Incoming major crash?

Just seeing if anyone has seen this video and has any thoughts.

Possible major crash like the dotcom and 2008 incoming?

Are you DCA in or expecting it to get worse before we see a major bull run starting?

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Let’s put it this way, I expect the worst is still ahead.

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I guess the question is, did the market already correct/selloff prior to the likely economic slowdown that is happening, or hasn’t it been priced in? Earnings are starting to come out so we will start to see a big disparity in companies quality/profitability I think, but what the indexes do I am not sure.

Will continue to invest in names I see value or high quality long term picks.

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Someone else predicted 2026 about 18 months ago.

Sometimes these things can become self-fulfilling.

Imo this is quite irrelevant. If anything, incoming jitter is very healthy to rationalize some valuations.

That’s the name of the game. Acquire quality companies at fair prices, and market’s movements don’t mean much.

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There will be a major crash!!!
And I will go further…
…There will be more than 1 major crash in future!!!

More seriously, its certain that in future there will be always major crashes. No one can predict when and how accurately.

Even a broken watch is right, 2 times a day. So the pessimists will be sometimes correct, as well the optimists.

If the drum beating (for good or for bad) is loud enough, it could start self-fulfilling events. For example, Central Banks, use communication as monetary policy tool. As economic agents have expectations and are emotional. Big Banks could trigger events though their communication and “research”, as well Credit Rating Agencies. (Big Banks’s communication are always suspicious, due to their skin in the game. :wink: )

FOMO, FUD, bank-runs are emotional events that can provoke extreme events. Examples: Meme stocks/cryptos, sub-prime mortgage crisis, bank panics, dot.com, tulip mania, South Sea, etc. Just see the below page about stock market crashes and bear markets:

And always, don’t forget the economic/business cycles. Very related to the credit cycles (monetary policy).

…And there will be unknown factors that could trigger a chain of events, e.g. a farmer eat bat wings in a Chinese village, starting a world pandemics:

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What I mean is for example, lets take REITs, do we honestly think something like Tritax Big Box that has fallen to lows of around 130p from 240p level will correct significantly further? I would estimate not, NAV may fall (from 220p currently) but thats priced in I would say. If people still hold some companies right now with lofty valuations then mostly it would be low quality or hype stocks by now.

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It has been priced in - recession talks have been going for long enough. I’m loading value.
You see it’s not about the share price of a company - I do not look at SP graphs - I look at the PE graph over the time, incuding during bear markets. Let me give you example - company X that has been on the market since 90s - at good times it was traded at 10 PE - ravenues are steady, no major concerns about the management, the company is sound. However times change and bear markets and crashes happens. So the last couple of such the stock have bottomed to lets say PE of 2-3 - way way south from long MA line. This is when you buy value, that is likely to make you happy. I’m not even going to comment on companies with 100+ PE(Tesla cough) or any other ridiculous valuations on that matter, that have been riding hype train fueled by money printer for long enough. This is the reason the banksters have been screaming that the end coming any moment now, while sitting on ath cash positions - to scoop as much as they can as cheap as they can as recent Blackrock note said.
Just as I invested in REITS during covid crash, I’m loading banks and proven investment funds now, they will likely generate more earnings YoY because of the rate hikes - selling expensive credits and on top of that they will aquire as much assets as they possibly can.
Get smart, buy value, not hype, diversify - banks, energy, tech, health, Brazil, Mexico, EU and you will be fine in the long run.
And lastly there are some companies out there that have stupid value at the moment, mostly in SA and EU. I bought PBR sub 10 with PE 2… I can’t even imagine who on earth sold his shares at that price.

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My only concerns with BBOX is its gearing and relatively low dividend cover, coupled with rising interest rates should dampen the value of its portfolio slightly. That said 60% of its leases have inflation factored in, it had 100% rent collection and its top 50% are strong brands with good cashflows in defensive consumer industries.

Analyst ratings are not so great, pricing in an upside of 10-20% at current levels, and a yield of 4.44% is not great at current levels.

I dont hold a position, but like to take a contrarian view and would need to check the cashflows of the underlying companies they rent to before purchasing. That and one thing is lacking - I would hope they work to close down the gearing but there is little room to accelerate their own revenue to do so without eating into dividend cover.

