Index investing vs Bitcoin. Thoughts?

Tl;dr Western countries might have reached their peak on the stock market and could enter a new era of horizontal movement in their Indexes, just like some asian countries. What do you think?

I recently watched an interview with an ex Goldman Sachs manager, which I’ll link below, and I’d love to hear your thoughts on this. The idea that the stock market only goes up, according to him, is not true. Japan peaked in the 90s, Europe peaked in 2000, Taiwan and South Korea have been around the same levels for decades, and the US could just be the next to follow. This could disrupt investors’ long term strategies.

So if compound investing into Index Funds is not going to work anymore, what can we do?

Anyway, here’s the video, the part where he talks about crypto is 10:10 and the indexes is at the 13:56 mark. But it’s overall worth the watch

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Diversification is how i’m going to try combat this.
I feel that anything is possible going forward though. Trying to compare the economy now with what it was 10/20/30+ years ago is impossible, as demands and technology are no longer the same.

Crypto is … something.
My worries with investing in crypto hinges on the tech once again.
Cryptography in tech is being broken, and how long will it be until the technology underpinning crypto’s gets broken too? It’s a big ask, so don’t worry too hard about it happening, but likewise - existing cryptography once used by the GOV later becomes obsolete due to tech being able to reverse engineer it.

Imagine the newsline: “Crypto no longer safe, cryptography broken…
The price would hit 0 so fast it would be insane.
Will this happen ? Maybe, maybe not.
But this is just one issue where it’s leaving a question mark in my mind.

I’d love for crypto to take off in a big way, hopefully it will continue to grow.
When bitcoin shot to 20,000 - and then crashed to 3000 or somewhere close, it pretty much killed the market trust it was gaining. I still find it difficult to imagine the big players endorsing it completely. Facebooks new libre coin is having tons of backlash, and that’s with Facebook’s force pushing it.

For me, i’m just sticking with Indexes and a small pot of play money to punt on riskier stocks.
It may or may not work, but buying in on the dips gives me the best chance of profiting.
You can still make money on sideways action.

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@adm
You make good points about crypto, but waiting on the big players to endorse it is probably not the right angle. The main appeal of crypto is that it’s a disruptor of the status quo. The downside is that it won’t succeed, it loses popularity or, as you said, it becomes obsolete due to security concerns. The upside is that it becomes the new standard.

Diversification is how i’m going to try combat this.
You can still make money on sideways action.

Active investing still works of course, but what will happen to the good old “just put 10% of your salary into an index each month and forget about it” tried and true? Many people don’t have the time or knowledge to become active investors and perform with consistency.

The dude in the video suggests dividend focused investing is a good alternative. As someone in his late twenties, I would like to have the reassurance that there is still a way for me to make use of safely compounding my money over the years.
If there isn’t anymore, that truly sucks, and active dividend investing and bitcoin will have to do

Yawn, another “Japan peaked”. Have you heard of dividends and stock buyback?

@CaptainDangernoodle
Yea, i’d advise it makes sense to have a little foothold in crypto, but anything more than beer money seems a bit of a risk, for me.

I’m roughly your age group, and for me im looking at it as follows:
If my dividend return beats bond yields, then anything more is a bonus.
I’m not planning on being an “active” trader, just buying in when I feel the price makes sense.

If Japan trades flat, then another economy won’t be.
There’s no one rule to abide by.
Japan is doing weak right now in returns, so I wouldn’t bother putting 50% of your money there.
Meanwhile FTSE250 or Russell2000 is going to race up quicker, so put more money in that pool.

Vary it up :smiley:

Yeah I have

@adm do you guys recommend a specific dividend ETF? Saw there are quite a few available here. Vanguard’s VHYL or Invesco’s HDLG for example

Also noticed that crypto isnt available on the Invest and ISA accounts. Hope they change that

Probs best owning the crypto from an exchange anyways.

I’m not picking high DIV etf’s specifically.

I’m going with:
VUSA / SWDA / ISF / VMID / VEUR / VFEM / XRSG - and once it drops more will add VJPN and a non Jap etf.

I split them though by percent.
US & All World split : 60%
Europe : 20%
Rest of world : 20%

Plus Extra 5% of capital as play money for risky punts. Like OIL :smiley:

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Don’t know if it helps anyone but I finished a quick compare on how ETFs available through Freetrade have faired in the last 2016-to the end of last year, and how they have done over the last year and in the last 30days.

If you had bought either SPGP IITU EQQQ IWFM CSP1 today last year, you would def be in profit having just ridden through the biggest drop we’ve seen for a long time.

Thanks a lot for sharing this, it’s incredibly useful!
It’s a shame that your star ETF SPGP is not available on T212. Have you requested it yet?

Also interesting that all the high dividend ETFs performed really poorly. Wonder why

Between the different S&P500 ETFs, would you pick CSP1 because it’s accumulating*?

Cheers :beers:

@phildawson
Hey, just wanted to point out that if by SPGP you mean iShares S&P Gold Producers, that’s on the LSE as SPGP.L or SPGPG actually, and we do have it on T212 as IS0E, the XETRA name :slight_smile:

SPGP on the NYSE is actually The Invesco S&P 500 GARP ETF.

PS: do you think iShares Physical Gold (SGLN) would be just as good?

I hold IUSA and I had SGLN which was doing well but that has been sold to fund GGP :grin: