Big fire sale on

[TUK020]

Looking at the data from my portfolio on HYPTUSS, I notice that 12 of my holdings (about a third) are showing metrics that give me a simplistic reading of "going cheap".
The list of holdings where actual or forecast cover is >2, and PE<10 (arbitrary chosen limits, haven't taken a close look at FCF for each of these)
BP
BT
HICL
HSBC
ITV
MGAM
SHEL
SDRC
SMDS
VSVS
VTY
WPP
OK, thereis some dodgy dross in there, but also companies that I regard as quality outfits, Schroders, Shell etc

There are some horrendous dark clouds on the economic horizon, but this does seem to be market sentiment on the floor

[Itsallaguess]

There are some horrendous dark clouds on the economic horizon, but this does seem to be market sentiment on the floor

I've been in 'cash accumulation mode' for a while now, with a view similar to yours except to me it feels like there's worse to come on multiple fronts for some time, and it certainly doesn't feel to me as though we're in a position yet to be using words like 'floor' at this particular stage...

With that said, I've recently reached my self-imposed marker on that full-on cash accumulation front, and so I'm currently in a half-way-house position of allowing wage-generated cash funds to continue to accumulate, at the same time as beginning to drip-feed share-account dividend income back into the market once such internally-generated funds have reached a level where broker fees are a sensibly-low proportion of any purchase.

Even where those half-way-house top-ups have re-started though, I'm preferring to stick to income-oriented Investment Trusts rather than single-company purchases, as in this environment I tend to look for a potential additional safety-margin of useful NAV discounts within those income-IT purchases, and I'm also looking to potentially take advantage of any discount-management processes that those types of income-IT's are often able to utilise if discounts continue to widen or are maintained for any length of time.

Last week I topped up JP Morgan European Growth & Income (JEGI), on a yield of 5.12% and a current discount of around 15%, and also Abrdn Asian Income (AAIF), which is on a yield of 4.5% and a current discount of around 13%.

My accumulated (and still partially accumulating) cash funds can be deployed if there's any huge market dislocation, but if not then I will continue to top-up existing holdings with the other share-account dividends as and when they reach sensible levels to do so.

The above is an approach that has served me well during previous periods of market-wide issues, and I think the single most important thing is to just come up with a strategy to deal with these periods that suits us individually, and then stick to that plan whilst these periods work themselves out.

The single most important thing for me has been to come up with a strategy to cope with these periods that means I never feel the need to actually sell down existing holdings, and I'm happy to say that the above approach has certainly delivered on that front, as it allows me to generate 'coping strategies' outside of any need for a major 'sell down event' to occur...

Cheers,

Itsallaguess

[daveh]

I've been buying as cash comes available. Picked up (topped up) VTY and HLN in the last couple of weeks, with dividends. Still holding back on adding this year's ISA allowance.

However, if I look at my Income Portfolio, it's not showing massive loses. It's down 1% YTD. It's been trading between +3% and -3% over the year so far. So, I wouldn't have said there has been a massive pullback in income shares so far (though there have been falls in individual shares (eg VTY and PSN in my portfolio).

[TUK020]

I've been buying as cash comes available. Picked up (topped up) VTY and HLN in the last couple of weeks, with dividends. Still holding back on adding this year's ISA allowance.

However, if I look at my Income Portfolio, it's not showing massive loses. It's down 1% YTD. It's been trading between +3% and -3% over the year so far. So, I wouldn't have said there has been a massive pullback in income shares so far (though there have been falls in individual shares (eg VTY and PSN in my portfolio).

I'm wondering if this is a boiled frog moment - happening gradually, so you don't realise it.

These stocks have not had a massive or sudden pull back in sterling terms. Many of them have international earnings denominated in dollars.

[TUK020]

In 2020, post COVID meltdown I took a couple of more risky leaps, one of which was a top up stake in Shell at around 1250p.

I am now overweight, and had a limit sell order to topslice the stake. The market price was approaching the limit sell price.

As a result of my pondering about market valuations, I have reset the limit sell price up another +20%. Going to ride this one a little longer. I find it difficult to believe that a company that invested in LNG is trading on these valuations in our current energy crisis.

What am I missing?

