Timing the market

bcfclee27

I know the uk is a bit unknown what with Brexit and everything.
How about the US, as HSBC global strategy have quite a high ratio over there.

Or is the US expected to do as badly or worse in the future.

Without the crystal ball comments.....

ChesterDog

It's not so much thst dips and falls do not matter.

More that they are random and unpredictable.

History shows that in trying to predict something that is random and unpredictable, you are quite likely to get both bits of timing (hold off from investing, followed by investing - in the case where you are anticipating a fall) wrong and achieve a worse result than if you had not attempted the prediction.

History also shows that markets go up relentlessly when viewed over a long time period, so the falls and even the crashes don't need to be avoided at all.

In a nutshell, timing only matters to people who shouldn't be investing in those markets.

eskbanker

Economic wrote: »

There seems to be a common view that dips in the market do not matter in the long run, but if the market drops 10% tomorrow then I can buy 11% more shares tomorrow than today and I will will have 11% more shares in 1,5, 10, 25, 50 years (and will receive 11% more dividend income).

I don't think anyone is saying that dips don't matter full stop, just that predicting the exact right time to buy (and sell) is impractical - if picking the right time was straightforward then of course it would be the best thing to do!

Immediately after a hypothetical 10% drop is clearly better than buying immediately before one, so if you know when a 10% drop is happening then let us know....

And of course there are many who've been predicting such a drop happening for years and if they'd waited then they'd have missed major gains in the intervening period!

ValiantSon

The last week hasn't been the best, and for all I (or anyone else) knows it could be the start of a crash, but there really is no way of knowing. People are always talking about impending crashes: sometimes their pure guesswork turns out to be right, but more often than not it doesn't. With this in mind the biggest problem is actually due to indecision about investing.

Pay no attention to pound cost averaging. You are just as likely to find that you end up buying more at higher prices. A lot of studies have shown that doing this actually results in an overall lower return for the investor compared to having invested the lump sum.

The funds you are intending to buy are good so if I were you I'd just invest now. There will almost certainly be a market correction (or two) over the expected lifetime of your investment, so there is little point even trying to time the market.

Prism

bcfclee27 wrote: »

I know the uk is a bit unknown what with Brexit and everything.
How about the US, as HSBC global strategy have quite a high ratio over there.

Or is the US expected to do as badly or worse in the future.

Without the crystal ball comments.....

The US is expected to do well. That doesn't mean the stock market will do as well as recently however as that expection is probably already fairly priced in. Interest rates will go up, companies will have to deal with that, people will have less income unless wages go up. More money will likely go back into bonds when the yields go up. That money tends to come from equities. To complicate it more nobody knows what will happen to the pound.

So many moving parts. Not worth worrying about, let the fund do its thing

Thrugelmir

bcfclee27 wrote: »

However many predicting a crash is on the way.

Few are predicting a crash. A reasonable number are suggesting a correction is on the horizon. As investors chase prices higher in the pursuit of the Holy Grail. Without reference to trading fundamentals or underlying movement in bond yields.

That's why drip feeding over a lump sum over a period of time is recommended. To iron out normal market volatility. Time in the market is key. As the majority of return is generated through reinvesting income. Not capital growth. Something a lot of people overlook. In addition diversify your portfolio widely. As different market segments will move independently of each other.

Prism

Thrugelmir wrote: »

As different market segments will move independently of each other.

Absolutely. YTD my India fund is down 10%, my Japan fund up 5% and everything else is about evens

eskbanker

Thrugelmir wrote: »

That's why drip feeding over a lump sum over a period of time is recommended. To iron out normal market volatility. Time in the market is key.

This seems contradictory to me - drip-feed if you feel that you can time the market, but if you don't (and accept the usual 'time in the market' view) then, starting with a lump sum, stats show that it's better on average to get it all invested rather than drip-feeding it.

ValiantSon

eskbanker wrote: »

This seems contradictory to me - drip-feed if you feel that you can time the market, but if you don't (and accept the usual 'time in the market' view) then, starting with a lump sum, stats show that it's better on average to get it all invested rather than drip-feeding it.

Agreed. Not being able to time the market is exactly an argument for not drip feeding.

TrustyOven

Alexland wrote: »

Invest in line with your volatility tollerence using shares, bonds and some cash (incase both shares and bonds drop). Then if it gets bad enough (this week was not too bad) you can start moving cash in from the sidelines and increasing your shares percentage to give a quicker recovery.

What happened this week?
I think I saw on one day, a ~ 1% drop and I shrugged. I had a buy order pending as well. Hmm.