write. Articles in newspapers take relatively little time to write and if they are devoid of facts and are packed full of speculation then they take no time at all to fact check!


Degsy, I agree with lots of what you’ve written, but perhaps you weren’t aware that the journalist who wrote the piece is a published author on the subject in question (I don’t think AsleepInYorkshire is a fan).

https://en.m.wikipedia.org/wiki/Rana_Foroohar

In this instance her article is probably in part to publicise her next book.

But I take on board yours and SalvorHardin’s more general point, even stopped clocks etc...

Wasron

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Re: Prediction about the next crash

#263384

Postby TheMotorcycleBoy » November 10th, 2019, 7:45 pm

Wasron wrote:I read this today and wondered what I can possibly do in advance, if the prediction looks like being accurate

https://www.theguardian.com/business/2019/nov/08/how-big-tech-is-dragging-us-towards-the-next-financial-crash

I hold a lot of VWRL and this obviously has a fair chunk of the FAANG stocks, but if corporate bonds are becoming worthless and impacting big tech then the rest of the market might be carnage too.

I wonder what the indicators would be that this was about to happen. In 20 years of investing I’ve never sold everything to sit in cash, but if there were some identifiable canaries in the coal mine you could preserve a heap of your wealth

An interesting read anyway, whether you believe it or not

Wasron

Hi Wasron,

I just read it. It does provoke a few thoughts, and indeed the unfair tax position given to firms e.g. Amazon, is detrimental to both suppliers and customers alike.

Criticisms of the prose of the article aside, i.e. it did ramble a little, I do vehemently disagree its premise. I do not believe that the Big Tech firms RF cites are at all analogous to the Banks of the GFC.

If Google goes bust, we'll use a different search engine. I search with google currently, but it has no assets of mine. Furthermore unlike the Banks, there no such intertwined monetary relationships which hold, for AMZ and GOOG in a deadly embrace, unlike Lehman etc. of the noughties.

Sure, a lot of these tech firms hold the debt of many other firms, however it seems unlikely that the failure of one could lead to a sudden reluctance of interbank lending, cessation of credit flows, etc. etc.

Matt

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Re: Prediction about the next crash

#263392

Postby Backache » November 10th, 2019, 8:52 pm

Wasron wrote:I read this today and wondered what I can possibly do in advance, if the prediction looks like being accurate


I'm in quite a lot of agreement with other comments inas much as though the article is interesting in some ways as to how much debt is held by major companies issuing their own debt, I don't think yu can say that a finanacial meltdown is hterefor elikely or inevitable .
BUT pretty major market upsets do happen not infrequently and having diversification is not of itself a bad idea, having part of your portfolio diversified into TIPS high quality bonds or whatever is unlikely to make you much money at their current levels but it may provide you with a safety net and the ability to buy stock if there is a fall..
If you have a concern about the article the obvious thing to do is to avoid the shares in big tech . Most of the companies are so cash generative that I doubt there bonds are likely to default even if the paper they hold is less valuable than it's apparent face value but the equity would undoubtedly be hit if their assets took a big knock and they had to spend more of their cash to cover these losses.

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Re: Prediction about the next crash

#263400

Postby Lanark » November 10th, 2019, 9:45 pm

Wasron wrote:I read this today and wondered what I can possibly do in advance

If rumours of a possible crash have you wondering about your position, then thats a good thing.

There is always a possibility of a crash just as there is always a possibility of stocks going higher. I think a strong sign that you have a portfolio which is in balance with your own appetite for risk is that a downturn or even the possibility of a downturn should not fill you with dread.

A good mental trick for this is to try and imagine you are investing someone elses money, what impartial advice would you give them?

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Re: Prediction about the next crash

#263424

Postby Wasron » November 11th, 2019, 7:26 am

Lanark wrote:A good mental trick for this is to try and imagine you are investing someone elses money, what impartial advice would you give them?


Thanks Lanark. Good advice.

To others I’d say a globally diversified portfolio of ITs and reinvest the dividends until retirement, which is pretty much what I have.

Regards

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Re: Prediction about the next crash

#263491

Postby StepOne » November 11th, 2019, 1:21 pm

Wasron wrote:
Lanark wrote:A good mental trick for this is to try and imagine you are investing someone elses money, what impartial advice would you give them?


Thanks Lanark. Good advice.

To others I’d say a globally diversified portfolio of ITs and reinvest the dividends until retirement, which is pretty much what I have.

Regards


Sounds good to me. I don't think you can second-guess the timing of the next crash. Compscidude gave it a go three years ago (viewtopic.php?f=7&t=1631&p=15200#p15200) when the FTSE was about 7,000, and it's never been lower since. A lot of the points he makes still hold true, though, so maybe it will happen tomorrow. Or maybe not. Who knows? Not me, that's for sure.

Just keep investing regularly into global trackers, as cheaply as you can, and view the next crash as an opportunity to buy more :D

Cheers,
StepOne

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Re: Prediction about the next crash

#263495

Postby TheMotorcycleBoy » November 11th, 2019, 1:33 pm

StepOne wrote:
Wasron wrote:
Lanark wrote:A good mental trick for this is to try and imagine you are investing someone elses money, what impartial advice would you give them?


Thanks Lanark. Good advice.

To others I’d say a globally diversified portfolio of ITs and reinvest the dividends until retirement, which is pretty much what I have.

Regards


Sounds good to me. I don't think you can second-guess the timing of the next crash. Compscidude gave it a go three years ago (viewtopic.php?f=7&t=1631&p=15200#p15200) when the FTSE was about 7,000, and it's never been lower since.

Yes it has!

From late November 2018 to late January 2019.

Matt

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Re: Prediction about the next crash

#263519

Postby StepOne » November 11th, 2019, 3:21 pm

TheMotorcycleBoy wrote:
StepOne wrote:
Wasron wrote:
Thanks Lanark. Good advice.

To others I’d say a globally diversified portfolio of ITs and reinvest the dividends until retirement, which is pretty much what I have.

Regards


Sounds good to me. I don't think you can second-guess the timing of the next crash. Compscidude gave it a go three years ago (viewtopic.php?f=7&t=1631&p=15200#p15200) when the FTSE was about 7,000, and it's never been lower since.

Yes it has!

From late November 2018 to late January 2019.

Matt


Technically true, not sure it would qualify as a 'crash' though ! ;)

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Re: Prediction about the next crash

#263578

Postby Degsy67 » November 11th, 2019, 9:08 pm

Wasron wrote:Degsy, I agree with lots of what you’ve written, but perhaps you weren’t aware that the journalist who wrote the piece is a published author on the subject in question (I don’t think AsleepInYorkshire is a fan).


I was aware however I haven’t read her books so I can’t comment. I have however looked at the chapter headings in the contents list and the author’s introduction to her latest book. I didn’t add it to my wish list. As the premise of the book appears to be bemoaning the rise of the tech giants such as Amazon and Google along with the increasing monetisation of content, I found it mildly ironic that a quick Google search led me straight to Amazon and the Kindle version of her new book for £9.99.

Degsy


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