Is it insane to invest in the stock market now?

enthusiasticsaver

I would say doing nothing is insane. You cannot time the markets and no one has a crystal ball to say what stock markets will do but if you are investing in cash your money is losing value anyway because of low interest rates.

I would look at a work pension first as usually your employer will match contributions up to a certain percentage and you get tax relief on contributions so you profit immediately.

SonOf

Strange how the focus is been on US equity rather than global equity. The US market is the only developed market that has a PE ratio above long term average. And even that is not at a level that is not considered very high. Of course, PE Ratio is only one measure.

The US underperformed in the previous cycle and has over-performed in this cycle. How much of that overperformance is catch up from the previous.

Most stockmarkets are not overheating in terms of looking at long term average data.

capital0ne

EdGasketTheSecond wrote: »

Good job 'Bob' didn't invest in Woodford patient capital trust then!

Too right, but you wouldn't put more than 5% into a single investment would you? You must diversify your portfolio then little hiccups like following a 'famous' fund manager doesn't really matter if it goes belly up!

tin586

Might be worth a read if you are still having doubts:

https://moneyweek.com/517282/how-to-steel-yourself-to-buy-at-new-all-time-stockmarket-highs/

The way I look at it is like this (and I appreciate this might not suit everyone’s circumstances): I will never be a distressed seller, so I don’t have to worry about timing the market.

Eco_Miser

capital0ne wrote: »

Too right, but you wouldn't put more than 5% into a single investment would you? You must diversify your portfolio then little hiccups like following a 'famous' fund manager doesn't really matter if it goes belly up!

So you advocate someone just starting out to spread their meagre initial investment over 20 different funds?

Thrugelmir

SonOf wrote: »

Strange how the focus is been on US equity rather than global equity. The US market is the only developed market that has a PE ratio above long term average. And even that is not at a level that is not considered very high. Of course, PE Ratio is only one measure.

Share buybacks have been a way of engineering improved EPS figures. Thanks to Mr Trump's corporate tax cuts some $806 billion was spent by companies on repurchasing their own shares in 2018. While the trend has continued into 2019. The first two quarters of this year has seen a reduction in the spend to the corresponding periods.

bowlhead99

Eco_Miser wrote: »

So you advocate someone just starting out to spread their meagre initial investment over 20 different funds?

Diversification can be useful but an individual small holding can be pretty meaningless. If you are not careful you'll end up with each new holding being such a small single digit percentage of your total portfolio that it's not worth spreading the money. I heard an expert say this on MSE forums, he had a largish portfolio though

MaxiRobriguez

Dividend yield is higher than bank accounts interest rate so you'll do better in stocks even if capital growth is flat for multiple decades than you would doing nothing.

Spread your risk and go for it.

BrockStoker

Well I just invested nearly £8k in individual stocks (mostly US listed biotech) since the 30th Oct, despite my currency reservations at this time. I still have another 12k to hand (with significantly more to come) in this particular account/portfolio (the smallest by far of 3 that I currently have) which I plan to use when I see further opportunities.



As others here have said, get stuck in, but always make sure you keep some cash to hand both for emergencies, and buying opportunities, especially if things have gone up (which they have).


It's probably best to keep things simple to begin with though, just until you start to understand what you are doing better, and you have a significant sum invested. Start off with a single well diversified fund. In the mean time, read all you can on the subject, follow the markets, start some "dummy" portfolios with virtual money, and try to works out what tour strategy/aims will be.



Once you have a strategy that based on your own circumstances, you should stick to it no matter what, so think hard about it, and search this forum to see what others are doing.

Thrugelmir

MaxiRobriguez wrote: »

Dividend yield is higher than bank accounts interest rate so you'll do better in stocks even if capital growth is flat for multiple decades than you would doing nothing.

With no capital growth for multiple decades. There's a reasonable chance that the companies concerned will no longer be listed.