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Stocks are and will undoubtedly always be the investment that offers the best prospects for long-term growth. They are a very effective instrument to protect against inflation. However, if they can outperform for many months or years, they can also pick up some serious corrections, also over quite long periods. The apprentice stock market traders of the 2000s remember this well. The professionals too.
Très souvent en bourse le travail est mal payé : il vaut mieux acheter et… ne plus rien faire. C’est ce que fait d’ailleurs Warren Buffett la plupart du temps. Le problème de beaucoup d’investisseurs c’est qu’ils se préoccupent trop de leurs actions et se laissent rattraper par leurs émotions. Au final, ils finissent par acheter trop cher par cupidité et/ou à vendre au rabais par peur.
La grande majorité des investisseurs ne fait pas mieux que le marché, ou, pire, moins bien. C’est une des raisons qui explique pourquoi dans le cadre d’un Permanent Portfolio on conseille d’investir directement dans un ETF qui réplique le marché. L’autre raison c’est qu’avec cela on est certain que les actions sont peu corrélées aux autres actifs, car en choisissant les actions de manière individuelle, il est possible que celles-ci ne réagissent pas comme le marché.
In Switzerland, the ETF CHSPI is a good fit (only 0.10% management fees) or CHDVD, dividend-oriented (only 0.15% fees - I'll talk about it later). I find the idea of using ETFs interesting, for the reasons I just mentioned. However, I currently own excellent quality stocks and I will buy more in the future. I consider them as great wines that I let age in my cellar. The ETF would then be more like a wine to drink, that you buy when you're thirsty and that you enjoy fairly quickly (sometimes with a headache). We will come back to the advantages and disadvantages of ETFs later.
As we have already said, stocks are currently clearly overheating. The advantage of the Permanent Portfolio is that we do not need to worry about market valuation, because the distribution of 25% into 4 parts by asset type "forces" us to underweight stocks as soon as they climb too much compared to other investments.
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Stocks are my preferred investment, by far. But today, I believe that stock market valuations are largely artificial, boosted by persistently low interest rates since the massive intervention of central banks to counter the consequences of the subprime crisis.
I don't know how and when this will end, but I have a feeling that the current situation will have to normalize. When that happens, the stock market will take a hit.
But for my part, apart from cash, I don't really see any alternative that suits me. Of course, today, cash doesn't bring in anything, but - as long as you are in your reference currency and thus avoid exchange rate effects, on the one hand, that you are not subject to a negative rate and that inflation remains low - you don't lose anything or not much; in addition, cash is very useful for taking advantage of a significant drop in the stock markets to buy quality securities at low or reasonable prices. All in all, by being in cash while waiting, perhaps even for a long time, for a marked drop in the markets, I think that you are not losing, or even winning.
Indeed, I have the same approach as you Laurent. For the moment I am inflating my savings account while waiting for a market drop. Even if I buy a few heavyweights, Roche, Nestlé etc.. the rest seems too expensive to me. But I would like to find 1 % on my savings anyway ... but in Switzerland, impossible
I think exactly like Laurent Martin!
It is certainly appropriate to be cautious at the moment. Personally, I am currently 45% cash. But this is temporary, the time to reallocate my portfolio towards cheaper securities. This will also require a market correction (but not only). Be careful not to completely shift to the other side, the excessively cautious, i.e. 100% cash. No one is a fortune teller and sometimes the stock market can go up and up again for many years. Comparison is not reason but let's think of those who left the market at the end of the 50s... The market was also very high according to the criteria of the time. The right path is always the middle one...