Do you keep cash aside to invest after next crash?

Malthusian

StellaN wrote: »

I understand that you can't time the market, however, at the moment I'm looking to invest a bit more money into US Equities, but, I think I will hold back just for now because the Dow is at an all time high so the price of the fund will be very high!

You understand that you can't time the market but you're doing it anyway?

The US stockmarket was at its peak in 2013 and if you were contemplating investing then but held off waiting for a crash you'd have missed out on retuns of over 50%.

As I've discussed on this forum before, stockmarkets generally go up, and therefore spend a great deal of time at or near their peak (even when you include the dismal last decade). If you refuse to invest because the stockmarket is at or near its peak you will be sitting in cash for a very long time and missing out on a large proportion of the returns.

And people who say they're "holding back while the market at its peak" don't invest when the market falls from its peak anyway. "The market is at its peak." "The market has further to fall." "Don't catch a falling knife." "A dead cat always bounces once." "The recovery is built on sand." "Equities look overbought." "The market is at its peak." Repeat.

jdw2000

StellaN wrote: »

I understand that you can't time the market... but, I think I will hold back just for now because the Dow is at an all time high so the price of the fund will be very high!

Can you see what you did there?

JuicyJesus

dunstonh wrote: »

Starting to see a number of these alarm bells now. (btw, i said potential as I refused do it)

But I thought IFAs were all unscrupulous !!!!!!!s who only care about making money from fees and don't care about the financial wellbeing of their clients or the quality of their recommendations????????

jimjames

When talking about crash predictions it's quite interesting to look back

2010
https://forums.moneysavingexpert.com/discussion/2348283

2012, I hope George is happy with his 1% cash ISA....
https://forums.moneysavingexpert.com/discussion/3899731

By sitting on the sidelines for the last 5-7 years they've missed out on a lot of growth!

stringer_bell

I'm in the fortunate position of having low six figures in cash, being self employed who knows when my income might dry up

on one hand I want to invest it to grow, every year I miss out on gains, however with the fall of the pound I don't want to invest it in funds that may drop 10-20pc with the recovery of the pound..

a nice dilemma to have I guess

fun4everyone

dunstonh wrote: »

Starting to see a number of these alarm bells now.

Can you expand on why this is an alarm bell for markets? I understand what this person wanted to do was overly risky and I think you did the right thing refusing them but surely it should be an alarm bell for them only? Why would it be an alarm bell for the market in general? Just playing devils advocate because apparently nobody can time markets?

dunstonh

Can you expand on why this is an alarm bell for markets?

There are various sayings going back nearly a hundred years that fit with various generations. When the shoeshine boy is giving you stock tips, you know its time to sell. Replace with taxi driver, hairdresser as per generational change. All a variation on the old quote from the 1920s by an investor who decided to pull out before the great depression. The market is too popular for its own good when anyone and everyone wants in.

Another from Rothschild... Buy when there's blood in the streets, even if the blood is your own.

The theory being (and one that is relatively accurate over the generations) is that it is best to buy when everyone is scared (and values are low) and be fearful of a crash when everyone thinks its the place to make money. Usually because the gains have already happened and its too late.

Just playing devils advocate because apparently nobody can time markets?

You cant time the markets. However, nothing looks value at the moment. Every asset class looks poor value or overpriced. You are almost looking at the least worst option.

JohnRo

Do you keep cash aside to invest after next crash?

Short answer : yes

Longer Answer: not necessarily

Easy access cash allocation which will be deployed when the equity allocation falls significantly, ISA limits allowing.

Currently approx 25% cash & p2p / 75% equity investment split.

So assuming a 50% equity portfolio drop, which is the sort of number it would take for me to even consider it worthwhile, I'd be aiming to move just under 40% of the cash pile into equities.
It would not be done in a hurry though, so having made the decision it would then happen over the course of three or four months as part of a rolling investment program.

For that reason a crash and relatively quick recovery wouldn't see me doing much if anything different.

jdw2000

dunstonh wrote: »

There are various sayings going back nearly a hundred years that fit with various generations. When the shoeshine boy is giving you stock tips, you know its time to sell. Replace with taxi driver, hairdresser as per generational change. All a variation on the old quote from the 1920s by an investor who decided to pull out before the great depression. The market is too popular for its own good when anyone and everyone wants in.

Another from Rothschild... Buy when there's blood in the streets, even if the blood is your own.

The theory being (and one that is relatively accurate over the generations) is that it is best to buy when everyone is scared (and values are low) and be fearful of a crash when everyone thinks its the place to make money. Usually because the gains have already happened and its too late.



You cant time the markets. However, nothing looks value at the moment. Every asset class looks poor value or overpriced. You are almost looking at the least worst option.

You've sold up then?

TheShape

dunstonh wrote: »

There are various sayings going back nearly a hundred years that fit with various generations. When the shoeshine boy is giving you stock tips, you know its time to sell. Replace with taxi driver, hairdresser as per generational change. All a variation on the old quote from the 1920s by an investor who decided to pull out before the great depression. The market is too popular for its own good when anyone and everyone wants in.

Another from Rothschild... Buy when there's blood in the streets, even if the blood is your own.

The theory being (and one that is relatively accurate over the generations) is that it is best to buy when everyone is scared (and values are low) and be fearful of a crash when everyone thinks its the place to make money. Usually because the gains have already happened and its too late.

You cant time the markets. However, nothing looks value at the moment. Every asset class looks poor value or overpriced. You are almost looking at the least worst option.

If I'm understanding this correctly, perhaps the thing to do at present is continue with your regular monthly payments into your chosen stocks and shares fund(s) but now maybe isn't the best time to move the entire balance of your BOS Vantage accounts into stocks and shares?