Finance & Investments

[Norwichwood]

Why is it dangerous? They are all making a profit and have strong cashflows. As long as you can repay your debt there isn't a problem. None have a P/E of above 30. That's not high share prices for a growing profitable tech company. Just buy a fund - if your don't like the Nasdaq 100 just buy the S&P 500 or some other fund that you fancy. I would avoid UK.

[Rick2468]

The BBC news showed a graphic about the level of borrowing of Amazon, Alphabet, Microsoft and NVIDIA and it is starting to rival the amount owed by a country and Nvidia is acting as a bank to some of these companies lending them money which they then use to buy Nvidia products. That's got to be dangerous.

I've held my stocks but not invested any additional money over the past 12 months aside from my bonus. I'm sitting on about £50K of cash waiting for a crash and so far I've lost out on roughly £10K in returns, although on the plus side my invested assets have been doing really well.

The amount of debt in the tech companies leads me to think there will be a crash, but I do believe that sentiment drives the market and investors will continue to big up the market so everyone keeps the money flowing in. There is precedent for this, the 2008 crash was delayed for a while after the magnitude of the bad debt was common knowledge as investors / credit agencies brushed it off as something that would have insignificant impact on the banks.

Some people think there will be government bail-outs if some of the big companies fail as they will be considered too vital to the economy (and likely also very important to the few individuals who are making the decisions...). Whilst the debts are the size of some countries they could still be swallowed by the US government, and the current government has a staggeringly care free attitude to loading more to the national debt.

[RandomGuy99]

External Link/Members Only

After a nearly 1,000% surge, the AI debt orgy can’t last forever, while hidden borrowing has exploded to $1.65 trillion

[Malvolio]

So if you're waiting for a crash, how do you intend to judge when the market has bottomed out?

I'm going back to the two types of investors - those who can't time the market and those who haven't realised they can't time the market.  There's also the example of the world's most famous investor, who has used the crafty tactic of staying invested since 1956.

[Blackpool Rock]

So if you're waiting for a crash, how do you intend to judge when the market has bottomed out?

I'm going back to the two types of investors - those who can't time the market and those who haven't realised they can't time the market.  There's also the example of the world's most famous investor, who has used the crafty tactic of staying invested since 1956.

Ah yes the Sage of Omaha 

I've quoted about timing the market numerous times and it will always remain a constant along with the other point that I always read about when there's market turbulence or a fall happening -
It's not just about making 1 decision to sell out of a stock / fund / market as you then have to make a 2nd decision as to when to buy back in or alternatively what else to buy into and what makes you think that any alternative will do any better 

If you take some events like Covid and the start of the war in Ukraine the whole market took a hit and it didn't really matter what the market sector was so it's about sentiment and people just start selling out of everything without giving it too much thought so good stocks get dragged lower along with the bad for no good reason.
Taking Covid as an example after the drop I did sell out of a couple of duffers and switched the proceeds into Tech which had also been hit, thankfully the Tech then rebounded strongly as people clamoured to buy laptops etc and work from home whereas anything in hospitality etc remained low

The other constant is that any investor should review their portfolio regularly and rebalance it so that it remains diversified and they aren't wiped out by a crash in any 1 individual sector. 

[RandomGuy99]

Which is worth having more, time in retirement or more money in retirement?

There's perhaps no point having more money in retirement if your health isn't great and you can't enjoy it.

[simon07]

Which is worth having more, time in retirement or more money in retirement?

There's perhaps no point having more money in retirement if your health isn't great and you can't enjoy it.

If you have places to see and things to do, do it whenever you can. I have found that retirement is a time when i have the money and not as much stamina to do things. I am also caught in the grandchildren and carer to wife trap too.

I try and find time for punting when the right conditions are met.

[Norwichwood]

297 reviews so far - we salute your service! What age are you roughly?

I'm coming up to 55 this year - taken a few career breaks over time - ready for another one - but currently place pays v well - just a bit of dodgy place which can go bang and I don't want to be there when it does.
Need a side hustle.

At 34 I had nothing and no job - but since then have changed - slowly increasing the savings, investments and returns. No property or kids or wife. I hate flying with a passion. But maybe time for some fun abroad. Using the 4% rule I have enough to retire on. Plus mostly in Tech which has given much better returns over the last 30 years. And it only seems to be getting better returns wise.

[RandomGuy99]

297 reviews so far - we salute your service! What age are you roughly?

