Stock Market crash-not if but when?

dealer_wins

All this talk of crashes, this can only mean we will experiance a 20% upswing this summer lol

surijohn92PerkyMaiden

If world economies are under increasing economic scrutiny, it would be foolish to believe the U.S. economy will grow.

puk999

I'm invested in equities and bonds 85:15. I understand the rationale of not timing the markets, and using index funds primarily. The idea of keeping it simple and thinking of the long term really appeals.

However, I keep wondering whether I should convert some of my ISA/SIPP into cash thinking I can buy back in after a big drop. It must be so satisfying to move £45k (or whatever) sideways into cash, watch the big crash, then buy back so many more units than you had before.

Then I read messages on here about the anxiety of being out of the market while it is rising. Plus there's the paltry interest rate in the ISA/SIPP cash accounts. These aspects steer me back to the original simple and boring strategy of staying invested and adding contributions as regularly as possible.

I have a question for the long term mainly index investors here. At some stage you decided upon an asset allocation; e.g. 75% equities, 10% bonds, 15% cash. You then split the 75% equities into global equity, EM, small cap, etc at specified percentages. If you follow Tim Hale, Monevator and the like, the idea is that you stay with this asset allocation through all weathers and rebalance. My question is are you actually doing this, or are you moving the equity:bond:cash ratio away from the initial setting? Do you hold more cash because you perceive we're nearing the end of this bull market?

Before people say, I don't feel that I'm invested outside of my risk profile If the market dropped 40% tomorrow, I'm in for the long term and have the confidence that it'll recover enough before my retirement, but I would also be very frustrated that I didn't have a stack of cash to throw in at low prices.

That brings me to another thought/question. We all hold some emergency cash, right? If the market does plummet, would you throw some of that emergency cash into the market?

InvestInPoker

puk999 wrote: »

I have a question for the long term mainly index investors here. At some stage you decided upon an asset allocation; e.g. 75% equities, 10% bonds, 15% cash. You then split the 75% equities into global equity, EM, small cap, etc at specified percentages. If you follow Tim Hale, Monevator and the like, the idea is that you stay with this asset allocation through all weathers and rebalance. My question is are you actually doing this, or are you moving the equity:bond:cash ratio away from the initial setting?

I keep my allocation as I decided upon a couple of years ago. I do not plan on changing it and it would take a very good reason to do so. What I WILL be doing, and I planned on originally is gradually moving into safer, less volatile investments as I get nearer to the age where I will be "retiring" and relying on that money. I don't want to experience a 50% drop in my net worth the year before I rely on that pot. So with <20 years to go I will take a small % away from equities and add it into safe bonds or something equivalent. I'll then gradually increase the % of "safe" and non volatile investments until 5 years before I will start living on the money when it will be 50/50 equities/safe investments.

Do you hold more cash because you perceive we're nearing the end of this bull market?

No I don't pretend to be able to predict stuff like that. I hold cash for paying my outgoings, for an emergency fund and for my gambling bankroll.

That brings me to another thought/question. We all hold some emergency cash, right? If the market does plummet, would you throw some of that emergency cash into the market?

Nah my cash reserves are for the reasons I said above. I add to my investments once a year in a lump sum (no dripping, I believe with a long time frame I am just giving up returns by drip feeding)

zolablue25

Ah, but if the markets dropped 40% tomorrow then you wouldn't have 75/10/15 ratio anymore would you? You would need to rebalance by selling some bonds and using some cash to buy more equities to get back to 75/10/15 (or whatever split you were using).

kangoora

I'm around 2-3 years from retiring (hopefully) and I'm now 56% equities and 44% 'other'

'Other' being circa:
10% Gilts Fund
10% Corporate Bond Fund
10% Property Fund
14% Guaranteed Absolute Return Fund (SL GAR)

Currently debating whether to increase it to 50/50 by adding 2% to each of the 10%, mainly in the interests of neatness

Kendall80

Low growth figures in the UK and US, uneasiness re the Fed rate rise, poor company earnings data. This thread may be more pertinent this time around


Just checked my ISA - only ones not in the red for the week are my Japan fund and bonds. Start of something?

edinburgher

If you follow Tim Hale, Monevator and the like, the idea is that you stay with this asset allocation through all weathers and rebalance. My question is are you actually doing this

Yes, with the exception of a small degree of lifestyling to very slowly reduce exposure to equities.

[Deleted User]

I bought back 5 of my original 20 stocks this morning, 77% defensive and the rest cyclical. Still sitting on a lot of cash. I usually only buy back if I get more stocks for my selling total and if their charts look ok

[Deleted User]

I couldn`t edit my post so a new one. Although I have an avatar of a sheep, which is all to do with spinning and knitting. I am a contrarian, always have been, I never ever follow the herd. All is chart based and when my gut tells me the time is right.