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Buying stocks during temporary political and geopolitical uncertainty
Dian
Posted: 19 August 2017 10:34:33(UTC)
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Other than consumer staples like food and health care,when market volatility picks up and when there are temporary political and geopolitical tensions what types of stocks should take as safe investment?

I would appreciate your thoughts on the above.
Tug Boat
Posted: 19 August 2017 11:52:11(UTC)
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I don't know what is a safe bet going forwards. However, I have just completed my yearly clear out - think some of you call it rebalancing - this is what I've done:

Dumped all my trackers and most of my unit trusts.

Bought BGLP, PEY, SEQI, RGL and CLDN

BGLP is something with which you may not be familiar, but may be a safe port if a storm is brewing.

Was going to top up RECI, but the damned thing has just gone up 7%.

Will buy more CLDN if it drops a tad, you can't beat timing the market.

6 users thanked Tug Boat for this post.
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Trev DIYer
Posted: 19 August 2017 13:00:14(UTC)
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What is BGLP?
Tim D
Posted: 19 August 2017 13:18:20(UTC)
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Dian;49981 wrote:
Other than consumer staples like food and health care,when market volatility picks up and when there are temporary political and geopolitical tensions what types of stocks should take as safe investment?


If you think the tensions really are temporary, surely the thing to do would be to buy whatever everyone else is dumping on the cheap? It's too late to be buying defensive assets when everyone else is crowding into them.
6 users thanked Tim D for this post.
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Tug Boat
Posted: 19 August 2017 15:06:44(UTC)
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Blackstone GSO loan financing BGLP
King Lodos
Posted: 19 August 2017 15:59:05(UTC)
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Defence stocks and gold miners might be two more ideas.

Also consider wars tend to be highly inflationary, so it might be that TIPS, gold and natural resources are good bets.

Because every situation's different, what I'd do is look at price trends across each sector, and see where the early money's moving ... If it's moving into Consumer Staples, I'd buy more ... The market has layers of intelligence, and you can usually get a pretty good idea of where smart money's going (it tends to be more sector specific, for example).

There's a good chance, if money's leaving a sector (like IT), it's because the outlook for that sector is getting worse – and buying on a 10% dip isn't necessarily buying cheap.

When smart money's selling a sector, dumb money's usually buying .. That's why I'd look for early price trends – because dumb usually thinks it's buying a bargain, which means that sector won't be going up

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Dian
Posted: 20 August 2017 00:49:22(UTC)
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I really appreciate for great ideas. Thanks.

http://www.barrons.com/a...their-slumber-1502916936
Mr Helpful
Posted: 20 August 2017 09:46:31(UTC)
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Tim D;49985 wrote:
Dian;49981 wrote:
Other than consumer staples like food and health care,when market volatility picks up and when there are temporary political and geopolitical tensions what types of stocks should take as safe investment?


If you think the tensions really are temporary, surely the thing to do would be to buy whatever everyone else is dumping on the cheap? It's too late to be buying defensive assets when everyone else is crowding into them.


From another thread "I have a rule now that I never hold anything I wouldn't buy more of .." KL
that had me nodding in agreement, but then :

From Ben Carlson's book 'A Wealth of Common Sense':-
"You'll always hate something in your portfolio"
"Most of the good investment decisions you'll make over your lifetime will be the ones that feel like they're not right at the time"
That has me nodding in agreement also.

So there is a dichotomy !
Do what feels comfortable or not ?
How to reconcile ?

However for the immediate question, very much with Tim D.
And would suggest to never run without sufficient 'dry powder' (Cash and/or Bonds), or other less than perfectly correlated assets, to take (reluctant) advantage of any such temporary insanity.
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Tim D
Posted: 20 August 2017 10:47:01(UTC)
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Tug Boat;49983 wrote:

BGLP is something with which you may not be familiar, but may be a safe port if a storm is brewing.

Blackstone GSO loan financing BGLP


Just looking at this... seems it has been around at least a few years but only listed in the UK as BGLP in June.

Curious why you'd think this could be a "safe port"? Looking at a recent report it looks like it's stuffed full of high yield credit (Moody's B1 & B2)... not something I'd normally consider a "safe port" at any time (I do hold a bit of global high yield via ETF myself... but that was bought as an "optimistic" bet about the future, not a "pessimistic" one).