I'm coming up to 55 this year - taken a few career breaks over time - ready for another one - but currently place pays v well - just a bit of dodgy place which can go bang and I don't want to be there when it does.
Need a side hustle.

At 34 I had nothing and no job - but since then have changed - slowly increasing the savings, investments and returns. No property or kids or wife. I hate flying with a passion. But maybe time for some fun abroad. Using the 4% rule I have enough to retire on. Plus mostly in Tech which has given much better returns over the last 30 years. And it only seems to be getting better returns wise.

Having a lot in tech is risky and it is likely the bubble will burst.

[Norwichwood]

30 years of good returns and still good p/e ratios factoring in growth. Even if it halved tomorrow I would still be highly up. I'm still buying. The snowball is still growing faster than I can spend it. What do you suggest instead?

[RandomGuy99]

30 years of good returns and still good p/e ratios factoring in growth. Even if it halved tomorrow I would still be highly up. I'm still buying. The snowball is still growing faster than I can spend it. What do you suggest instead?

Diversify your portfolio. Keep some that you don't mind losing in high risk. Keep some in lower risk that should just safely grow over time. Invest in stocks in different sectors as often one will take a dive while another will go up, so they balance out over time. Keep some in low risk like cash or government bonda

[Norwichwood]

I'm 75% tech and 25% UK small caps (down from 40% and reducing) - I know which has made me the money over the last 20 years! I own a range of tech stocks - none above 6% of my whole portfolio (Nvidia which has done 'ok').

My next step is to set up a company (due to changes in salary sacrifice in April 29) - then build a SIPP based on more targeted stocks - but likely to be tech. I'm still young enough to take the risk. The war in Ukraine and Trump tariffs have caused some big shocks downward but always bounces back so far. Also have a salary which pays 2x my living costs with salary sacrifice to the max. So going to keep betting on tech until can find something better.

[Norwichwood]

On a side note - what do people think of the Motley Fool? Anyone follow the naked investor? Once I have a SIPP to target some stocks - looking for someone to follow.

[simon07]

Cheers matey. I will 70 soon and i keep punt-ready by staying fit with swimming sauna and sex. I still do weights though find i cannot do the same heavy weights i did when i had a personal trainer 7 years ago. Sometimes its the hunting for the right WG that keeps the mental interest up, though poor prospects does depress me a bit.

Having a great bank manager who is able and willing to be flexible helps a lot. He helped me transfer money from my business building equity to help me pay off my home mortgage 25 years ago, along with cash savings i had. I guess managers are more cautious now?

Then i focused on overpaying my business mortgage. Not having to pay for home freed me up to invest in various companies who moved my ISA on as they merged or were absorbed like Clydesdale, Duetch Bank, Tilney etc. I could not always save the full ISA amount and i did my best, mindful of the need to live, travel, scuba dive etc. I wish i could speak to my younger self at 25 years age and impart wisdom. Still it’s sufficient for me with what i have. All this will be useful to younger members of UKP i guess 

[Norwichwood]

"I wish i could speak to my younger self at 25 years age and impart wisdom."

Yep! I would say - find a nice girl and get laid, start a business like Craig's list, travel & have fun. I worked for a US bank in my late 20's get burnt out and bust, then when 34 started to get my sh*t kinda together and started the snowball.

Now need to stop drinking (2 bottles of wine a day) get fitter as my body is starting to feel older - find a side hustle (again had 1 in the past almost 20 years ago which started me off saving and building the snowball)

And if I could get over my fear of flying - would spend a few years in Asia :-)

[Blackpool Rock]

I'm 75% tech and 25% UK small caps (down from 40% and reducing) - I know which has made me the money over the last 20 years! I own a range of tech stocks - none above 6% of my whole portfolio (Nvidia which has done 'ok').

My next step is to set up a company (due to changes in salary sacrifice in April 29) - then build a SIPP based on more targeted stocks - but likely to be tech. I'm still young enough to take the risk. The war in Ukraine and Trump tariffs have caused some big shocks downward but always bounces back so far. Also have a salary which pays 2x my living costs with salary sacrifice to the max. So going to keep betting on tech until can find something better.

I'm another fan of Global Tech as my best 4 funds are all Tech and it's served me very well on average holding it through the downs until it rebounded very strongly, my normal holding is between 25 and 33% of my portfolio, when it hits about 33% I look at switching some into other funds to diversify.

