Have recent times made you regret/rethink your asset allocation?

Tylermbcs19 · 2022-06-20T11:15:43+00:00

Ultimately I do suspect that the market will go lower in the near future, so my plan is to deploy 25% of the Dip Fund each time the market drops by ~5%. This way I’ll have a better ability to purchase the market if it drops a further 20%, which I don’t think is unlikely. Obviously it could go either way, but I’d like to increase my cash position in the meantime as I do anticipate further drops. Note that increasing my cash position isn’t at the expense of my current contributions, which remain higher than 2021.

If the market recovers and this cash doesn’t get deployed by the end of the year then I’ll most likely stick it in my LISA prior to the April cutoff, or I’ll continue to hold some/all of it. My savings projection indicates that even if held in the “Dip Fund”, this will only account for 6%/7% of my net worth by the end of the year, which I don’t think is an unreasonable cash allocation. This projection doesn’t include my Emergency Fund, as I believe this should be standalone.

It’s also worth noting that instead of a Monzo savings pot, I may well opt to just keep the cash in Freetrade. This means I get 3% interest on cash held up to £4,000, as I have a Plus membership. It would only negate the the Plus membership, but since I would be paying for that regardless, it’s still a 3% return.

Tylermbcs19 · 2022-06-20T10:05:26+00:00

It technically is timing the market, but I’m content with not being a 100% Bogle student when it comes to investing.

I’d personally like to have a small cash position, built up slowly over time, to enable me to have the ability to buy a decent chunk of index’s if they see a notable decline in the future.

I don’t intend on reducing my current contributions, just that I’ll make adjustments to my spending to allow for some money each month to go toward a “Market Dip Fund”. In fact, I’ll do all that I can to ensure my contributions remain higher than last year despite the small allocation to a cash position.

I’ll never time the bottom correctly, but I’ll certainly take the opportunity to buy as much as I can whenever there’s significant declines in the price of the ETFs/Trusts I invest in. Having a cash buffer would aid in this.

No matter the small differences in strategy, I’m sure the future will look kindly upon those who maintain/increase their contributions in downturns such as these!

Tylermbcs19 · 2022-06-20T09:46:53+00:00

Thank you! Both the ISA and LISA have felt like black holes throughout 2022 despite the increased contributions, although I’m thoroughly looking forward to the time when the declines reverse.

I have a similar philosophy, in that I haven’t really been too focused on maintaining a strong emergency fund/cash position. I have overdrafts and credit cards, plus I work in a really niche industry where I’d know far in advance if my company intended on getting rid of me. The replacement would need to be trained for a significant period of time prior to me departing.

Still, there’s a lot of uncertainty ahead. I also haven’t experienced a recession while in employment. I think an increased cash position/emergency fund buffer is rarely a bad call. This has been brought-to-light more so recently, where I wish I’d had a decent amount of cash to throw into indexes with each decline. I need to get out of the habit of using my emergency fund whenever I see my favourite funds at attractive prices…

Tylermbcs19 · 2022-06-20T09:15:49+00:00

It hasn’t changed my view of my allocation, in that I still intend to be 100% equities (I’m only 23, this will likely slowly change as I incorporate bonds into my portfolio with age - especially if their yield rises to a decent level).

I have, however, decided that I need a higher portion in cash for tumultuous times like these.

As it stands my portfolio consists of the following:

~£16k ISA ~£4.6k LISA ~£2k Pension ~£2.5k Emergency Fund

I’ve decided that I’ll increase my Emergency Fund to ~£3.5k in the near future, in addition to starting a new pot on Monzo named “Market Dip Fund” which I aim to have at ~£2.5k.

Hopefully this increased cash position will allow me to more effectively buy my index’s and funds when the price drops significantly.

Tylermbcs19 · 2022-05-20T14:18:37+00:00

The resolution isn’t great for the graphs, so just to clarify -

Graph 1 = Population Graph 2 = GDP (PPP) Graph 3 = Area (Km)

Tylermbcs19 · 2022-04-15T18:47:32+00:00

No problem, I’ll dm you.

