One of the things that has plagued investors throughout history is FUD. It’s fear, uncertainty, and doubt. When I suffer from FUD, I try to act rationally with a long-term perspective in scary situations. For example, after the Brexit vote in June 2016, my wife and I agreed that Britain has faced years of political and economic uncertainty. As a result, we immediately significantly reduced our exposure to UK equities and reinvested this capital in index funds focused on global and US. Over the next three years, this has proven to be very beneficial. FTSE 100 Significantly below other major equity markets.
America the beautiful
However, FUD is back as US stocks soar and other financial assets appear to be fully priced. In 2019, we mitigated asset risk and transferred half (50%) of our capital to cash security. Our goal was to buy stock when prices became more attractive. We acted decisively when Covid-19 collapsed the market in March 2020. By early April, all available capital had been invested in global equities again. Our absolute profits since the collapse of this market have been greatest in over 30 years. We believe UK stocks appear to shine after years of sluggish returns.
Since mid-2016, our family portfolio has been focused on the United States and has little exposure to the United Kingdom. Over the last five years, the S & P 500 has doubled, excluding dividends. Over the same 50 years, the FTSE 100 has increased by only 11%. Therefore, moving the exposure from the UK to the US after the Brexit vote resulted in excellent returns. Again, I think this will change given the extreme price difference between US bubbling stocks and UK cheap stocks.
US stocks appear to be bubbling
I’m surprised to see the performance of US equities in 2020, the year of the pandemic. The S & P 500 rose almost one-sixth (16.3%), and the technology-intensive NASDAQ Composite Index rose three-sevenths, up 43.2%. For me, this is an overly enthusiastic smack. Without Covid-19, would these indicators rise very high in a normal year of moderate economic growth? I can’t find the underlying justification for these market movements (except for ongoing ultra-low interest rates and huge global liquidity). today, Trading S & P500 When the price-earnings ratio exceeds 40, the return yield is less than 2.5%, and the dividend yield is 1.6%. Even if profits recover significantly in 2021, this is too high for me. Today, I prefer UK stocks with less foaming.
UK stocks seem cheap
While US stocks soared in 2020, cheap UK stocks missed the party. In 2020, Footsie plunged one-seventh (14.3%), dropping almost 1,100 points to close at 6,460. Still, I think the worst for UK stocks could end. Once vaccination is initiated, Covid-19 should be under control in late 2021. Similarly, the last Brexit deal was agreed to avoid the worst-case no-trading scenario.
For me, 2021 is to find, buy and hold cheap UK stocks for long-term profits. My goal is to buy a quality business with a solid balance sheet, strong bottom line, and ideally market leadership. In addition, as a value investor, I’m digging into the FTSE 100 bargain bin looking for low-rated stocks with high rates of return and juicy dividends. With maximum payouts ranging from 5% to double-digit percentages, Footsie has a lot to offer Those who seek income And today’s bargain hunter. That’s why the FTSE 100 is my number one index pick in 2021!
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US and UK stocks. Which one do you buy and hold today?
https://www.fool.co.uk/investing/2021/01/01/us-stocks-versus-uk-shares-which-would-i-buy-and-hold-today/ US and UK stocks. Which one do you buy and hold today?