Good or Bad time to invest

homer911

My FA indicated if you have a diversified portfolio and are happy with modest returns on additional investments, the returns on short-medium term bonds are good at the moment, but do your own research on that..

runswithascript

https://www.boards.ie/discussion/2058270335/good-or-bad-time-to-invest

Firstly, I am an amateur student of global macro, not a professional, but my understanding is that your instinct was right, unless they were planning to invest your money in short term treasury bills to earn yield which is probably not the case. The recession has been looming since the first yield curve inversion April 22 and every additional inversion since only makes the 100% hit rate of presaging recession likely to continue.

The inversions of both US Government Bonds yields and the Eurodollar Futures curve are historic which makes it more likely it will not be a moderate recession.

Personally I am waiting, there is nothing wrong with sitting things out in cash, and you also do not need to catch the very bottom of the market to be successful. With inflation now seeming to really be transitory and just a product of the global supply shock from the pandemic, and with growth metrics indicating the economy is steadily deteriorating there is a good chance the Federal Reserve will at least pause soon. I am trying to discipline myself to resist the wave of FOMO we will see when this happens, and instead only start looking for signs of recovery after they have already started cutting, which they may be forced to do due to a crisis event like an issue with the collateral or the housing markets.

Also worth considering that the environment after a bottom is found may be very different to the last few decades, where for instance commodities offer much more return than equities.

AnF Chuckie egg

I always take a long view with investing, is now a good time to invest? who really knows. For me I see lots of good companies down between 50-80% from the ath's, can they go lower, yes. Either way I'm taking money out of cash and reinvesting in those companies. I do think the valuations of some of these companies is now too low for the amount of inflation we are seeing. There is just too much money floating about after all the quantitative easing. I believe the value of cash is down over half since 2017 yet many of those companies are at valuations below the 2017 levels.

My Father use to tell me about how he and his brother bought the 2 houses back in the 1970s. His brother bought first in 1975 and paid £6500, my father paid £10500 for the same type house 3 years later much to his brothers amusement at the Bargain he had got.

Roll on to 2022 and the same houses now sell for over €400k. So over the long term did any of the two brothers pay too much!!

daithi7

https://www.boards.ie/discussion/comment/120081477#Comment_120081477

Hmm, not at all sure about your analogy example tbh i.e. The initial price and hence valuation you pay does actually determine your final returns .

Re your analogy re your dad & his brother paying 6,500 & 10,500 for similar houses in the 70s, now worth ~400,000. Did the initial price greatly affect their returns?

I guess it depends on what the real value of 10,500 - 6,500 is in today's terms? It's probably fairly significant !!

Nearly all studies show your return from equity investments is heavily dictated by the price you initially pay for earnings also.

Shedite27

Listened to two fund managers give outlooks this week, one is very bullish and at the top end of its equities range, the other the complete opposite and at an all time low of equities. Big difference of opinions at the moment from the "experts"

AnF Chuckie egg

https://www.boards.ie/discussion/comment/120190635#Comment_120190635

True but I was only trying to point out that with a long term view time in the Market will still give returns even if you thought you over paid, plus how quickly inflation can erode the value of money.

Value of £6500 in 1975 when factoring inflation is about £40k today

Value of £10200 in 1978 would be about around 40k too!!