I see BGLP has "exposure predominantly to floating rate senior secured loans directly and indirectly through collateralized loan obligation (CLO) securities and investments in Loan Warehouses"... Fair enough anything floating rate could be interesting if rising interest rates are anticipated... I'm dubious increased default rates from the inevitable and long overdue cull of the worlds' zombie companies won't kill all your returns in such an event though.

Vanguard put out a sceptical note on floating rate a while ago - https://personal.vanguard.com/pdf/icrpfr.pdf - but Vanguard does seem to have a pattern of talking down any niche where they don't have their own product offering.

As for CLOs... https://www.ft.com/conte...-11e7-9a66-93fb352ba1fe ... those could BE the storm!
(Or paywall-avoiding google cache link).

But good luck! Fortune favours the brave etc!
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Sara G
Posted: 20 August 2017 12:17:11(UTC)
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Mr Helpful;50006 wrote:
Tim D;49985 wrote:
Dian;49981 wrote:
Other than consumer staples like food and health care,when market volatility picks up and when there are temporary political and geopolitical tensions what types of stocks should take as safe investment?


If you think the tensions really are temporary, surely the thing to do would be to buy whatever everyone else is dumping on the cheap? It's too late to be buying defensive assets when everyone else is crowding into them.


From another thread "I have a rule now that I never hold anything I wouldn't buy more of .." KL
that had me nodding in agreement, but then :

From Ben Carlson's book 'A Wealth of Common Sense':-
"You'll always hate something in your portfolio"
"Most of the good investment decisions you'll make over your lifetime will be the ones that feel like they're not right at the time"
That has me nodding in agreement also.

So there is a dichotomy !
Do what feels comfortable or not ?
How to reconcile ?

However for the immediate question, very much with Tim D.
And would suggest to never run without sufficient 'dry powder' (Cash and/or Bonds), or other less than perfectly correlated assets, to take (reluctant) advantage of any such temporary insanity.


On the first point I'm mostly with Ben Carlson - if everything you hold / buy is going up then you're either a very successful momentum investor (for now) or your not sufficiently diversified - for most people the latter would apply. But what KL says would also make sense, if used as a test of conviction over the long term prospects of a holding. My version of it is that I never hold anything I wouldn't buy more of - if it became cheap.

On the original question, it can be psychologically difficult to buy when bad things are happening in the world - either through fear, or because if feels wrong to profit from such situations. But if taking the emotion out of investing is something most of us aspire to, then it is the right thing to do in most cases.

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Bill Fowler
Posted: 20 August 2017 12:38:12(UTC)
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I have moved from long term holds, selling at a nice profit, back into day trading as there will be a lot of volatility, but is not money that I need or have borrowed to invest so can sit it out if it suddenly goes bang. Only using ETFs and the odd IT, mind.
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Guest on 21/08/2017(UTC)
Mr Helpful
Posted: 20 August 2017 14:07:55(UTC)
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Am increasingly beginning to think that the hype and upward price drive, around the so-called FAANGS :-

Facebook
Amazon
Apple
Netflix
Google (Alphabet)

might be a warning to keep clear of that sector at least ?

It might be this generation's version of the traditional bubble ?
Prices are going up because they are going up.
'Greater Fool' Investing or what more kindly Siegel refers to as 'Castles in the Air'.

"The circumstances that induce the recurrent lapses into financial dementia have not changed .....
Individuals and Institutions are captured by the wondrous satisfaction from accruing wealth.....
The associated illusion of (investor) insight is protected by the .... impression that intelligence, one's own and that of others, marches in close step with the possession of money.....
And so on to the moment of mass disillusion and the crash."
Prof JK Galbraith
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Captain Slugwash
Posted: 20 August 2017 14:40:51(UTC)
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Mr Helpful;50018 wrote:
Am increasingly beginning to think that the hype and upward price drive, around the so-called FAANGS :-

Facebook
Amazon
Apple
Netflix
Google (Alphabet)

might be a warning to keep clear of that sector at least ?

It might be this generation's version of the traditional bubble ?
Prices are going up because they are going up.


Glad I am not the only one. I would probably add Tesla and the Fangs Chinese equivalents to your list.

It is all very reminiscent of the dot com era.
It has had a meteoric rise over the last 12 months, might be time to bank some gains and wait for the euphoria to subside?