Couldn’t agree more. There are exceptions to the rule as always, but if you look at a long term all world index vs all world value vs all world growth vs any industry sector (lets say hydrogen), then there is an almost repeatable history that when one (normally growth) outperforms the other by >70%, it returns to the ‘norm’. In fact the MSCI all world Value Index long term has beaten the MSCI All World Growth Index.

We have the opportunity as investors, to buy value stocks at a time of our choosing - and if lucky, match the returns of say Berkshire Hathaway.

Perhaps I am missing your point, but as a REIT they legally have to pay out 90% or more of their rent (not service income) and generally they are on the low end in recent years, many REITs on market are closer to the 100% and some even over it such as THRL.

Debt compared to equity (I assume what you refer to with gearing?) what is your short term worry here? I look more at debt to assets 1.5bn in borrowings but compared to assets of about 6bn, it’s at <25% LTV which gives them some cushion with likely revalues down. I believe they said it only comes a serious issue if values drop 50%.

For me I agree like all companies with debt interest are a risk, but they have taken on debt to expand and their raise well above 200p was a great move, has helped fund probably a 10-20% increase in rent increase with current cap ex schedule.

I can understand if your comments are REITs in general, but do you see many REITs as better than Tritax from a valuation and quality side of things? I am actually hoping for a further dip for REITs as several others I would like to enter at better valuations.

Yes this part is meh as it doesn’t allow flexibility.

Rising interest rates mean this debt will be more costly to service, which due to the 90% annual payout above, gives less leeway to pay down the debt in good times. That said the service costs will be written off the rent income first, but their hands are tied to a point in managing the portfolio.

This is down to preference. (Edit: clarification - preference between investing in non-REIT with high coverage vs REITs that necessarily bear low coverage)

Lots of analysts complain on REITs low coverage ratio and high debt levels, as if they were talking of a productive business. Both these metrics are utterly irrelevant when it comes to REITs.

When investing in a company, FCF retained are an important measure of the flexibility of their activities and internal margin of safety. But REITs, if they desire to retain the status and benefits from very high tax advantage (due to not being a corporation), certainly cannot keep that luxury. And it is something to consider, as most RE portfolio aren’t easily disposed off, so the effectiveness of the management is far more important than most other industries.

This is what partly justify REITs’ overal discount in the market, the other part being the individual tax regime higher for REITs income.

At the same time, REITs FCF are also far more predictable, so there is a much lesser need for higher retained earnings.

Point is, looking at coverage ratio and leverage ratio for REITs is just showing a very poor understanding of REITs’ unique tax regime and business activities. Careful analysis is still warranted, and REITs do carry a discount for it; but this won’t show any relevant information about them.

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100% always. The problem is flexibility and diversity in their structure. To invest in a REIT, you ideally need to look at the cash flow risk of the underlying.

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Just to be sure, what is the UK REITs’ dividends tax rate withheld for individual investors?

I have a vague idea (unconfirmed) of generally being 20% tax withheld.

The UK REITs also have the Stamp Duty Reserve Tax (0,5%), if domiciled in UK.

Why ask me? :joy: No idea, I don’t own any UK REITs.
I know some places won’t have any withholding tax on REITs, but generally distributions tend to be income taxed at a personal level (which tend to be higher than other investment incomes taxes).

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With a name like colincrypto I think I’ll ignore his advice.

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Maybe our British friends can shed some light on this? :wink:
(e.g. @Dougal1984)

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Thanks :sweat_smile: - its been a while, but I think it all depends if the income is PID or non PID, but in general if you hold them outside a tax efficient wrapper, you should* pay tax at your highest income tax rate.

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Quite a good (albeit they reference dates several years ago) overview here:

In short in terms of PID if you hold in a SIPP, ISA etc then you would get 100% of dividend, if you hold it individually it looks like they will take 20% from it for HMRC and you will get 80%, however depending on your tax band you may also have to pay more tax as it seems PID is treated as income not ‘dividends’ so you pay income tax on it.

However I am small fry so my REITs are in ISA wrapper so havent a clue if some places/brokers will credit you 100% then you just pay more tax on back end after year end?

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As a Brit, any tips to create a more tax-friendly scheme on any British territory/jurisdiction for non-UK resident? :smiley: