The next stock market correction

JohnRo

I find these two articles help to give some perspective and link together well in terms of what's happening. they're clearly US centric but relevant and the sniping at the MSM certainly applies here.

The big question for me as an investor is what the heck to do about it.. just diversify, plod on and rebalance when the inevitable hits the fan I suppose. I'm currently building a cash pool and planning to delay the next round of scheduled rebalances.

http://davidstockmanscontracorner.com/how-the-stock-bubble-was-inflated-retail-leverage-plus-leveraged-corporate-stock-buybacks/

http://davidstockmanscontracorner.com/11880/

rpc

N1AK wrote: »

In there defence it does rather depend what you think is most important. If you think quality of life is then per capita is important, if you're worried about the nations ability to pay its debts then total GDP is more critical.

If you are looking at quality of life, GDP is a poor measure. GNI per capita on a PPP basis is better, but still very flawed.

Even GDP should really be on a PPP basis.

It's all a bit like CPI - a good common standard to compare different economies, but F all use to Joe Bloggs in terms of his daily life.

Glen_Clark

N1AK wrote: »

Ha ha ha very good, the old I'm unable to comprehend you thus what your saying is too complex, how very original minister.

I'll paraphrase in sun level language for you: "There's more GDP for each bloke innit"

No need. I'll just try and remember that when you say inflation, you mean GDP. So thats clear then

guymo

Glen_Clark wrote: »

No need. I'll just try and remember that when you say inflation, you mean GDP. So thats clear then

He definitely did not say inflation when he meant GDP.

He gave you three adjectival phrases:

inflation adjusted
per capita
per capita inflation adjusted

When you see an adjective you are supposed to find a noun to which it applies. The noun in question here was "GDP" which was supposed to be understood.

I agree that the sentence could have been phrased more clearly by the insertion of "GDP" in three places, and I agree that it sounded quite a lot like something Sir Humphrey might say, but this last post of yours is unwarranted in my view. There is some good advice in your sig.

moneyfoolish

I've never understood why the market has been going up for the last few years when the economy was in such a terrible state so I certainly won't be able to predict when it's likely to fall! Sadly, some of us "oldies" can't wait 40 years to ride out the highs and lows of the stockmarket so we have to make do with the pittance we get from current or savings accounts!

gadgetmind

moneyfoolish wrote: »

I've never understood why the market has been going up for the last few years when the economy was in such a terrible state

Because market returns haven't historically tended to correlate with the performance of the economy as a whole. Strange but true.

gadgetmind

moneyfoolish wrote: »

us "oldies" can't wait 40 years to ride out the highs and lows of the stockmarket so we have to make do with the pittance we get from current or savings accounts!

Why do you care about the highs and lows as long as the dividends keep flowing?

Buy shares in a selection of investment trusts, hold the certificates as paper, ignore valuations, and keep banking the dividends. Or if you don't care about capital for the rellies, go the annuity route if old enough to get more income this way, or mix and match.

N1AK

rpc wrote: »

If you are looking at quality of life, GDP is a poor measure. GNI per capita on a PPP basis is better, but still very flawed.

Even GDP should really be on a PPP basis.

It's all a bit like CPI - a good common standard to compare different economies, but F all use to Joe Bloggs in terms of his daily life.

Given that I was responding to your comment about 4 different measures and which one an economist would say is best I made the risky decision to assume that you'd have expected them to pick from the options presented not select another unrelated one.

Personally I'd say GNI was a poor measure for economists to use when considering quality of life. It tells you where you are now, but it doesn't give any indication of where things are going. If you're trying to improve quality of life over extended periods of time then no single measure is going to be enough

Glen_Clark

guymo wrote: »

He definitely did not say inflation when he meant GDP.

He gave you three adjectival phrases:

inflation adjusted
per capita
per capita inflation adjusted

When you see an adjective you are supposed to find a noun to which it applies. The noun in question here was "GDP" which was supposed to be understood.

I agree that the sentence could have been phrased more clearly by the insertion of "GDP" in three places, and I agree that it sounded quite a lot like something Sir Humphrey might say, but this last post of yours is unwarranted in my view. There is some good advice in your sig.

Perhaps its better explained by the Osborne formula:
Real Rate of Inflation, minus Official Rate of Inflation, equals GDP Growth :beer:

Conrad

A read a most interesting piece by a fund manager (I forget which) which discussed the vital importance on total returns of 'best days'. From memory it asserted that these best days to be vested are far and few between and thus the importance of remaining in market cannot be overstated.

Being out of the market on these days as a massive negative impact on returns.


In other words trying to second guess when to bail in or out is probably not a smart move for most of us.


When prices plummet we obviously get to buy more shares for each contribution.


I timed the property market perfectly, selling my buy to lets in 2007, but it backfired because I lost out on plummeting interest rates and rising rents and soon after property prices recovered in the SE anyway, so I gained nothing for my clever market timing. A salutary lesson.