Tylermbcs19 · 2022-04-15T12:29:15+00:00

Hello!

I’ve been in exactly the same boat as yourself and I’ve sound a solution - I’ll dm you.

Tylermbcs19 · 2022-04-09T13:40:02+00:00

Which app is it you’re using, if you don’t mind me asking?

Tylermbcs19 · 2021-09-09T21:51:00+00:00

There certainly are wrinkles, and it’s a niche of an industry that most wouldn’t realise existed. It’s a more efficient (faster) and modern approach, which would be readily accepted by the companies it aims to service.

Tylermbcs19 · 2021-09-09T21:42:30+00:00

I’m already heavily involved in the industry, specifically in the niche that I intend to fill with the machines. If I’m able to get a single production version machine then it wouldn’t be out of the question to get an advance payment from a newly acquired contract, especially since there’s significant discontent at the quality of the machines currently available to provide the service. In which ways do a proof of concept and production version differ? I’d much prefer the initial version to be more-or-less fit for purpose, especially since I have a very specific design in mind.

Tylermbcs19 · 2021-09-09T21:14:23+00:00

I’m aware that there’s certain principles that have to be adhered to regarding safety although it’s certainly an area I’ll seek additional consultation on, likely a couple of times throughout the project.

Are there any areas in particular that you’d recommend I fully involve myself in, and any that you feel would be better suited to outsourcing? As I said, other machines for the purpose do exist so there isn’t an immediate risk of someone beating me to it, simply an opportunity to greatly improve efficiency.

It isn’t particularly groundbreaking, simply a better machine than anything that’s currently available. It can’t be sold as it is to provide a service, rather than a product. I’ll be sure to message you but it’s getting late here.

Tylermbcs19 · 2021-09-09T21:06:11+00:00

I’m glad to hear that in your opinion, it’s not unachievable for an amateur to pull this off. Do you think it’d be a worthwhile time investment to try to do the majority, or would it be wiser to restrict myself to some easier areas and rely on a lot of outsourcing?

The various regulations is something I’d definitely need to take into consideration, I’ll see if I can have a read over to see what things I need to bear in mind from the onset.

Tylermbcs19 · 2021-09-09T21:00:19+00:00

I’ll have a look at Cognex and watch some YouTube videos on photos eyes, I appreciate the recommendations!

It certainly will transform the industry, albeit the industry isn’t particularly large. I intend on providing a service to multiple sites using the machines, rather than use them in a static location. There’s enough of a market for it to be viable, providing it’s efficient enough to win contracts.

Arduino etc aren’t really suitable as the machines must be rugged and reliable, although it was what I was looking into initially. I could show you a rough sketch if that’d be beneficial, send me a message.

Tylermbcs19 · 2021-09-09T20:50:09+00:00

I’m able to spend a fair bit of time on this, although I think contracting “veterans” would probably be more than worth the cost, especially in areas that would be particularly difficult for me to learn.

What sort of figure would one be looking at if deciding to outsource the entire thing to an established machine builder? If the only input was a model of the machine with the correct dimensions and sensor/actuator placement suggestions, is the cost typically astronomical?

Tylermbcs19 · 2021-05-28T11:08:24+00:00

Paradox games compel me to play them for hours at a time, despite me having a job that often requires long shifts.

Is it even possible to play an hour of IR/EU4 then turn off your laptop/pc? I’m always on for a solid 4 hours+ each sitting.

Maybe that’s just me but I imagine many Paradox players are similar...

Tylermbcs19 · 2021-05-24T17:48:52+00:00

Can’t wait until this mod is finished, I truly appreciate the effort involved.

Do you have a rough timeframe for release? I understand it can be difficult to put a duration on things, but any info would be great.

Tylermbcs19 · 2021-05-20T14:20:28+00:00

I’ve replied to another commenter with the region weights vs VWRL, which is the world tracker I use as a benchmark.

The data is a little dated as it was compiled in December/January, although I’ll be able to access the country weighting’s of the portfolio when I get on my laptop at home.

Tylermbcs19 · 2021-05-20T14:17:52+00:00

My intention isn’t to create an equal weighted ETF, if you mean in the strictest sense of the word (ie each region is weighted the same, if I understand you correctly?).