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King Lodos
Posted: 20 August 2017 15:14:10(UTC)
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Mr Helpful;50006 wrote:
From another thread "I have a rule now that I never hold anything I wouldn't buy more of .." KL
that had me nodding in agreement, but then :

From Ben Carlson's book 'A Wealth of Common Sense':-
"You'll always hate something in your portfolio"
"Most of the good investment decisions you'll make over your lifetime will be the ones that feel like they're not right at the time"
That has me nodding in agreement also.

So there is a dichotomy !
Do what feels comfortable or not ?
How to reconcile ?

However for the immediate question, very much with Tim D.
And would suggest to never run without sufficient 'dry powder' (Cash and/or Bonds), or other less than perfectly correlated assets, to take (reluctant) advantage of any such temporary insanity.


Well when I first started investing, I thought "Why would anyone buy these funds that don't make money over 5 years?" .. So I always selected funds that were posting the best returns in each sector.

And invariably, performance would turn around, and they'd start dipping .. and I'd sell on a 5% loss .. Worst case, hold on because I had an emotional attachment to the fund, and sell on -15%.

It's almost like markets know when you're making big decisions, but don't know anything.

Years later – after stints as a value and endowment-style investor – I'm back to doing exactly what I was doing when I started, but with enough of a perspective on timing to predict whether I'm likely to get momentum or mean reversion (which both come from buying into strong trends).

The Market Wizards series are the Holy texts of trading (which is what anything that involves timing really is) .. I was rereading Hedge Fund Market Wizards yesterday, and in the epilogue it makes the point that some of the most successful traders in the world have completely opposite and counterintuitive strategies .. It's no wonder I'm back to following price trends, as it clearly says something about my personality.

I'd say all investing advice is contextual .. You could make a real mess following Warren Buffett or Jack Bogle's advice, if you weren't investing in the same things as Buffett or Bogle.



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jvl
Posted: 21 August 2017 08:46:34(UTC)
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Captain Slugwash;50019 wrote:
It is all very reminiscent of the dot com era.


Not for me.

Dot com Era:


  • Only tech stocks were making extraordinary gains. Many other sectors and assets were undervalued.
  • Most of those tech stocks weren't making much in sales, let alone profits.
  • There were lots of competitors and the Internet and mobile devices were in their infancy, not widely adopted


Now:

  • Pretty much everything's expensive. What else are you going to buy?
  • Google/Alphabet, Amazon, Apple, Facebook, Netflix are making either huge profits or sales.
  • The Internet is now mainstream and the above are dominant in their fields. They're practically consumer staples, used by most of us daily.


For me, the dot com era was pressing F5 a lot and watching stocks like Baltimore Technologies and Infobank go up by 10-20% a day, for weeks, months, on end. Stocks you wouldn't hear of a few years later. And being asked by people who'd never been interested in stocks for tips. That's not happening these days.
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kWIKSAVE
Posted: 21 August 2017 09:19:56(UTC)
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I hold Provident Financial ....not a lot thank God

Worth topping up ..... been thinking fora while but falling knife theory I guess King Lodos ?
Betty G
Posted: 21 August 2017 12:06:29(UTC)
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kWIKSAVE;50042 wrote:
I hold Provident Financial ....not a lot thank God

Worth topping up ..... been thinking fora while but falling knife theory I guess King Lodos ?




Provident Financial is down following an article in the Sunday Times suggesting that some of the city's most powerful hedge funds have built up significant short positions in the subprime lender amid speculation it is set to issue another profit warning and cut its dividend. I would be more inclined to sell it than buy it.
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Alex Peard on 21/08/2017(UTC)
Alex Peard
Posted: 21 August 2017 13:01:16(UTC)
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Betty G,

Thanks for info on Provident. Was thinking of buying some more on today's drop (to bring down average buying price) as the dividend should at least be held going forward unless there's more bad news. However, having been caught out on Carillion recently am very cautious. The people shorting shares usually know more than we can!
Bill Fowler
Posted: 21 August 2017 13:38:58(UTC)
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On individual shares, I have found too much vested interest in the press to believe anything I read so I just avoid that game altogether - anyone remember Redstone, Gardner, etc
Law Man
Posted: 21 August 2017 16:33:52(UTC)
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For cautious 'wealth preservation' funds, have a look at:

Ruffer Total Return/ RICA

Troy Trojan/ PNL

CGT

RCP.
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