What's your strategy for 2022?

I think they are both measured in dollars (on most portals), so the answer would be “not sure”. :slight_smile:

Otherwise compare a CHF hedged Total World ETF to a CHF-hedged SP500 ETF to get the answer.

The CHF will probably continue to outperform, especially if we are running into a stock market crash again.

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I don’t think that works because the hedging in those ETF is reset monthly, right? Not sure you are going to capture long term currency devaluation fluctuations. But somebody more knowledgeable than me can correct me if I’m wrong.

Now the million dollar question: what are those specific sectors to select, and what are the ones to avoid?
Betting against US tech in the last 10 or 15 years would have been a very bad idea.

Betting against US stock market was the same story. Even after the Corona crash, US stock market outperformed developed and emerging markets.

Increasing home bias is always a bad idea (from my point of view), unless you live in the US. Overweighting sectors? Same question as above: how do you want to pick the potential winners? Gold didn’t gain much in the last years (and it doesn’t produce anything - it’s just a hedge), bond allocation doesn’t make sense atm at all.

I think just keep investing in all-world index funds. The index is self-adjusting, so e.g. if Switzerland magically increases from 3% worldwide stock market share to 10%, it will be reflected.

From my point of view, it’s more important to think about your risk tolerance. If you can’t sleep well due to overvaluation, you might have too much percentage allocated to the stock market part of your portfolio.

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I have a more general suggestion not to follow any prognosis about the future development of any market. The analysts or whoever can’t predict it. Sometimes someone is right, but purely by chance.

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“overvalued growth stocks” are the disruptors of these 20 years

  • Tesla with EVs
  • Microsoft with Azure and Office365
  • Apple with the touch display and then the complete iEcosystem
  • FB who invented social networking
  • Netflix/Spotify/YouTube who “invented” streaming
  • Google who made everything available at your fingertips

These giant companies have such a high valuation because they made such a moat for themselves and basically harvested the majority in the market upfront. NFLX and SPOT tend to be punished recently, but they’re still Nr 1 in their sector.

Also, overvalued ARKK-style “nonprofitable tech” stocks are the ones that solve problems, who are challenging the status quo and are looking into sky-high valuations in 10yrs time. It’s a bet, but it might be worth it.

Utilities and other low-PE stocks are getting relatively overvalued if they produce nothing but a 3-4% dividend in an environment where the 10yr US treasury notes are also valued at 3% slowly. You basically take on a risk for no additional potential gains.

The US is traditionally very innovation-friendly, so anything that resurrects like a phoenix after a coming recession will probably be a US company or also have a registered seat in the US.

Technology and especially software moves the world forward. It has been like this since the last 50 yrs, I don’t see that changing anytime soon.

these are exactly the sectors that need software (DeepMind, robotized agriculture, big-data use cases, AI-powered underwriting, new digital mobile apps for insurance clients) to make a competitive advantage.

  • how to invest into cash? Basically you are saying to just not buy stocks and keep CHF instead? :slight_smile:
  • Swiss and especially EU real estate are also overvalued, so in a rising inflationary environment these RE pools will slowly be losing asset value (while not generating too much income), won’t they?

in a coming recession, wouldn’t anything smaller than large cap be at a risk of not surviving the recession?

I believe we are about discussing options and not just the “passive total world ETF” mantra…

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Another point is that “US market” is a rather formal definition. For example the already mentioned Spotify is a Swedish company traded for some reason in US.

So you should rather look to where company’s earnings are coming from, and for big companies, US or Dutch (ASML) or Swiss (Nestle) ones, the answer is usually “from everywhere” (and “mostly from US”).

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@user137 already answered a lot of what I also would refer to.

I think there’s a video from Warren Buffett about gold. He’s not a fan of it. Also, you would have to check how much hedge gold provided during the financial crisis 2007-09 or other crises before. I remember people talking about Silver already 5 years ago, citing that it’s on the rise and Bill Gates owns a lot of silver (back then - not even sure if the story is true).