[Tara]

Looking at the data from my portfolio on HYPTUSS, I notice that 12 of my holdings (about a third) are showing metrics that give me a simplistic reading of "going cheap".
The list of holdings where actual or forecast cover is >2, and PE<10 (arbitrary chosen limits, haven't taken a close look at FCF for each of these)
BP
BT
HICL
HSBC
ITV
MGAM
SHEL
SDRC
SMDS
VSVS
VTY
WPP
OK, thereis some dodgy dross in there, but also companies that I regard as quality outfits, Schroders, Shell etc

There are some horrendous dark clouds on the economic horizon, but this does seem to be market sentiment on the floor

I don’t think the markets or market sentiment are on the floor yet or anywhere near the floor yet. The FTSE is only 5% below the all time high and the Dow is only about 10% below the all time high. So if stock markets are just below their all time highs, how can market sentiment be on the floor?

In 1973 the main UK stock market Index fell by over 70%, and PE ratios reached about 2 or 3 for many big UK companies. That was on the floor. I would assume that you are maybe not old enough to remember it? But if you think that there are “horrendous dark clouds” ahead for the UK economy, then why can the same stock market fall as 1973 not happen again?

[dealtn]

In 1973 the main UK stock market Index fell by over 70%, and PE ratios reached about 2 or 3 for many big UK companies. That was on the floor. I would assume that you are maybe not old enough to remember it? But if you think that there are “horrendous dark clouds” ahead for the UK economy, then why can the same stock market fall as 1973 not happen again?

It can, that is certainly one possibility. As are those dark clouds arriving and a much more benign outcome happening too. Also those clouds don't arrive, and a variety of positive and negative outcomes for the stock market occur.

Those that pose anything close to certainty about future outcomes, for any asset class, concern me and such clarity demonstrates a lack of credibility to any argument they are making.

[Nimrod103]

In 1973 the main UK stock market Index fell by over 70%, and PE ratios reached about 2 or 3 for many big UK companies. That was on the floor. I would assume that you are maybe not old enough to remember it? But if you think that there are “horrendous dark clouds” ahead for the UK economy, then why can the same stock market fall as 1973 not happen again?

It can, that is certainly one possibility. As are those dark clouds arriving and a much more benign outcome happening too. Also those clouds don't arrive, and a variety of positive and negative outcomes for the stock market occur.

Those that pose anything close to certainty about future outcomes, for any asset class, concern me and such clarity demonstrates a lack of credibility to any argument they are making.

QE is over, QT has arrived just at the moment when the British Govt wants to borrow a lot of money. So interest rates must go up sharply. Gas and electricity prices are very high and petrol is still high, though not quite as high as before. All these things will vastly increase industry costs, while encouraging the consumer to hunker down, and not spend. In previous cycles, I think the fuel/energy costs were the main driver in the onset of recession.

In the light of this, I find it very hard to understand why the markets (in particular the British markets) remain so upbeat.

[dealtn]

In 1973 the main UK stock market Index fell by over 70%, and PE ratios reached about 2 or 3 for many big UK companies. That was on the floor. I would assume that you are maybe not old enough to remember it? But if you think that there are “horrendous dark clouds” ahead for the UK economy, then why can the same stock market fall as 1973 not happen again?

It can, that is certainly one possibility. As are those dark clouds arriving and a much more benign outcome happening too. Also those clouds don't arrive, and a variety of positive and negative outcomes for the stock market occur.

Those that pose anything close to certainty about future outcomes, for any asset class, concern me and such clarity demonstrates a lack of credibility to any argument they are making.

QE is over, QT has arrived just at the moment when the British Govt wants to borrow a lot of money. So interest rates must go up sharply. Gas and electricity prices are very high and petrol is still high, though not quite as high as before. All these things will vastly increase industry costs, while encouraging the consumer to hunker down, and not spend. In previous cycles, I think the fuel/energy costs were the main driver in the onset of recession.

In the light of this, I find it very hard to understand why the markets (in particular the British markets) remain so upbeat.

Equally I find it hard to understand a description of the UK markets as upbeat, or why the UK in particular is presumably believed by you to be positively out of line with alternative located markets.

Markets (almost universally) are not just forward looking, but have a horizon as far as "forever". Short term concerns, and a specific focus on a recession "now", or over the next couple of years, are a component in valuation, but not exclusively. Are you permanently negative on the UK?

[BullDog]

FTSE100 being not much higher than it was more than 20 years ago looks pretty miserable where it is to me already.

[Nimrod103]

In 1973 the main UK stock market Index fell by over 70%, and PE ratios reached about 2 or 3 for many big UK companies. That was on the floor. I would assume that you are maybe not old enough to remember it? But if you think that there are “horrendous dark clouds” ahead for the UK economy, then why can the same stock market fall as 1973 not happen again?

It can, that is certainly one possibility. As are those dark clouds arriving and a much more benign outcome happening too. Also those clouds don't arrive, and a variety of positive and negative outcomes for the stock market occur.

