What to do with £200k in the bank?

[The Byre]

And what might justify high PE ratios?

Greed and market hysteria!

When I see tech companies that have mortgaged all their IP and therefore have zero assets but with a PE of 33, or a water company with a PE of 29 and a maker of electric motors with a PE of 35 - I see madness and a great deal of insider selling.

Now imagine the boost that would be given by an artificial intelligence that can truly understand what the user is trying to do, apply vast amounts of computation to it, all of the information available to humanity, all in milliseconds, sometimes without any human input ... the boost given to the economy is going to make trillions look like peanuts.

We heard all this before with the 2000 dot-com bubble, the Japanese bubble in the 80s, the 2020 Chinese housing bubble, the UK housing bubble of 2007. I could go on and on!

Just like the Internet in 1999 (in which I was heavily invested and did very well out of it) AI will be of great benefit - but the companies that will profit from AI are not out there yet. AI is still very much embryonic.

The next Big Thing will be commodities and oil, coal, gas and uranium in particular. We are burning more oil and coal than at any time in human history and governments everywhere are trying (unsuccessfully) to suppress the extraction of all four. You watch Biden pivot on fracking - he has to! He will have no choice!

But there is a real danger to listening to talking heads on CNBC or Bloomberg - they only know the past 20 years, tops! Listen to people like Jeremy Grantham, Ray Dalio, Jim Rickards, Rick Rule and Steve Hanke - people who have an understanding of long-term trends and patterns and economic history. These are people who have seen bubbles build and then pop many times over!

 

[macScot]

It's good to get various viewpoints, both from those pessimistic and optimistic. Information is good to have, and you get to see things from different perspectives and make your own judgments.

In my opinion, when crashes happen investors cash in their investments either to buy back at a better price eventually or shift their position within the market by changing the industries they have invested in. Others may keep the cash in the bank, or spend the money elsewhere.

Keeping money in the bank may be good short term but not long term.

Spending money means that eventually, the companies in the markets make more returns for those invested, so for me, that means keep investing in companies that dominate their markets.

However, as @The Byre has stated he is at a stage of his life where enjoying the rewards of his investments means more to him and therefore being invested in less risky asset classes, in his opinion. So good luck to you and enjoy your retirement.

 

[PaulSmt]

Reinvest them in your business.

 

[antropy]

Reinvest them in your business.

It's not always easy to do - look at Apple; it's sitting on mountains of cash it can't spend.

Paul.

 

[antropy]

However, as @The Byre has stated he is at a stage of his life where enjoying the rewards of his investments means more to him and therefore being invested in less risky asset classes, in his opinion. So good luck to you and enjoy your retirement.

Yes, reduce risk as you get older because you might want the cash in the next 5 years for a Saga Cruise and the market might need more than 5 years to recover.

Paul.

 

[antropy]

These are people who have seen bubbles build and then pop many times over!

And so have I. I just invest through them.

The markets always go up eventually, and usually they're not down for that long (~5 years max).

Paul.

 

[The Byre]

you might want the cash in the next 5 years for a Saga Cruise

Mu idea of hell on Earth! No, I'll continue to work - it's my way of relaxing.

 

[antropy]

Mu idea of hell on Earth! No, I'll continue to work - it's my way of relaxing.

I wouldn't put running a business and relaxing in the same category ?

Paul.