Hedging against a stock market crash

[beanhead]

If you think you have too high a percentage of stocks, it may be time to review your asset allocation.

As we have discussed, bonds and bond funds are quite tricky when investing from Japan in yen. But still worth thinking about.

[concerned]

The permanent portfolio 25% in each of cash gold stocks and long term bonds might be one to look at if one is worried about volatility
I guess best to pick a portfolio allocation/type and stick with it no matter what, switching back and forth may not be good either

[sutebayashi]

In recent years the consensus advice on this forum seems to be that, for the not so risk averse with 10-20 years to retirement, an all stock index portfolio is generally recommended.

I’m an outlier here in that I have some gold in my portfolio.

The way I look at this is - what does the data say?

Many people have excellent opinions about various matters, including about the uselessness of gold. But opinions are not data.

My suggestion is that anyone feeling uncomfortable with the full-on risk of an equities-only portfolio go over to myindex.jp, play with the portfolio tool there and see what happens to the risk measures of their portfolio when putting some gold into the mix.

Or foreign bonds etc too. I have more foreign bonds than I do gold.

[adamu]

opinions are not data

What does your crypto portfolio look like?

[sutebayashi]

My crypto portfolio is worth zero, and has never been worth much more than zero. (I want to see a longer track record than crypto has.)

Coming back to the markets, I saw this nice reminder of where things are at now.
This guy is one of those charisma traders but he has nicely juxtaposed the current situation in Japanese stocks versus things when he started his activities earlier in the century:
https://x.com/tesuta001/status/1819551025738764696?s=12

[ChapInTokyo]

Looking at how the correction in both the US and Japanese stock market is being reported on TV, I see that the fear of the US economy slipping into recession is definitely one that is encouraging many Investors retreating to safer assets.

「日本の歴史に残る急落」日経平均2200円超の暴落にNISAで投資する人は? 今後の株価はどうなる?背景にアメリカ経済への不安感【news23】(TBS NEWS DIG Powered by JNN)
#Ｙａｈｏｏニュース
https://news.yahoo.co.jp/articles/3dd71 ... c00b15e324

Looking at the price movements of VT versus BNDW (Vanguard Total World Stock ETF and Vanguard Total World Bonds ETF) over the past week, bonds are clearly becoming quite popular now.

[TokyoWart]

Looking at the price movements of VT versus BNDW (Vanguard Total World Stock ETF and Vanguard Total World Bonds ETF) over the past week, bonds are clearly becoming quite popular now.

You can't determine the popularity of bonds by looking at price changes because the prices go up when interest rates fall even when there is no increase in demand. You would look at fund flows to see the changing popularity of bonds vs equities.

[Tsumitate Wrestler]

Almost a year's worth of gains erased from the Topix in 2 market days...

[ChapInTokyo]

I bought a chunk of the iシェアーズ米国債 0-3ヶ月ETF last month on which I’ve lost 10% in yen denominated value over the past couple of weeks. I also bought a chunk of 楽天インデックス・バランス・ファンド(均等型) which is a VT+BNDW wrap mutual fund which is currently down about 5% in yen denominated value since I bought it last month. My stash of inflation hedged JGBi wrap 東京海上セレクション物価連動国債投資信託 fund is currently down 0.13% too but this almost looks comforting considering the chaos and mayhem in the markets these last few days.

Looking on the bright side of life I suppose this week will be a great time to go buy a selection of individual Japanese stocks for the long run! Yum!

[northSaver]

Looking on the bright side of life I suppose this week will be a great time to go buy a selection of individual Japanese stocks for the long run! Yum!

Indeed, the summer sale has finally started! Huge moves in TOPIX and N225 today (biggest move in over 50 years I heard) and that's after a big drop on Friday too. Gotta love how the markets over-react every single time! Almost every investor in Japan knew that the USD.JPY interest rate differential was going to start narrowing in the second half of this year, yet when it actually happens everyone (except the forum members on here hopefully) start selling like crazy. True, the impending Israel-Iran war isn't helping, and last week's US employment data was a bit of a shock, but still.. go figure!

Needless to say, now is an excellent time to load up on Japanese stock index funds if you have some spare cash (not including emergency cash of course). And global funds too if the carnage continues in Europe and the US. I'm not saying this in the bottom, just that you have to start buying them cheap at some point. A 20% drop warrants a decent buy order in my opinion, maybe as much as 50% of your spare cash. Save the rest for further drops. The only question is what to buy. ETFs are instant but not so good in NISA. Mutual funds take a while to go through. Hmm. Any thoughts on this?