Timing the market

[eyeswideshut]

To play Devil's advocate, the market regularly has sudden drops of 10-20% or more (Dec 2018 most recently). In fact, it is rare for a year to go by where that is not the case. While I agree the best strategy is to regularly invest, it doesn't hurt to keep a small part of your portfolio aside in cash ready to buy stocks when they go on sale.

[adamu]

What if the market drops 20%, you jump in, and it drops another 30%? Or, do you wait just a bit longer for the 30%, but then actually it bounces back and you miss out on the opportunity?

[eyeswideshut]

What if the market drops 20%, you jump in, and it drops another 30%? Or, do you wait just a bit longer for the 30%, but then actually it bounces back and you miss out on the opportunity?

If the market dropped 20% tomorrow, I would buy without question. If it drops a further 30% (we are now talking about a 44% total drop) I would need to cash out one or more of my fixed term deposits and sell some bonds to buy stocks to get back to my designated asset allocations. You are right that there is always a chance of missing out but I am not talking about being 100% cash or anything crazy like that, just keeping some dry powder available to buy on sale if the chance arises (like it did back in December).

[Sybil]

I sold 100% of my shares about 3 weeks ago and put them into an account earning basically zero interest. All the talk of trade wars and recession freaked me out and I don't think a no-deal Brexit will help. However have to admit I'm usually hopeless at predicting this stuff. Time will tell.

A panic move with nothing really to panic about. Similar 'issues' to the ones mentioned are always going to be in the news.

If you are panic selling now, I wonder how you will react in a financial crisis. How about losing the equivalent of year’s salary overnight? It could easily happen.

Let’s say the market crashes 25% over the space of a couple of weeks. Someone has $150,000 in the markets so they lose $37,500 almost overnight, which happens to be the equivalent of their annual salary.

I don’t worry about market crashes, I either don’t check my portfolio during a severe down turn or use it as a buying opportunity. I have bonds and other asset classes so I can cope with stock market crashes. I know certain people don’t like bonds because of their almost ‘zero return’….

As someone previously mentioned in this thread, he / she knew someone who sold everything up during the 2008 crash. I also knew someone who did the same after being in the market for 20 years.

Anyone panicking now shouldn’t be in the market and should put all their cash in the Post Office.

[Jansen]

I usually don't bother timing the markets, choosing to invest a fixed amount every month, but the past couple of years has taught me to hold me money for a month of two for the inevitable Trump Tweet™. Tonight (US tomorrow) should be interesting.

[KyushuWoozy]

Iinevitable Trump Tweet™. Tonight (US tomorrow) should be interesting.

Why, what's happening?

All going crazy in the uk parliament but not sure if that stuff really noticed in the rest of the world.

[Sybil]

All going crazy in the uk parliament but not sure if that stuff really noticed in the rest of the world.

Yup, the undemocratic yobs in Parliament are trying to keep the UK tied to Europe for their own dubious reasons. At least a lot of these enemies of democracy will be kicked out at the next election.

[RetireJapan]

I think it might be better to try to stay on topic with the forum, and avoid things like politics in other countries, religion, etc.

[ricardo]

I think it might be better to try to stay on topic with the forum, and avoid things like politics in other countries, religion, etc.

Agreed

But the UK is leaving the EU on 31 October, “do or die.”

This is profoundly important for anyone who has a financial connection with the UK or who is betting with or against the Pound.

[adamu]

But the UK is leaving the EU on 31 October, “do or die.”

That is the policy of the current government and the current default legal possition, but it's not guaranteed. We don't know what will happen, and we also don't know what the eventual economic effects will be.

So as usual, better not to bet on it one way or the other, and keep diversified investments.