4 Month Investment Plan

JulieRight

Alexland said:

Its entirely possible that we could see a crash or broad market correction in the next 4 months but nobody knows which is why it's very risky puting money into markets when you need it soon. You know this already which is why you haven't invested the majority of this money. I doubt any of the regulars here would suggest S&S investment is suitable for a few months.

Yes right.  What worries me the most about the market is that I wasn't expecting it to recover this fast - I was expecting it to be at maybe half up the 'covid drop' on the charts i.e. half of what it was pre-covid.  It feels artificially inflated to me.

My biggest worry is what will happen to the market especially tech when the world 'goes back to pre-covid normal'...
Since March 2020, people have been stuck inside with nothing better to do than invest.
What happens when restrictions lift, will the market crash as fewer people invest and 'get proper jobs' i.e. life goes back to normal for most people and the stock market is no longer the main focus in their life as it was during the pandemic... Will this change in behaviour worldwide cause a market crash, at the end of the pandemic? That's where my gut tells me the stock market is going... But then I think about the elite and their investments. I don't think they'd allow it to crash because they must control it. 

JulieRight

I think my point is...
It is COVID and the LOCKDOWN WORLDWIDE that has caused the stock market to rise significantly due to a CHANGE IN HUMAN BEHAVIOUR i.e. people being stuck inside with 'investing' advertisements to lure them to investing...

SO...
When covid gets better. i.e. when restrictions lift and people start travelling and life returns to normal, which will happen it is only a matter of time, will this change in behaviour cause the stock crash because of decreased demand?? is it just supply/demand?

JulieRight

I.e. a reversal of investing behaviour since March 2020... 

kuratowski

Is it still April 1st?!

I think you have some strange ideas about what moves stock markets.  If you have some spare cashflow I might suggest a subscription to the FT.

And - as already pointed out above - on this forum most people are interested in saving and investing for the long term and not particularly engaged in discussing short term trading ideas.

benbay001

JulieRight said:

Worst thing that could happen.. I buy now... Nasdaq at 14k... In 4 months, market correction happens or even crashes and Nasdaq drops to 10-12k... My 180k drops to 140-150k... That would be just my luck!!

That certainly isnt the worst case.

Historically the S&P P/E ratio is around 15. Its currently 37.

For it to return to the historic P/E the index price would need to more than half.

Id say prices are riskier now than they have been in the last 12 months. 

The prices reflect a perfect landing the other side of the pandemic, anything less than perfect could see another crash.

benbay001

JulieRight said:

I'd just say that I'd have invested sooner but this is a lot of money for me and I worry about the market crashing, so am very cautious and hesitant... But I think the worst of the pandemic has happened and the economy is coming out of it soonish, so I can profit off the tail end of the recovery. Well that's my plan.Thanks a lot.

Trading stocks in the middle of a particularly volatile market is at the far end of the very high risk scale, especially with a time horizon of 4 months.

What makes you think you can out perform a broad market index anyway? (Im not saying you cant, i just think its important to reality check yourself as its very hard to do, requires patience, an education and a long time horizon).

md258

It sounds like you are pretty certain that prices will rise over the next 4 months. Would you have thought the same thing in Jan 2020?

If you want to gain an extra 10k, you could put 10k on red. If it comes in, great, if it doesn't, put 20k on red etc. The end result will be approx 15/16 chance of winning 10k and a 1/16 chance of losing it all (ignoring the 0).  From reading between the lines, it doesn't sound like your risk appetite is that high.

I would leave it in cash savings (approx £320 in 4 months at 0.5%) and be sure that you can afford to buy at that point.

PS. Why buy in 4 months rather than now?

colsten

JulieRight said:

I have read Martin's advice on investing.

Show us where he - or any credible person, for that matter - advises private individuals to invest of large sums of money for 4 months.

eskbanker

colsten said:

JulieRight said:

I have read Martin's advice on investing.

Show us where he - or any credible person, for that matter - advises private individuals to invest of large sums of money for 4 months.

As would be expected, the MSE editorial line echoes that expressed frequently on the forum....

https://www.moneysavingexpert.com/savings/investment-beginners/

We can't tell you whether investing is right for you. But if you're going to do it, it's recommended you invest for at least five years. This is because the longer you invest, the longer you have to ride out any bumps in the market.

[...]

If you're saving over the short term, it's wise not to take too much of a risk. It's recommended you invest for at least five years. If you can't, it's often best to steer clear of investing and leave your money in a savings account.

Thrugelmir

JulieRight said:

Alexland said:

JulieRight said:

I'd just say that I'd have invested sooner but this is a lot of money for me and I worry about the market crashing, so am very cautious

You are right to be cautious markets can crash at any time for many different reasons which is why S&S investment is only suitable for periods of at least 5 years preferably longer (especially with such high US valuations at the moment) to reduce the risk of withdrawing at a loss. What happens to share prices over periods of months is almost random.

Looking at the NASDAQ chart, it looks ridiculous frankly.  That is what is putting me off investing.  Surely such bullish run cannot be sustained after the pandemic when we're no longer stuck inside? Or has the pandemic attracted more people to investing who otherwise wouldn't, like me, which is driving up prices??? The whole market looks very unstable and unnatural but I'm no expert. Just my gut feeling tbh. Surely summer must be a good time for stocks - last year was? 

There's more unprofitable growth companies listed on the Nasdaq now than at the bust of the Dot Com boom.  Not all can become a commercial success and live up to their valuations. Suspect that many (US) investors have bought into the Tesla hype.  Only in the past couple of weeks has it dawned on some of them that companies such as VW are going to provide serious competition in the EV space. That's the insular nature of US thinking for you!