The Fear of the Correction!!!

srcandas

It seems, regardless of the thread's purpose, that many threads end up debating the dreaded correction.

After such rises it must come.
Not a good time to get in.
We could see 5000 before we see 8000

etc.

And of course such is the nature of a wiggly line that all will get their chance to say how right they were

However looking back over the graphs of indexes over time, the long periods of growth in the past, the current lack of investment alternatives (including the housing market and savings), current company balance sheets and valuations, ..... I can't see the logic beyond "I've made a bit for 8 months, I can't carry on being lucky ".

I'll stick my neck out and say we will see 8000 before 5000 and even that we will never see 5000 again unless there is a nuclear war or a very large asteroid strike or Nige Farage becomes PM (love the guy but PM???)

Any other optimists out there who want to balance the pessimist posts?

westy22

I try to just ignore all the 'noise' and keep steadily saving and investing, month in / month out regardless of what is happening.

It's not easy but I just try to discipline myself to keep buying, reject temptations to sell anything, and accept that whatever my 'net worth' is today it will be different tomorrow, for better or worse!

MoneySaverLog

You have to ask yourself one question, what is propping up the markets?

My theory on this is that it's down to all the QE (Printing of money) and the banks gambling again in the markets.

History repeats itself I guess. The safest position right now is to be hedged with long and short positions. Just in case we are heading for another "Tech bubble"

atush

If you are drip feeding it isn't so much of an issue (unless you are close to retirment/spending your investment pot.

I have continued to drip feed over previous corrections. I do use periods just after a correction for Lump sum investments.

Glen_Clark

MoneySaverLog wrote: »

You have to ask yourself one question, what is propping up the markets? My theory on this is that it's down to all the QE (Printing of money)

Mine too. I can't see anything else propping up asset prices.
The Government has hit on another wheeze to take from the poor and give to the rich, and has become addicted to it.

jimjames

MoneySaverLog wrote: »

You have to ask yourself one question, what is propping up the markets?

My theory on this is that it's down to all the QE (Printing of money) and the banks gambling again in the markets.

History repeats itself I guess. The safest position right now is to be hedged with long and short positions. Just in case we are heading for another "Tech bubble"

I'm curious why QE is propping up stock markets.

The P/E ratio and other indicators are still way off any previous peaks and even after the current rally in many cases are not stretched for earnings that companies are making/forecasting. FTSE250 may be slightly different but that is one group of shares.

JohnRo

I'd assume it's a combination of a permanent, ongoing devaluation of developed world currencies lifting prices, compounded by a capital flight to equities, from those seeking income in this (engineered) super low interest period?

gkerr4

^^ what he said - no-where else for money to go to except for equities.

can you see interest rates rising any time soon? bond returns? nope - so equities it is then.

marathonic

I'm not expecting a correction per-se - more of a modest pullback of up to 10%.

The problem with pulling out of the market in the expectation of such a pullback is that, should the market rise 15% beyond where you expect the pullback, as it often does, before the inevitable pullback, you're going to lose out.

For this reason, better to drip feed.

In fact, for my pension contributions, I always drip feed at levels based on where I think the market is and where it is going. I was contributing 26% of my salary in 2009-2010 reducing to 7% after that and reducing to 3% from next month.

I'll increase my contributions significantly again after the next 15-20% pullback (just as the masses are decreasing their stock market exposure )

srcandas

JohnRo wrote: »

I'd assume it's a combination of a permanent, ongoing devaluation of developed world currencies lifting prices, compounded by a capital flight to equities, from those seeking income in this (engineered) super low interest period?

And I can't see why any of that should change soon?

As JimJames says many shares offer good value. And the money has to go somewhere.

Despite all the talk of new highs there are still hundreds of solid bargains to be found. And even more so in Asia. Not normally a reason to expect a crash

JohnRo

I'm not expecting a crash, I've decided to lump in a sizeable chunk of cash now on top of regular monthly for what it's worth, rather than just drip feeding in over the period of whatever is left of this bull run (if that's what it is).

As you say there is no indication anything that has caused the rises we have all seen is going to change any time soon. Central bankers and governments are looking increasingly addicted to money printing and that will only drive things on.