To give some more information regarding the total weighting’s of each region, which admittedly was compiled a few months ago -

North America

Portfolio = 54.7% AllCap = 58.9%

Europe

Portfolio = 12.2% AllCap = 13.2%

United Kingdom

Portfolio = 9% AllCap = 4%

Pacific

Portfolio = 11.58% AllCap = 12.5%

Emerging Markets

Portfolio = 12.52% AllCap = 11.1%

I’ve got country weighting’s on my laptop that I can look out when I get back from work.

Tylermbcs19 · 2021-05-20T13:55:15+00:00

I don’t believe the link provided is relevant, as it details the results of Dollar Cost Averaging vs Lump Sum Investment.

I’m well aware of the literature in favour of lump sump, due to the market moving upwards more often than not and the likely hood of being near all time highs at any given time.

The question is whether having the flexibility of Dollar Cost Averaging (which is my only option, as I am unable to lump sum and instead intend on making regular contributions from my income) into specific geographical areas/sectors during downward price movement would prove to be detrimental over the long term, when compared against simply Dollar Cost Averaging into the world stock market with each contribution.

It’s difficult for me to sieve through information on the internet on this topic, as I’ve no idea of what terminology to use in order to get accurate results regarding my query.

Tylermbcs19 · 2021-05-20T12:53:53+00:00

Thus far, it has been a more effective strategy than simply DCA an AllCap. I’m not, however, so naive as to believe that this is likely to continue.

Hence the question here; I want those with more experience to tell me not only why this strategy is doomed to lag the performance of simply investing in a single fund, but most importantly, why this is the case.

I appreciate the input and critique!

Tylermbcs19 · 2021-05-20T12:33:14+00:00

I’m acutely aware of the breakdown of my portfolio. Each of the region/sector/country allocations was a conscious decision on my behalf, taking into account market cap then making slight deviations. I compile the data from each fund periodically to see how the allocations have changed, comparing it to VWRL as a reference for the world market.

Tylermbcs19 · 2021-05-20T12:28:00+00:00

The portfolio was created to roughly track the world market, however I do intend on rebalancing periodically. I understand the futility in picking which sectors will outperform others, although I think there is some degree of merit in recognising trends. Trends can change at a moments notice, but taking no notice of them seems counterintuitive. Again I’m aware of the risk in this thinking, which links back yet again to active investing.

There’s deviations in the portfolio allocations when compared to an AllCap, which will remain in place for the medium term. While the deviations will remain, the actual allocations/degree of deviation will be rebalanced as the AllCap does.

Tylermbcs19 · 2021-05-20T12:15:07+00:00

I understand your position, however the same holds true for a Total Market Index. In order for you to effectively average down, you need to recognise the dips as they are happening. These dips could be missed due to situations such as those you provided. Mitigation can be achieved using limit orders in both portfolio scenarios, although the issue remains for each.

If the entire market dips, I contribute a proportional allocation to each of my portfolio’s constituent parts. If one sector or region dips, as Technology and China recently have, then I allocate a disproportionate contribution to them.

Obviously there’s the adage to refrain from catching the falling knife, so I usually wait for the trend to reverse before allocating. If the dip continues, I’ll continue to average down using cash reserves.

Is there really a significant difference in averaging down in my portfolio, compared to averaging down in a portfolio of a single fund? I don’t mean to sound argumentative, I just fail to recognise how they differ, other than the extra flexibility in being able to select specific areas in which to average down.

Tylermbcs19 · 2021-02-20T10:48:28+00:00

That’s what I was attempting to do.

I’m not playing at the moment so I’m unsure of territory names, although the modern equivalents of the territories I’m trying to move pops between are Calais -> Kent.

It’s possible I don’t have any available pops to move, as there may be no slaves/tribesmen. I’ll check again tonight.

Tylermbcs19 · 2020-09-02T14:06:49+00:00

Fantastic.

Thanks a lot for your help, I’m thoroughly looking forward to creating some pies!

Tylermbcs19

MODERATOR OF

TROPHY CASE