When i started investing around 2015, there was already talk about a potential bubble and look where we are now. I am simply a bit sceptical of the many proclaimed cassandras at this point. Maybe it will be to my detriment.
But generally it also does not sound wrong to focus more towards the stocks you mention?
This sounds like “grass is always greener on the other side” delusion .
If there is a crash, politicians will as a first priority put ecology into a drawer for a while.
EMs may take a hit with rising bond prices.
Value? Why not… Is there still something like that?
Not actively preparing for a potential crash but indirectly I wanted anyway to add more value stocks and emerging markets to my assets so I redefined my asset allocation strategy for 2021 to include small cap value and emerging market for a total of 25% of my asset allocation. Then beginning of this year I re-balanced by selling some VT in order to buy AVUV, AVDV and AVEM.
I am convinced that value, profitability, conservative investment and momentum have a higher expected return based on the research I have seen. This seems especially true for small caps.
That is why I have a small cap value tilt based on the Dimensinal/Avantis approach.
If you believe that this is also true, then by all means, add a value tilt.
Thanks for the answers. I pretty much agree with you. I’m thinking about adding small cap, value, EM tilts since I’ve joined this forum 3 or 4 years ago. Maybe it’s a good time to finally implement this. The current stock market situation is really uncomfortable.
We are seeing a very strong v-shaped recovery and are in for a huge stimulus program from Biden (likely another 1tril). Inflation meanwhile is low and no sign of a recession at all. I believe it when some say that we will see an immense increase in earnings this year.
@1000000CHF that is the thing. you’ve got to be ready to face that. I am sitting on some India value fund since 3 years. It has been tough, seeing everything going straight up but this funds.
I also agree with @xorfish regarding avantis/dimensional, and/or small value approach and am doing 60-70% VT-esq + rest split among AVDV, AVEM, AVUV/SLYV, and RPV. But, totally ready to underperform more years.
If the increase is too modest companies can buy more shares back like Apple recently, boosting the EPS.
It’s done with new debt which is anyway bought by central banks, so it’s more free money flowing into the stonk market !
Bullish !
Perhaps after all it’s not a bubble but some sort of inflation.
A real estate developer said once in an interview: “a bubble it’s when it bursts”.
I found it dumb first, but over time I found many examples where prices jump to a higher range and never come back significantly lower.
Some Nobel laureates don’t think bubbles really exist:
The word “bubble” drives me nuts, frankly, because I don’t think there’s anything in the statistical evidence that says anybody can reliably predict when prices go down. So if you interpret the word “bubble” to mean I can predict when prices are going to go down, you can’t do it. …
I believe markets work. And if markets work those things shouldn’t be predictable. If I can predict that housing prices will go down, if the market’s working properly, they should go down now … If the market’s working properly the information should be in the prices.
I don’t even know what a bubble means. These words have become popular. I don’t think they have any meaning.
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