UK Shares Are Toxic Assets11 Mar 2020 13:14
How would you define a toxic asset?
Well, I’d start by describing it as an asset which plunges in value. Not just once but every day, every month. A textbook example of TAs (toxic assets) were the subprime (NINJA ) American subprime mortgages; wrapped up as SIVs and CDOs and labeled with a Triple AAA credit rating by Yankee’s bent credit rating agencies.
But aren’t UK shares toxic assets too. Continuously marked down so no one is ever in profit. Never any blue skies above. In an index that’s lower now than 22 years ago. The slightest bit of negative news enough to strip billions off a shareprice, even when it’s fake.
For example: say you bought a terraced house on Corbyn Lane in Sunderland about the time of the election, for £200,000, and ten weeks hence a market maker will only give you £120,000 for it - and there’s every chance it’ll fall further - isn’t that a toxic asset?
There is something really wrong with UK equities. I’ve been around markets for years, but before there was at least a bear/bull divide; not anymore. Uk stocks are in a permanent bear market and it just keeps getting worse.
Not only that. Trading/investing is stressful. It engenders a lot of grief, a lot of worry. Wouldn’t it be better to just leave it in a savings account or even under a mattress and Relax.
I’ll explain that in more detail - Fleecy, for example owns up to a £90,000 loss. Had he the good sense to put it in a savings account he’d be £90k to the good. I know savings accounts get derided by some fantasy traders on here who purport to make a killing going long on UK shares - but hey - most would be tens of thousands to the good if they had - without the grief - the lost sleep - the stress - the losses.
In my opinion UK stocks can now go into the bracket of toxic assets because of their woeful performance And my advice to anyone thinking of buying in is to be prepared to lose.
Hold long term is no argument at all - in fact the statistics all point to - the longer you hold them the more you’re going to lose. And the dividends - well as you’ve seen you can lose 2-3 years dividends in one bad week.
Who would have thought that of a toxic asset.
Glossary:
SIV - Structured Investment Vehicle
CDO - Collateral Debt Obligation
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