Those that pose anything close to certainty about future outcomes, for any asset class, concern me and such clarity demonstrates a lack of credibility to any argument they are making.

QE is over, QT has arrived just at the moment when the British Govt wants to borrow a lot of money. So interest rates must go up sharply. Gas and electricity prices are very high and petrol is still high, though not quite as high as before. All these things will vastly increase industry costs, while encouraging the consumer to hunker down, and not spend. In previous cycles, I think the fuel/energy costs were the main driver in the onset of recession.

In the light of this, I find it very hard to understand why the markets (in particular the British markets) remain so upbeat.

Equally I find it hard to understand a description of the UK markets as upbeat, or why the UK in particular is presumably believed by you to be positively out of line with alternative located markets.

Markets (almost universally) are not just forward looking, but have a horizon as far as "forever". Short term concerns, and a specific focus on a recession "now", or over the next couple of years, are a component in valuation, but not exclusively. Are you permanently negative on the UK?

Upbeat is perhaps putting it too strongly, but the current bull market appears to have run for about 13 years now, and must be getting long in the tooth, given the very apparent problems in the UK and European economies. Maybe the downturn in the FTSE 250 is a sign of a early bear market, but the FTSE 100 is still holding up. By the way, I don't think the UK is in a worse position than Europe, but the USA is in a much better position wrt cheap domestically produced energy.

However, I am very concerned with the amount of debt the UK Govt has and will run up. Truss's 'Dash for Growth' bears worrying similarities to Maudling's Boom, the Barber Boom and the Lawson Boom IMHO. All were devised on the need to lower taxes and interest rates in order to stimulate growth, which never came. Might the Truss Boom end the same way? My own view, FWIW, is that such a boom would only succeed if accompanied by a very hard headed shake-up of the whole UK economy, to remove as much inefficiency as possible.

[BullDog]

In 1973 the main UK stock market Index fell by over 70%, and PE ratios reached about 2 or 3 for many big UK companies. That was on the floor. I would assume that you are maybe not old enough to remember it? But if you think that there are “horrendous dark clouds” ahead for the UK economy, then why can the same stock market fall as 1973 not happen again?

It can, that is certainly one possibility. As are those dark clouds arriving and a much more benign outcome happening too. Also those clouds don't arrive, and a variety of positive and negative outcomes for the stock market occur.

Those that pose anything close to certainty about future outcomes, for any asset class, concern me and such clarity demonstrates a lack of credibility to any argument they are making.

QE is over, QT has arrived just at the moment when the British Govt wants to borrow a lot of money. So interest rates must go up sharply. Gas and electricity prices are very high and petrol is still high, though not quite as high as before. All these things will vastly increase industry costs, while encouraging the consumer to hunker down, and not spend. In previous cycles, I think the fuel/energy costs were the main driver in the onset of recession.

In the light of this, I find it very hard to understand why the markets (in particular the British markets) remain so upbeat.

Equally I find it hard to understand a description of the UK markets as upbeat, or why the UK in particular is presumably believed by you to be positively out of line with alternative located markets.

Markets (almost universally) are not just forward looking, but have a horizon as far as "forever". Short term concerns, and a specific focus on a recession "now", or over the next couple of years, are a component in valuation, but not exclusively. Are you permanently negative on the UK?

Upbeat is perhaps putting it too strongly, but the current bull market appears to have run for about 13 years now, and must be getting long in the tooth, given the very apparent problems in the UK and European economies. Maybe the downturn in the FTSE 250 is a sign of a early bear market, but the FTSE 100 is still holding up. By the way, I don't think the UK is in a worse position than Europe, but the USA is in a much better position wrt cheap domestically produced energy.

However, I am very concerned with the amount of debt the UK Govt has and will run up. Truss's 'Dash for Growth' bears worrying similarities to Maudling's Boom, the Barber Boom and the Lawson Boom IMHO. All were devised on the need to lower taxes and interest rates in order to stimulate growth, which never came. Might the Truss Boom end the same way? My own view, FWIW, is that such a boom would only succeed if accompanied by a very hard headed shake-up of the whole UK economy, to remove as much inefficiency as possible.

There's little doubt in my mind that another £150 billion or so of government debt is medium term a very bad thing. I haven't got any easy answers to the current state of affairs in the economy. But it seems nobody else has either. Who was it said something along the lines of "those who fail to learn from the lessons of history are doomed to repeat them".

I truly despair that today, all the politicians of any party have only one answer to any problem that arises. Spend and borrow more money.