Correction or bear market in stocks this year?

BananaRepublic

Some may recall that for years in the early part of this century people were saying there would be a correction but the market kept on rising. Those who bailed out early lost out on a lot of growth, even if they sat through the correction of 2008, and the subsequent growth.

Who knows. Stock market investing is for the long term, if you can't take the risk, put your money elsewhere.

pip895

There is a lot of cash sitting on the sidelines earning very little and just waiting for a correction to jump in. I would expect corrections therefor to be short lived.

I admit I am keeping a little bit in cash just so I to can buy into a dip - but in all honesty it is probably just to make me feel better about the dip than to make any real money.

Glen_Clark

economic wrote: »

i think it looks more and more like a good idea..

Yep, it looks more like a good idea to sell equities this year than it did last year. Doesn't mean it is a good idea.

joujou

I predict with almost full confidence that they will go up as well as down this year. multiple times. EVERY DAY.

Glen_Clark

pip895 wrote: »

There is a lot of cash sitting on the sidelines earning very little and just waiting for a correction to jump in.

There will be for as long as interest rates stay incredibly low....

Glen_Clark

Exerbusi2 wrote: »

I'm de-risking, but that's in part because my portfolio is small so I have to protect it.

In that case I suggest a cheap tracker rather than direct investment in shares.

talexuser

I think this will be the year of inflation, so which sectors will do worst is perhaps the question.

jimjames

pip895 wrote: »

There is a lot of cash sitting on the sidelines earning very little and just waiting for a correction to jump in. I would expect corrections therefor to be short lived.
.

If there was so much cash on the sidelines why didnt it get invested when there was a correction last year and the FTSE dropped as well as many other markets? I'm up 40% on my emerging market investments made in the early part of last year.

I think that highlights the problem I mentioned earlier. Those who think they are waiting for a correction don't even recognise it when it comes.

chucknorris

pip895 wrote: »

There is a lot of cash sitting on the sidelines earning very little and just waiting for a correction to jump in. I would expect corrections therefor to be short lived.

I admit I am keeping a little bit in cash just so I to can buy into a dip - but in all honesty it is probably just to make me feel better about the dip than to make any real money.

I'd rather have the bird in the hand, i.e. the dividend income. Than take a gamble on capital gain.

Pincher

chucknorris wrote: »

I'd rather have the bird in the hand, i.e. the dividend income. Than take a gamble on capital gain.

https://www.gov.uk/government/publications/dividend-allowance-factsheet/dividend-allowance-factsheet

You’ll pay tax on any dividends you receive over £5,000 at the following rates:

7.5% on dividend income within the basic rate band
32.5% on dividend income within the higher rate band
38.1% on dividend income within the additional rate band


Versus 10% and 20% tax on capital gain

I am finely balanced on 10% capital gains and 7.5% dividend tax right now.

Given the choice, I would choose 20% tax on capital gain, rather than 32.5% on dividend.


There is an interesting manoeuvre, if you have excess capital gains, but too little dividend. Buy something with dividend, then sell it ex-dividend. Assuming the dividend is 5p, and the price drops by 5p, selling it creates a loss of 5p, which you use to reduce your taxable gain. If it works the way it should, you pay no tax on the 5p dividend, and you no longer pay the 20% on the capital gains you manage to offset.