Preparing for the Crash

Prism

ZingPowZing said:

Thrugelmir said:

ZingPowZing said:

Thrugelmir said:

ZingPowZing said:

Also, it’s worth stating that those holding good gains are best placed to face a prospective crash. 

Prefer cash myself. 

Yes, you keep saying. That and top-slicing, taking a profit, reversion to the mean, fang overvalued, long experience, rebalancing, late stage economic cycle etc  etc.

But if you invest on the assumption that we are in bubble territory where a correction is always just round the corner, that comes with an opportunity cost that doom-mongers are shy to acknowledge, let alone quantify. The “stopped clock” brigade are never wrong, just waiting to be proved right.

Long term, it’s a losing strategy.

What complete twaddle. Sounds as if you've an awful lot to learn and experience yet. 

Hopefully. And some lessons no doubt will be painful. Still, better than sounding like you made up your mind about everything years back. Then waiting for the world to conform to your view.

For example, Thrugelmir has cautioned against Apple shares, deeming them overvalued for quite a while, thus foregoing (at least) the last 700% appreciation (plus dividends) since this thread: 
https://forums.moneysavingexpert.com/discussion/4279851/apple-shares-invest-or-not-invest/p1

There's nothing wrong with stating and restating a position in definite terms - and one day it may be proved right - but there is a cost to sitting out the dance.

You are of course correct that the share price has rocketed up over the last 8 years but there is something to be said for looking a bit deeper. Over the last 8 years Apple hasn't quite doubled its revenue or profit - it looks about 80% up overall - which to be honest is a pretty poor performance compared with other similar companies. However the share price has indeed provided great returns for those willing to invest regardless of the company performance. All of this is in the hope that Apple have a trick up their sleeve to tap into a new market. There is nothing wrong with investing in companies that are doing well now rather than those that 'might' do well in the future. 

lozzy1965

Thrugelmir said:

thegentleway said:

bd10 said:

Whether this is a mere 10-20% correction or an 70-80% correction, only time can tell.

70-80% wouldn't be a correction; that's a collapse, which is very unlikely to happen. I think 40-50% is a more reasonable worst case.

Depends on how long the casino type attitude to the stock market , particularly in the USA, prevails. Ultimately companies have to generate revenues , and most importantly cash. Without which current price levels of certain stocks become totally meaningless. Following social media trends could result in a lot of burnt fingers. Institutional players can game the system too. 

Hmmm, 70-80% - or even 100% -  can result on specific shares from what we have seen recently, which are essentially caused by pump and dump through social media.  No indication that this is market wide though.  I'm with the 40-50% worst case scenario voices.

Thrugelmir

lozzy1965 said:

Thrugelmir said:

thegentleway said:

bd10 said:

Whether this is a mere 10-20% correction or an 70-80% correction, only time can tell.

70-80% wouldn't be a correction; that's a collapse, which is very unlikely to happen. I think 40-50% is a more reasonable worst case.

Depends on how long the casino type attitude to the stock market , particularly in the USA, prevails. Ultimately companies have to generate revenues , and most importantly cash. Without which current price levels of certain stocks become totally meaningless. Following social media trends could result in a lot of burnt fingers. Institutional players can game the system too. 

Hmmm, 70-80% - or even 100% -  can result on specific shares from what we have seen recently, which are essentially caused by pump and dump through social media.  No indication that this is market wide though.  I'm with the 40-50% worst case scenario voices.

Barclays have been monitoring the Tesla share price and say that the trend follows social media posts. 

virenque

UK is back upwards today ish, Tesla flat. Meituan looks painful though!

bd10

Regards the correlation Barclays found, funny thing is: upside correlation is different to downside correlation. If you take for example the whole FTSE100 set of shares, in upwards trending markets, both cross-correlation between individual stocks and correlation to the Index itself tend to be (a) lower and (b) much more dispersed. In downwards trending markets both much higher. Which we saw last spring (and in so many MBS books during 07/08: those student loans all of a suddent became totally correlated with car loans, ouch!). So statistical relationships may all of a sudden not hold or unexpectedly reverse in different maket conditions. Point being, what Barclays noticed on the upside may be much more pronounced on the downside and lots more instantaneous that the weak 1-day lag the tested for.

[Deleted User]

Prism said:

ZingPowZing said:

Thrugelmir said:

ZingPowZing said:

Thrugelmir said:

ZingPowZing said:

Also, it’s worth stating that those holding good gains are best placed to face a prospective crash. 

Prefer cash myself. 

Yes, you keep saying. That and top-slicing, taking a profit, reversion to the mean, fang overvalued, long experience, rebalancing, late stage economic cycle etc  etc.

But if you invest on the assumption that we are in bubble territory where a correction is always just round the corner, that comes with an opportunity cost that doom-mongers are shy to acknowledge, let alone quantify. The “stopped clock” brigade are never wrong, just waiting to be proved right.

Long term, it’s a losing strategy.

What complete twaddle. Sounds as if you've an awful lot to learn and experience yet. 

Hopefully. And some lessons no doubt will be painful. Still, better than sounding like you made up your mind about everything years back. Then waiting for the world to conform to your view.

You are of course correct that the share price has rocketed up over the last 8 years but there is something to be said for looking a bit deeper. Over the last 8 years Apple hasn't quite doubled its revenue or profit - it looks about 80% up overall - which to be honest is a pretty poor performance compared with other similar companies. However the share price has indeed provided great returns for those willing to invest regardless of the company performance. All of this is in the hope that Apple have a trick up their sleeve to tap into a new market. There is nothing wrong with investing in companies that are doing well now rather than those that 'might' do well in the future. 

Yes, fair point about the metrics, Prism; but the truth is it's not Aapl investors who are "hoping Aapl have a trick up their sleeve" - they are already sitting on huge gains - it is the non-participants who are hoping they shall be rewarded for their abstinence eventually.

Origin of current turbulence was Elon Musk tweeting over the weekend, some say. 

It is concerning to see that Tesla has become the most traded stock in the world, where for many years it used to be Aapl. The two are very different propositions. And we don't even know the extent of speculation in Bitcoin. Where people used to look to Aapl to see which way the market was heading, now the lead comes from Tesla and Bitcoin. That's not healthy imo. So, I'm keeping a weather eye on those indicators, but for those who have sat out the rise in Aapl and others, be careful what you wish for: if they go south, your investments will be adversely affected.

DireEmblem

It is difficult to time the market, most people say its not even worth the time trying.  If there were to be another crash like the previous, then we don't know if that would be next week, next month, or next year.

I would just say to be prepared, make sure you have enough cash saved to be comfortably safe - your 6 month emergency fund.  Perhaps a little more.  How much runway would make you comfortable?

If a crash were to happen, and your job was safe, then invest.  Not just in the markets, pay off your mortgage, and invest in yourself.  That could either be further education, or a trip of a lifetime.

Plan to set yourself up with a reasonable security blanket, and enjoy life.

quirkydeptless

Not worried about the share prices.

When they were up, they were up,

And when they were down, they were down,
And when they were only half way up,
They were neither up nor down.

csgohan4

investing in individual shares, brings joy and also pain and you must be prepared to take both. I sold my CINE shares  when they had a dip for reasonable reasons at the time (They were down 20% at one point), if I had held my nerve I would be sitting on 100% profit by now... Sigh... 

Least my IAG shares are on the up and hopefully will take off even more, excuse the pun

MDMD

SMT down another 6% today. Annoying as I bought in yesterday in my SIPP as a long term holding and Trading account as it was at a discount.

Trying to decide if I should double down on
it while there’s a “sale” on.......