What are the “strong indications” that the strategy is not going to work anymore? All those predictions from “analysts” usually have one thing in common: they don’t turn out to be true. I remember people writing books and predicting the stock market to crash for the last 10+ years. Guess what: I used to believe those crash prophets back in the days. Which was utterly stupid, looking at it from hindsight. At least those crash prophets made some good money selling books and their own funds…

It would be more interesting to know what they recommend, not what they say is not viable anymore.
The problem I see with all those analysts is that none of them has a crystal ball. Let’s take for example the analysts following certain stocks and giving buy, hold or sell recommendations. From what I’ve seen for most of the single stocks I hold is, that those predictions are worthless. If I had bought every time some analyst downgraded a stock, I would have made much more money, because usually the stock price was going up after the downgrade.

So yes, I think it makes sense to think about it. But then you have to come up with a solid plan.

I totally second this! Holding 100% shares during a bull run is easy. You still need to be comfortable with when stocks go down over and extended period of time, e.g. 3 years. It still depends on where in your investment timeline you are.

I see it similar to user137: most real estate in european countries is overpriced (even though I only know the German and Swiss market, and a little bit the market in Czech Republic, Slovakia and Romania). It might be good for capital preservation, but not if you want to grow your net worth significantly.

So why not just buy Roche, Novartis and Nestle? They anyway make up 60% of the SMI.

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and SwissRe with their 7% dividend yield.

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The worst investment decision I made was in ~2015-2016. I had a position in a tech stock, which has tripped in value. I’ve sold it, thinking I’d take a nice profit and that it can’t go much higher, can it? Today it would have been 10x the original value.

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Thanks guys, as soon as you’re done selling your stocks I’m going to buy the s… out of VT :grin:

But honestly: Timing the market (e.g. a recession) just doesn’t work, it’s been scientifically proved so many times. You gotta get it right twice: on your way in and on your way out. Good luck with that!

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Another one of my old mistakes: around 2013, I was thinking about whether to enter the market. I’ve had a look at the historical S&P 500 chart, what I saw was that the price was reaching the peak of 2000 and 2007. According to technical analysis, this were “resistance” points, meaning, that it’d be likely for the price to go down from there. And sure enough, there were enough doomsday predictions available to confirm my point. I’ve decided to stay out of the market.

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This is a prognosis, see above.

Nice summary for all the recent posts here.

my soulmate :slight_smile: I sold all tech when Trump was elected. I don’t even dare to post those stock prices.
I would’ve been about a year’s income better…

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which is timing the market twice :wink:

what about 1999 to 2010? :smiley:

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i have the luxury to only time my way in… lol
I wanted to buy when VT was well above 100, now im happy to get a 10% discount, i just buy and buy… thats how we do it, righ? (just like the crypto folks… lol)

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Do you have that luxury because you received a larger amount which you didn’t want to invest?
And do you have a plan when you buy? I mean certain numbers, how much to buy?
It’s one thing to buy and buy, but one day you’ll run out of ammunition. And what if VT keeps falling further?

I wouldn’t compare it with crypto (I know, it was more of a joke) - with VT you at least get some dividends, and it won’t get rekt magically (like so many crypto scams) :slightly_smiling_face:

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I got some money at the end of last year but i did not feel “safe” throwing it all in. Its less than 10% of my NV so i don’t feel too bad, even if it drops further. In that case i could just buy more and average down?

Yes, I get that. My question is: how much are you investing (percentage wise) of that amount, and which buy prices to you have? E.g. let’s say VT goes down to 90 USD. Are you investing 10% at 93, 92, 91, 90? I’m curious about your targets.

Only like 10% of investors (private and professional) beat the market over the last 100 years.

So even if VT falls, the likelihood is quite high that you would underperform VT when picking stocks / adjusting accordingly.

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