Timing the investment

wmb194

ChesterDog said:

You're focused on an event that is expected.

It's the ones that are not expected that move the needle the most dramatically. 

The question is always, "what's in the price?" The market may be expecting c.10% tariffs but if they come in at, say, 30% the market will move.

Hoenir

wmb194 said:

ChesterDog said:

You're focused on an event that is expected.

It's the ones that are not expected that move the needle the most dramatically. 

The question is always, "what's in the price?" The market may be expecting c.10% tariffs but if they come in at, say, 30% the market will move.

The ultimate market needle will be determined by corporate financial performance in the months to come. Also the USA's ability to service, refinance and borrow yet more to fund it's party lifestlye. Some markets appear to be operating on blind faith. Oblivious to the data which suggests that many Americans aren't reaping the benefits of the Trump Administration's economic policies. Those making money are happily making more money. That's  American Exceptionalism in a bottle. 

poolboy

It evens out over time, this year trumps tariffs rocked the market the first trading day of the tax year.  I thought I was an investing god, truth is I was going to buy anyway but my 20k went further.

Over time, what looks like a lot of noise now is just a speck on the horizon.  I am mainly into investment trusts so reinvest income, they are all riding high ATM due to interest rate movements.

Within an isa it's a lot more satisfying to see a load of positives.  Have a listen to meaningful money podcast, he says never time the market, you can win or lose but it's completely out of your control.

MEM62

Jamb0 said:

Don’t want to invest then the markets drop 5-10% 

Why not?  In the long term this sort of movement would be meaningless.  

bobfredbob

I think it's a legitimate question to ask.

You can search for the story of the "world's unluckiest investor", a parable of what would happen if you only invested at every market peak immediately before a crash.  The summary is that over a long enough period, in the past, you probably make back a nice profit.

If you are not feeling confident about the investment, then why not wait a week?  I assume you think there may be a drop, so what's the harm in waiting?  Markets usually recover, but it may take decades.  You don't want to feel bad that you could've held out just one more week...

Of course, you should also ask yourself if investing in whatever you're investing in is right for you.  What happens if the market stays depressed for an extended period?  Will it cause hardship?  In general, you shouldn't worry about dips, but that doesn't mean you should buy at every peak.  Perhaps this money should be invested somewhere safer?

Middle_of_the_Road

MEM62 said:

Jamb0 said:

Don’t want to invest then the markets drop 5-10% 

Why not?  In the long term this sort of movement would be meaningless.  

Agreed, but if there is a meaningful crash and you rely on income from the investment, it could have real consequences. Recovery could take years, meanwhile the capital has been substantially diminishing.

InvesterJones

Middle_of_the_Road said:

MEM62 said:

Jamb0 said:

Don’t want to invest then the markets drop 5-10% 

Why not?  In the long term this sort of movement would be meaningless.  

Agreed, but if there is a meaningful crash and you rely on income from the investment, it could have real consequences. Recovery could take years, meanwhile the capital has been substantially diminishing.

If a drop in capital of 5-10% had consequences for something you rely on then equities are the wrong investment - it would be wiser to build a buffer from other assets, or if you can't afford the time, consider something other than equities.

dunstonh

If you are not feeling confident about the investment, then why not wait a week?  I assume you think there may be a drop, so what's the harm in waiting?  Markets usually recover, but it may take decades.  You don't want to feel bad that you could've held out just one more week...

And in the majority of cases, nothing will have changed in a week's time and markets will statistically be higher.

You can end up in a perpetual state of putting off because you will never be satisfied. Now is the time.

MEM62

Middle_of_the_Road said:

MEM62 said:

Jamb0 said:

Don’t want to invest then the markets drop 5-10% 

Why not?  In the long term this sort of movement would be meaningless.  

Agreed, but if there is a meaningful crash and you rely on income from the investment, it could have real consequences. Recovery could take years, meanwhile the capital has been substantially diminishing.

In that case putting all your eggs in that one particular basket would not be an appropriate risk and you would follow another strategy.  We can all find exceptions that need an alternative thought process but no such caveats were alluded to in the original post - which was purely about timing the market.  .  

Bostonerimus1

Anyone who is worried about a 5% or 10% short term drop in the markets should probably stick with saving accounts and cash ISAs. Drops in markets don't lose you money, it's how you react to them that is the biggest determining factor to success or failure over the long term.