Preparing for the Crash

valiant24

If one believes, as do I, that an almighty stock market crash is coming, what is your opinion on the necessary defensive action?
Sell equities obviously, with the intention of buying back later, but then what?   Keep the cash in, er,  cash?   Suppose (say) AJBell or ii go bust, all but £85k of your cash would be lost.  Buy short-dated gilts maybe?  What is the best way to keep (say) hundreds of thousands of pounds ultra-safe?
(Please note, I'm not looking for a discussion of whether there will be a crash (I think so), or whether I am qualified to judge (I am not).   Just advice on the best way of safely staying out of equities).
Thank you!
V

[Deleted User]

valiant24 said:

Sell equities obviously, with the intention of buying back later, but then what?

What? This is called timing the market and ~90% of people get it wrong. Are you among that 10% successful?

I will do what I usually do, which is nothing. And buy full £20k load to ISA shares account every year.

Go ahead and sell now. I don't mind picking up cheaper shares during the crash. DCA strategy (dollar cost averaging) is wonderful and require no skill, no effort and no time wasted on timing the market and getting burned.

maxsteam

I think that the better question to avoid would be when, not if. There may well be further record highs before the fall.
Personally I would rather cover my portfolio with long dated put options in indices than get involved with the panic selling when it comes.

Thrugelmir

valiant24 said:

If one believes, as do I, that an almighty stock market crash is coming, what is your opinion on the necessary defensive action?

Be selective in your choice of investments. Not all share prices react in a similar fashion. 

masonic

valiant24 said:

If one believes, as do I, that an almighty stock market crash is coming, what is your opinion on the necessary defensive action?

It is wise to believe that there is a stock market crash coming. There is always one coming. You just don't know when it will be. So the correct action to take is ensure you are invested appropriately for your risk tolerance and rebalance your portfolio when it drifts outside of the asset allocation limits you have set.

YellowStarling

As others have said, market timing is a fool's errand.  It's all well and good thinking you've successfully avoided being in the market during a 50% crash, only to realise you weren't in the market for the 200% rise beforehand.  The crash could be next week, and if so then selling now would be perfect timing.  But the key is nobody can truly know, and history shows there is, or has been at least, more growth than pullback over long enough periods, so I invest to be in the market as much and as long as possible, diversified across allocations that suit my tolerances for both riding out and smoothing out the bumps in the road.

Linton

valiant24 said:

If one believes, as do I, that an almighty stock market crash is coming, what is your opinion on the necessary defensive action?
Sell equities obviously, with the intention of buying back later, but then what?   Keep the cash in, er,  cash?   Suppose (say) AJBell or ii go bust, all but £85k of your cash would be lost.  Buy short-dated gilts maybe?  What is the best way to keep (say) hundreds of thousands of pounds ultra-safe?
(Please note, I'm not looking for a discussion of whether there will be a crash (I think so), or whether I am qualified to judge (I am not).   Just advice on the best way of safely staying out of equities).
Thank you!
V

No one is qualified to judge whether there will be a crash or not. Crashes always happen when not expected except by those people who predict one every year..  So much better to accept you dont know and invest on the basis that it will happen sometime and will recover.  

It is not true that if ii or AJBell went bust all but £85K of your cash may be lost.  ii or AJBell wont be holding your money and if they did it would be ringfenced.

The only way of keeping £s safe is to invest in glits (UK government bonds).  The UK government can always pay the £s it owes you, whether the £s would be worth anything is another matter. You would have to ensure that the bond maturity dates were close to the date you wanted to get your cash as otherwise over the medium to long term you could make a loss, as it is you will barelt break even.

ANGLICANPAT

Dont actually know about this, but  somewhere in my mind i thought Id briefly read  something about a  method of setting  up your investments  to allow the platform to  auto buy or sell at a price you set .   Is there, and how useful could it be for situations being discussed above ?

kinger101

Linton said:

valiant24 said:

If one believes, as do I, that an almighty stock market crash is coming, what is your opinion on the necessary defensive action?
Sell equities obviously, with the intention of buying back later, but then what?   Keep the cash in, er,  cash?   Suppose (say) AJBell or ii go bust, all but £85k of your cash would be lost.  Buy short-dated gilts maybe?  What is the best way to keep (say) hundreds of thousands of pounds ultra-safe?
(Please note, I'm not looking for a discussion of whether there will be a crash (I think so), or whether I am qualified to judge (I am not).   Just advice on the best way of safely staying out of equities).
Thank you!
V

No one is qualified to judge whether there will be a crash or not. 

I'd say we can all be pretty certain there will be another crash.

valiant24

[Deleted User] said:

valiant24 said:

Sell equities obviously, with the intention of buying back later, but then what?

What? This is called timing the market and ~90% of people get it wrong. Are you among that 10% successful?

I will do what I usually do, which is nothing. And buy full £20k load to ISA shares account every year.

Go ahead and sell now. I don't mind picking up cheaper shares during the crash. DCA strategy (dollar cost averaging) is wonderful and require no skill, no effort and no time wasted on timing the market and getting burned.

Thanks for taking the trouble to reply.
But you didn't answer the question I asked - and nor has anyone else so far - instead you comment upon the aspect that I said I wasn't interested in discussing! ;-)
Seriously, ignore the "crash" bit and, if you wish, please do address the "safe way to hold cash" bit, as I am genuinely interested in others's views.
cheers
V

valiant24

Linton said:

It is not true that if ii or AJBell went bust all but £85K of your cash may be lost.  ii or AJBell wont be holding your money and if they did it would be ringfenced.

I would be happy to be corrected, but I don't believe that that is true.   Investments through a platform are (or should be) ring-fenced, but I do not believe that to be the case with cash held within a SIPP/ISA/dealing account.