However just a word of warning that over the last cycle when Tech was going down it was quoted that it was largely down to higher interest rates meaning that the cost of borrowing was higher and these stocks are borrowing and spending money hand over fist.
We have seen that inflation has been stubbornly higher than major central banks targets and in the current climate interest rates are on the up which may again at least put the brakes on Tech valuations


IMO to have 75% of a portfolio in any 1 market sector is far too high and you need to diversify.
In my early years of investing in the early 2010's I read a few articles which said the time may be right for UK smaller companies for various reasons, I duly invested in these and indeed they did really well for a few years returning over a few years returns comparable to what I currently have for Tech

I was a bit wet behind the ears in terms of investing back then and assumed it would continue forever and i'm sure things would have continued to do OK but then along came 2016 and Brexit.
My UK smaller companies all started to tank but I was sure they'd bounce back and couldn't bear the thought of selling out after they'd dropped, I stuck with them but when I looked a few years down the line and they'd basically flat lined for 3-5 years I bit the bullet and switched the majority of them out into other things including Tech  but pretty much all of what I switched into did so much better

The sums were bad at the time but looking back it wasn't too much compared to my current position however it did teach me the lesson about diversifying and reviewing my portfolio regularly then switching things if something isn't doing well or i'm holding too much

[RandomGuy99]

Government borrowing is high at the moment so bonds must be doing well.

[Norwichwood]

Interesting. If only 32% in Tech - what are the next categories after this? If tech slows. What might be the growth areas instead. (if Tech slows so might everything else). I would have gone S&P 500 but not so much now. UK is a no. China is a no. Property is out (in the UK). ATM I'm also limited as 2/3rd of my funds are in a pension fund - which only has 7 options - but going for the Sharia (Tech focused) has been great for me. As has an ISA with Henderson tech fund (more than 5x growth). China's and the worlds investment in tech helps to push US tech. 

[Blackpool Rock]

Interesting. If only 32% in Tech - what are the next categories after this? If tech slows. What might be the growth areas instead. (if Tech slows so might everything else). I would have gone S&P 500 but not so much now. UK is a no. China is a no. Property is out (in the UK). ATM I'm also limited as 2/3rd of my funds are in a pension fund - which only has 7 options - but going for the Sharia (Tech focused) has been great for me. As has an ISA with Henderson tech fund (more than 5x growth). China's and the worlds investment in tech helps to push US tech.

Just looked at my portfolio report and bearing in mind with funds you do get overlaps between funds in what their invested in but -
Tech 37%
Industrials 14%
Finance 14%
Consumer cyclical (deceptively vague  ) 8%
Communication services (i'd probably also call that Tech related though) 6%
Basic materials 5%
Healthcare 5%
Energy 4%
Then others at less %

It's always a crystal ball job deciding what the invest in though and you can never quite be sure but then again that's a good reason to put the money into a few things then see what does well / bad then switch out of the poor performers into the good.
My switches this year have been more into Global industrials and a UK fund which is heavy in banking, everything i'm reading also suggests that UK stocks are cheap in comparison to other regions as it's been unloved since Brexit

As I say crystal ball as i've previously invested in funds in India and Japan after reading they were on the up or about to rise however they never did anything so I avoid them like the plague now, never been in China so perhaps missed out, another theoretical boom should be green energy but I invested in one and sold out a year or so later with a 20% loss 

[Watts.E.Dunn]

"I wish i could speak to my younger self at 25 years age and impart wisdom."

Yep! I would say - find a nice girl and get laid, start a business like Craig's list, travel & have fun. I worked for a US bank in my late 20's get burnt out and bust, then when 34 started to get my sh*t kinda together and started the snowball.

Now need to stop drinking (2 bottles of wine a day) get fitter as my body is starting to feel older - find a side hustle (again had 1 in the past almost 20 years ago which started me off saving and building the snowball)

And if I could get over my fear of flying - would spend a few years in Asia :-)

Old mate of mine was very fearful of flying so i said unto him mate go and have a test trial flight at your local flying club.

Guess what?, he has for some time has held a private pilots licence!

Have a look at this site and you can see the number of aircraft over the UK Europe and most anywhere else.

Airlines such as Ryanair and Quesyjet are the b the best of my knowledge never had a fatality in all the years they have been operating!

Any aircraft of interest put your mouse on it and all the details are over on the left..

Its just amazing how incredibility safe commercial flying is!

External Link/Members Only

[Munter84]

UK housebuilders (finally) jumping on news of a renewed Help to Buy offering from Burnham.

Bellway up 10.35%
Taylor Wimpey up 11.51%
Barratt up 11.72%
Persimmon up 15.85%

The sector is still looking sad viewed historically, but some good news for those of us who have been patiently holding.

[PilotMan]

UK housebuilders (finally) jumping on news of a renewed Help to Buy offering from Burnham.

Bellway up 10.35%
Taylor Wimpey up 11.51%
Barratt up 11.72%
Persimmon up 15.85%

The sector is still looking sad viewed historically, but some good news for those of us who have been patiently holding.

I don't follow any of them, but I reckon margins will have decreased when they announce their results.

[PepeMAGA]

Micron Q4 update after the market closes tomorrow, expect a surge on Thursday if it's above expectations

[Blackpool Rock]

Just been on the news that the S&P has hit an all time high which will have been helped by the Nasdaq which is also at an all time high, so much for the AI / Tech bubble bursting that was recently being talked about, and talked about 6 months; 12 months; 2 years..................

[PepeMAGA]

Just been on the news that the S&P has hit an all time high which will have been helped by the Nasdaq which is also at an all time high, so much for the AI / Tech bubble bursting that was recently being talked about, and talked about 6 months; 12 months; 2 years..................

Yet the FTSE is down

[Adoniron]

Just been on the news that the S&P has hit an all time high which will have been helped by the Nasdaq which is also at an all time high, so much for the AI / Tech bubble bursting that was recently being talked about, and talked about 6 months; 12 months; 2 years..................

That doesn't mean it won't burst.

[Blackpool Rock]

That doesn't mean it won't burst.

But people have been claiming that it's about to burst for years, from what i've read / seen a lot of financial people believe that if it does fall then it's more likely to be a partial deflation rather than a huge pop like around 2000.
Back then there were just stupid valuations for new companies that didn't make anything and had never made any profit just because they were Tech, these days there's a bit more substance to the valuations and some Tech companies are making a shed load of cash not from making phones or computers but from advertising revenue on digital platforms etc

Even if it did half it's value then it's still been a good investment compared to most things over the last 5 years or so

[cunningman]

Back then there were just stupid valuations for new companies that didn't make anything and had never made any profit just because they were Tech, these days there's a bit more substance to the valuations and some Tech companies are making a shed load of cash not from making phones or computers but from advertising revenue on digital platforms etc

Microsoft and Oracle have sound core businesses - if the concentration increases a lot (as in 'even more') into pure AI play, then it will get even more scary.  Most of the S&P is having a bad time, the concentration of upside is quite extreme and supports the modest upside.

The capex required - and the forward profit predictions - are both very high.  Up to you of course but I think there will be casualties and the AI play is primarily one of confidence rather than track record - and confidence in the bleeding edge American models being worth it over the Chinese ones.  This has made wariness of Mag7 look like child's play.

The bond market is making things precarious.

[RandomGuy99]

Just been on the news that the S&P has hit an all time high which will have been helped by the Nasdaq which is also at an all time high, so much for the AI / Tech bubble bursting that was recently being talked about, and talked about 6 months; 12 months; 2 years..................

One day it will happen and it's gonna be bad.

[Blackpool Rock]

Microsoft and Oracle have sound core businesses - if the concentration increases a lot (as in 'even more') into pure AI play, then it will get even more scary.  Most of the S&P is having a bad time, the concentration of upside is quite extreme and supports the modest upside.

The capex required - and the forward profit predictions - are both very high.  Up to you of course but I think there will be casualties and the AI play is primarily one of confidence rather than track record - and confidence in the bleeding edge American models being worth it over the Chinese ones.  This has made wariness of Mag7 look like child's play.

The bond market is making things precarious.

Yes I agree that the huge sums being pumped into AI is concerning and no doubt some companies will go bust, I did read an article a couple of years ago that showed the biggest companies back in 2000 when the dotcom bubble burst, household names at the time and some are still going strong but some have ceased to exist.
The point was also made about the railways which saw a massive expansion in the 1840's and sucked in massive amounts of money, fortunes were indeed made however the returns weren't often as good as predicted and fortunes were also lost, however when a company went bust some of the assets like the land; tracks; rolling stock; locomotives and buildings did still exist

As per my previous posts on Tech I have said that I tend to switch some into other things once the % in my portfolio gets too high and that's just general good practice to have diversity in your investments.

I do however think when people talk about AI that there is a tendency to simply lump all AI in with Tech and vice versa however i'd say that AI while it is Tech is more of a sub sector, personally I don't pick individual stocks but invest in funds so i'm basically paying someone else to do all the hard work for me and each fund contains multiple different stocks so fundamentally diversified within the Tech sector

The other consideration is that if the AI/Tech sector does crash whether it brings the rest of the market down too like happened to many stocks back in 2000, realistically you also need to question how safe a safe haven actually is 

[Blackpool Rock]

One day it will happen and it's gonna be bad.

But you don't know that for sure do you 

I can say with certainty that everyone will die one day and indeed eventually the earth will cease to exist but that's not a reason not to carry on or to kill yourself now is it 

[RandomGuy99]

But you don't know that for sure do you 

I can say with certainty that everyone will die one day and indeed eventually the earth will cease to exist but that's not a reason not to carry on or to kill yourself now is it 

But it is a reason to be cautious and spread your bets.

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[Blackpool Rock]

But it is a reason to be cautious and spread your bets.

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Agreed, from my post above the one you quoted -

As per my previous posts on Tech I have said that I tend to switch some into other things once the % in my portfolio gets too high and that's just general good practice to have diversity in your investments.

[Massagemanmr]

That doesn't mean it won't burst.

it's going to burst we all know that, its just a case of when. That's what we don't know.

if you keep pound averaging in you will be a tad bruised but totally fine.

[RandomGuy99]

30% of the value of the US stock market is dependent on the top 7 tech companies.

[Blackpool Rock]

it's going to burst we all know that, its just a case of when. That's what we don't know.

if you keep pound averaging in you will be a tad bruised but totally fine.

Can you define a burst or what you believe may happen to the Tech sector  Just Googled and found this which suggests there are definitions for different drops in values -

 
Key Percentage Drop Benchmarks

While there is no single, rigid mathematical law for every market, financial markets use distinct definitions for drops:
• Dip / Pullback: A minor, short-term drop of a few percentage points.
• Correction: A drop of 10% or more (often up to 20%) from a recent high, happening over weeks or months.
• Crash: A rapid, severe drop—frequently 10% in a single day or 20% or more over a compressed timeframe.
• Bear Market: A sustained drop of 20% or more that generally lasts for several months or years.

Built-in Circuit Breakers

Major exchanges like the New York Stock Exchange use official percentage-drop thresholds (known as circuit breakers) to temporarily halt trading and stop emotional panic-selling:
• Level 1: A 7% drop in the S&P 500 triggers a 15-minute halt.
• Level 2: A 13% drop triggers a 15-minute halt.
• Level 3: A 20% drop halts trading for the remainder of the day.

To be honest i'd accept a drop of 10% - 20% (and indeed one of my funds I did post about a couple of months ago saying it was down 20% on the 12 month high) based on the fact that it's performed so well, this one which i've flagged up many times before - External Link/Members Only

It's currently around 10% down on the 12 month high and indeed dropped just over 2.5% yesterday but 2 or 3 months ago was about 20% down on the 12 month high.
Looking at the 3 year growth chart if you'd have invested then you would be looking at a 250% increase with £1000 now worth £3500, in 3 years   

If you'd have invested 5 years ago then the increase would have been 224% with £1000 now worth £3224 however at the low point the £1000 would have only been worth £716.98 so just over a 28% drop about 15 month in.
I'm not sure that the drop was classed as a crash as it happened over 12 months but it was certainly a severe correction (due I recall to interest rate rises stifling investment which we may well see again soon)

However I keep coming back to the fact that if i'd have invested £1000 in this fund 3 years ago and it halves in value when the markets open on Monday then it's still been a much better investment than £1000 invested in something viewed as safe returning 5% or even 10% or 20% a year

Just looking and if it fell by 2/3 then £1000 would still be worth £1166 so basically as good as that safe 5% stock which with 5% reinvested would still be worth slightly less at £1157


 

[cunningman]

30% of the value of the US stock market is dependent on the top 7 tech companies.

I think once the AI IPOs finish, its going to be worse than that.  I suspect its already out of date.

If the AI buildout slows materially - whether from a reset to the expected future earnings, or local politics around pollution and power, then the companies supplying that rollout will have issues as well as that datacentre owners and the AI firms hoping to rent capacity.  There's a lot of smaller companies that have bet heavily on the demand for construction.