Spectre of 1929 crash looms large

shortchanged_2

MFW_ASAP wrote: »

It's not difficult shortchanged, just common sense really.

When everyone is piling into a market it usually mean it's time to consider selling up. When everyone is selling up it usually means that it's time to consider buying.

I used this approach to great effect just prior to the credit crunch with my pension and added a significant amount to it. During the housing boom, when people were getting 120% mortgages, I 'hunkered' down and repaid the bulk of my mortgage. Once the crash occurred and we had 0.5% BoE rates, I bought a dream house.

Soon we'll have a correction in the stockmarket so I'm back in cash and we'll have interest rate rises so I have fixed my mortgage for 5 years and I'm making large overpayments.

It's called being a contrarian. Do the opposite of what the 'man in the street' (like yourself) is doing and you won't go far wrong.

God I wish I had your financial foresight and the great thing about it is we never hear you blowing your own trumpet.

MFW_ASAP

shortchanged wrote: »

God I wish I had your financial foresight and the great thing about it is we never hear you blowing your own trumpet.

I'm guessing that when people report when things go wrong, you're in hogs heaven, shortchanged. You must love lurking on the DFW and Bankruptcy boards.

What's funny is that I'm actually following your 'path' at the moment and being cautious, backing up what you and Graham are saying, yet you still can't stop yourself having a dig. It must really suck to be you SC, all that bitterness and jealousy, always wanting people to do badly.

wotsthat

The article is all about NYSE and only seems to mention the FTSE in the title which makes me a little suspicious about the author's motives. Clearly the FTSE would be affected by a US stock market crash but there are no indications of the UK level of debt being used to buy shares or how this might compare to 1929.

The graph is quite compelling but just leaves me with a slight sense of worry but no better informed as to what might happen.

Generali

Another Great Crash is unlikely to be imminent, as much as anything else because economic catastrophe doesn't happen often.

chucknorris

MFW_ASAP wrote: »

I've been quietly moving my pension investments into cash (and my wife and daughter's pensions too). I think there will be a major correction as an awful lot of investors have moved into the market because of zero returns from savings are are investing in funds/shares that are way outside their normal risk profiles. Once a small correction occurs, these guys will panic sell.

Long-term members of this board will remember that I moved to cash just before the credit crunch and then correctly called the bottom of the market and re-invested my cash. I therefore made quite a lot of money from the subsequent QE inspired recovery and I want to keep all of it.

I'm not convinced, to me it still boils down to simply trying to 'time the market'. I don't deny that I don't know what will happen when interest rates go back up, of course it is likely to hit the price of shares. But the problem is we don't know when interest rates will go up and by how far. If they only creep up to about 3% shares may well quickly come back in favour, after all they were doing OK in the past when interest rates were 5-6%.


I am uncertain as to what the best course of action is, the problem is cash right now loses money for certain, whereas shares may lose value in the future, but they will probably recover, so why not hold for the long term?

theEnd

Generali wrote: »

Another Great Crash is unlikely to be imminent, as much as anything else because economic catastrophe doesn't happen often.

But usually the catastrophe is followed by a recession to correct the imbalance of the boom. That hardly happened this time, despite the massive boom.

It feels like the can is still being kicked down the road and at some point a bigger readjustment is required.

I always thought this would mostly be a crash in house prices, but now I think an inflationary bust is more likely. Protect the wealthy at all costs.

theEnd

MFW_ASAP wrote: »

It's called being a contrarian. Do the opposite of what the 'man in the street' (like yourself) is doing and you won't go far wrong.

I'm not convinced. I was told to never be the first one in or last one out. Follow the herd and you're more likely to profit. And when things go wrong, the governments are more likely to protect or bail out the herd.

Generali

theEnd wrote: »

But usually the catastrophe is followed by a recession to correct the imbalance of the boom. That hardly happened this time, despite the massive boom.

It feels like the can is still being kicked down the road and at some point a bigger readjustment is required.

I always thought this would mostly be a crash in house prices, but now I think an inflationary bust is more likely. Protect the wealthy at all costs.

Real wages fell by 8% and GDP by a similar amount. Isn't that enough? What would be really bad?

MFW_ASAP

chucknorris wrote: »

I'm not convinced, to me it still boils down to simply trying to 'time the market'. I don't deny that I don't know what will happen when interest rates go back up, of course it is likely to hit the price of shares. But the problem is we don't know when interest rates will go up and by how far. If they only creep up to about 3% shares may well quickly come back in favour, after all they were doing OK in the past when interest rates were 5-6%.


I am uncertain as to what the best course of action is, the problem is cash right now loses money for certain, whereas shares may lose value in the future, but they will probably recover, so why not hold for the long term?

I checked my portfolio value from 12 months ago and after a few dips and rises, it's back exactly as it was back then. I'm still in the market with my company pension as I'm actively contributing to that one on a monthly basis which averages out any gains/falls.

My SIPP pension, which is my main pension pot and holds all of my previous company pensions is not receiving any contributions, and so I don't benefit from 'cheap stocks' during any falls. I'm therefore happy to miss out on a few percentage gains in the future in order to prtect the large QE fuelled gains made over the past few years.

Once things return to 'normal', I'll return to a normal investing pattern. I don't like being out of a market, but I'm convinced this one is overblown due to QE and 'Savers' who are outside their normal risk patters.

MFW_ASAP

theEnd wrote: »

I'm not convinced. I was told to never be the first one in or last one out. Follow the herd and you're more likely to profit. And when things go wrong, the governments are more likely to protect or bail out the herd.

It's served me well in the past (Re: credit crunch, dot com boom), but everyone should do their own research and follow their own path in life.