What’s the worst that can happen?

FIRE v London3 Comments

We investors take risks, right?  But our human aversion to losses is well documented.  In my case, one way it manifests itself is as a paranoia about various ‘disasters’ that could befall my investment portfolio.  As somebody with a sizeable portfolio, one which I am totally dependent on to maintain my standard of living, I want to make sure I consider what can go wrong with it and take any practical steps to reduce the chance of disappointment.

The obvious things to worry about are falls in share prices. But that is not what this post is about.  Stocks are volatile, and I am buying much more than I am selling, so at some level or other price drops are just good news for me for quite a while yet.

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Where to put Euros to protect against Grexit?

FIRE v London2 Comments

My portfolio has a significant allocation to Euro-zone investments*. This includes equities, fixed income, and cash.   But, better late than never, I am wondering what, if anything, to do to protect myself against a likely Greek sovereign default.

My read on the Grexit situation is as follows:

  • Worst case, all hell breaks loose.  Dominos start to fall.  Chaos erupts.  Nothing is safe.  This scenario will have me worrying about much bigger things than the thin sliver of my portfolio that is in Euros.
  • Best case, the Greeks exist the Euro pretty painlessly (for everybody apart from the Greeks and maybe some stranded tourists).  Under this scenario I think it is possible that after a brief hiatus the Euro starts to appreciate, as the weight of worry on its shoulders would have lifted a little. This view is probably unrealistically optimistic because attention is likely to turn to Italy, Spain and France next, and that weight of worry will make the Greeks seem like a feather.
  • Central case, the Greeks exit the Euro and there is some significant market volatility for some time to come.  In particular it is possible that the Euro depreciates out of stress/panic; that consumer spending drops causing GDP to fall in the Euro-zone; that there is an investor flight to safety;  and that probably you’ll see an increase in reform activity in Italy, France etc as the public starts to ‘get it’ about the need to avoid a similar fate befalling them.

Continue reading “Where to put Euros to protect against Grexit?” →

Useful ETFs

FIRE v London3 Comments

Exchange Traded Funds (ETFs) make up a large portion of my portfolio (though not all – a subject for a future post). I often struggle to lay my hands on a simple list of the key ETFs when I need it, despite useful resources like Monevator’s Low cost index tracker page.

I’ve just created a reference page listing the useful ETFs I look at. Points to note:

  • It’s laid out the way I look at my portfolio. Equities vs Fixed income. And the geographies are UK/USA/Australia/other.
  • I focus on physical ETFs, not synthetic ones.
  • I prefer the lowest cost ETFs, which are listed first in each category.
  • Everything on this list has a ticker and is easily tradable using an online broker near you.
  • My investment biases/prejudices are visible. I’m barely investing in government bonds right now, given their record low yields, but I do like high yield corporate bonds. I use dividend / value ETFS, but not growth or sector ones.

I’d love any comments/corrections/suggestions.