Hey guys. A question if anyone has an opinion on how UK stocks would fare in an S&P500 pullback.
Ive got a decent mix of LSE AIM, FTSE 100, FTSE 250 and USA stocks in my ISA. It skews to the UK side but Im wondering if that would help in a USA crash. Im having trouble finding any data on pullbacks in overpriced USA markets when the UK market is undervalued and underperforming.
Do you guys think an S&P500 crash would be a domino that would affect all markets? Or mostly isolated to overpriced stocks with stretched P/E ratios?
Ive got some stocks like Tesla which I assume would be slammed in a crash, but probably would most likely also recover well, so Im not too worried. But if being mostly in UK stocks would shield from the affects of a crash, itd be better than just holding cash.
This is all assuming we are headed for a crash, we may not be. I think Id like to take a defensive position in Feb and see how that goes for a couple of months.
when USA sneezes rest of the markets gets sick
Badly is the simple answer. And America is chaotic right now but I’m keeping hold of there banks
Of course there is a link between the two worth considering, to a point.
That being said, if you’re a long term investor and you’re picking strong company’s, and can afford to DCA then I wouldn’t worry about it too much. Just ensure you’re not overweight in particular sections.
Check out the SP500 graph over a long period of time and it tends to recover and exceed its previous highs over time
UK will be quite heavily linked as others have said. Perhaps some Asian markets might offer more of a hedge. Check out stuff like FCSS (I own) and BGCG (I dont own).
If emerging markets trail behind or take a hit the largest western economies generally plough on largely unaffected.
For the US to fall 20% - 50% that is definitely noticed around the globe. Highly unlikely the US would take a hit and the UK not to notice.
Remember the UK is around 4% of the global economy. The USA is around 60%. Many do not hold more than that percentage in UK stocks should it be major growth you are looking to achieve.
The UK’s ftse 100 is also highly concentrated towards mining, oil, tobacco etc… not ideal concentration when investors are moving towards ethical and sustainable businesses. So when the UK does take a hit, the main indexes do not bounce back quick, largely down to this factor.
Yes absolutely, I think UK stocks its worth choosing select ones rather than whole market, a FTSE tracker wont do well long term IMO.
not even sure individual stocks are a good idea. our economy is a wreck and we don’t produce anything plus the banks are getting hammered by Brexit. I’m investing in the german market for the high-quality manufacturing and stability as well as the us for everything else. now we all need some stability. then we can all get our tendies
Yeah ou are probably right, I am just allocating a certain portion to a few UK stocks in a rebound play and also almost as a ‘bond’ type play for some where little to no downside (at expenses of limited upside) which can be liquidated for better buying opportunities if/when a market correction in US.
So far last few months my UK plays have outperformed my US/China core portfolio, but is much smaller %
what companies you holding. always looking for inspiration
Cheers for the feedback guys. Today Ive trimmed my uk exposure, and doubled down on some of my performing US stocks. I found I was getting 20%+ a week on my USA stocks, and my UK side was barely creeping up.
Heres some of my better performing US stocks
Global Shipping Lease
Nothing really inspired about my choice, all quite mainstream just choose my buy prices carefully.
(I have certain points where I will reasess and may sell some/alll these)
Taylor Wimpey (will see how the 2021 normal dividend reinstatment affects things then make a move)
Shell/BP (might not be too far off selling this one, but still feel upside so holding on for now)
HSBC (Waiting on dividend reinstatment, then depending on % and portfolio weight will sell or hold for dividend).
Diageo ( i like this long term, but is also a rebound play on repoening)
Then 2 which havent performed well short term, but these are longer term plays for me:
Note: shares like Unilever, GSK and even Diageo, are more of my ‘stable’ stocks like JnJ from US too. I treat these like my anchor and then I add in layers of solid growth (SBUX, V, AXP, BABA, MSFT) as well as higher growth plays like StoneCo, Mercadolibre.
Just in case you thought these UK stocks were overly significant, they are more just to give different exposure.
I totally agree with your reasons for the UK selected stocks you have. In many ways the UK can be more of the anchor part to somebody’s global portfolio. Dividends are strong long term and regulation is solid here.
Taylor Wimpey, Legal & General (Cala homes) and Barratt all seem like excellent 10-20 year holds.
Yes I am bullish on housing prices and therefore housing stock long term in UK as there is just not enough and everyone needs to live somewhere so feels like wanting exposure to that. I am just trying to decide if and when to add more to Taylor Wimpey, I have a small position currently which I entered after considered research on its inventory, cash and balance sheet etc it was a no brainer at my average position of 112p, now its bouncing around 155-170p mark for a while so im trying to work out if I want more and if so at what price I am willing to. I would say under 150p I would be very tempted, but doesnt seem to be going that low right now.
UK house builders do really well on recoveries coming out-of recession. We are going into a double dip recession so…
2022 the time to go heavier into house builders and infrastructure?
Obviously no crystal ball here but UK house builders are looking prime for some great years ahead. We do have to get through the recession first though.
Looking 10 years out, these current prices are tempting in all aspects. Maybe purchase more every 6 months until things take off.
Not investing in TW is one of my biggest regrets.
I checked it out at rock bottom and didn’t act when I was even more of a noob
I dont think youve missed the boat at all. Sure the vaccine bump has long gone, and it doesnt look like prices will dip back to those lows again, but there are loads of undervalued mid-high market cap options still to recover.
My main strategy was a covid recovery portfolio of stocks that had at least 100% head room to hit their Feb 20 highs again, but the new mutation and new lockdowns slowed those gains.
I rotated out into some high growth, but not high profile stocks, and plan to rotate back into the covid recovery stocks (taylor wimpey included) once there is some light again at the end of the tunnel.
We have all done that with something, I wanted in to JP Morgan months back and have always held off and just seen it go up and up haha.
With Taylor Wimpey the next big news will be when and what price it reinstates dividend, they have said 2021 they will reinstate normal dividends, then 2022 will reinstate special dividend (a big one usually more than the whole of normal dividends). The main thing is working out how much of this anticipated dividend is baked in. As I said I think <150p either as long hold or as a 1 year play will make some money, as will capture dividend and I think if you need to offload you can for 165-170 quite easily, which is a benefit if you are not sure if long hold or rebound play.
Risks are obviously that housing market could take a hit post covid, but I think thats always a risk with housing stocks, cyclical in that sense.
It’s funny as I see a lot of interesting UK stocks that are Global Businesses that have decent prices if or when the US market dips.
I have shares in BritVic (Beverages), QinetiQ (Aerospace & Defence), Taylor Wimpey & Countryside Properties (House builders) as well as the likes of TriTax Box REIT and Greggs as I believe these have potential and some of them have been long players in our Markets as mostly FTSE 250 Companies and have some Global reaches too.
If the US Crashes I am buying some quality US and UK stocks with Global Exposure.
I agree, another one with international exposure I have but want to add too at the right price is Diageo (DGE) as their brands of alcoholic beverages are so strong. Once bars, pubs, restaurants the world over open properly and people enjoy life again I feel they are poised to bounce back strongly.