Looking to start an ETF/LIC Portfolio.

Great insight on the insurance aspect.

One can of course short the market with derivatives such as futures / options and ETFs etc. Good luck with timing the event though. And insurance ain’t always cheap.

As usual it’s the fear of “capital” volatility that drives investors to such lengths. My insurance in part is the “dividends” from the shares which generally is less volatile than capital value. Of course they also can be cut so that’s where the other part of my insurance kicks in, a simple cash buffer to top up any dividend shortfall for a lengthy period if needed to meet cashflow needs. Then if one desires he / she can hold a few well chosen LICs which will likely be taking advantage of their structure to also smooth dividends for their shareholders.

For the Total Return investor simple periodic rebalancing of Bonds against equities seems a more sensible option to reduce capital volatility rather than trying to use derivative products. Use of asset classes with low correlation to each other might be helpful but if it’s a major sharemarket event correlation on the “RISK” side is likely to converge offering little protection.

The only asset classes likely to save your arse in this situation are Gov’t guaranteed cash and bonds. Which often amuses me that some Super / Pension / Managed funds lump Alternative Assets, REITs, Infrastructure and corporate bonds along side cash and Gov’t bonds under so the called defensive asset classes. Any wonder it is very difficult to compare “balanced” funds on performance with risk assets in some cases lumped under defensive!

Just a conservative old fart’s view on things.

 

Easy yes. IMO it is a wasteful expense, especially via something like BBUS.
If I felt the need and had the urge I would use bonds.

 

The conditions are always out there for a more frightening correction then the last few ,then you have euro zone countries -mix in Brexit on the countdown -then we would be in the range now..
How many days until Brexit?

 

Even with Bonds the choice is not always easy:

 

If you have got a good plan like:

Save adequately



Invest regularly come hell or high water, in low cost diversified equity exposure.


Then all you need to do is not lose your head.



Get a plan that copes with everything that is a normal part of markets and stop worrying.

 

That has always been our plan - “stick to the plan”! Invest when ever we can in diversified equities and enjoy the ride. Sometimes it’s been pretty scary but always it has been rewarding

 

Bit of a shame that after the first 10 posts nobody even discussed the original post of the thread.

 

To be fair Chris made a decision on his portfolio in post #9

If I remember correctly even Geoff thinks paying the current premium for WAM is a bit of a stretch. If (when) WAM goes through a bad trot the likely swing to a discount will be quite a shock.

 

but you can certainly insure for it if you so desire.
Last 4 words of my post are the important ones.
Just trying to highlight that there are options other than a straight binary choice of invested/ not invested.

Am I insured? No
Have I insured? Not yet
Will I insure? Probably not, I am comfortable with share price ups and down, but I do know how to if the spaghetti hits the fan.

 

Hi mate,

I knew what you meant. My ramblings are nothing new to you of course (same old boring, same old boring ...). The reply was directed elsewhere but using your excellent post to extend on.

 

Roger that, I know that you know that I know you knew what I knew.
I like boring.
But I find the discussions that end up with any number of excuses to not be invested in shares discombobulating
Quite the conundrum......


*Disclaimer*
Nobody knows nothing, do with your coins as you see fit.

 

Share portfolio “insurance” by way of derivatives is akin to the superstitions of the Middle Ages....paying a soothsayer a clip as you can’t accept reality.

You’ll get it regardless

Just take less risk.

 

Just saying, 50% gain since I posted this a few days ago on XRP..

* cue 40% drop...

 

But I want low risk and high reward.

PS, would you consider DJRE lower risk than index ETFs right now or just a hedge on the correlations?

 

No view. A correlation thing.

 

Damn, I only got a 34% CAGR with ALI for the last 6 months.

 

Wasn’t he a famous boxer?

 

Ripple's symbol is a fidget spinner?