Timing the Market

snowlaser

BlackKnightMonty said:

snowlaser said:

BlackKnightMonty said:

Qyburn said:

I'm thinking along the lines of riding out a 50% drop with four following years to recover. That would need a cash buffer of 1.5 years.  

That is crackers. Switch to cash/gold and buy back in 30-50% cheaper. (If you think the market is going to crash)

That's not investing or risk management though, that's just gambling.

If you're wrong you could be in all sorts of trouble.  

Passively taking a 50% hit doesn’t make any sense. Where is the risk management in that!

But you don't know whether there will be a 50% drop.  You might THINK there will be one, but you also need to be prepared for the fact that you might be wrong.

Risk management is planning for a variety of possible outcomes and not just gambling 100% of your assets on a hunch.  There are all sorts of things you can do on the spectrum between "sit 100% in equities and risk a 50% drop" and your alternative "move 100% into cash and gold".

MK62

snowlaser said:

BlackKnightMonty said:

dunstonh said:

BlackKnightMonty said:

jim8888 said:

Sounds to me like you're already quite prepared to weather the coming storm - providing it comes. I've got most of my pension in equities - probably over 80% - and I'm currently sticking to my "Do Nothing" strategy on the basis that this saw me through the dot.com crash, 9/11, the 2008 meltdown, Covid. Saying that, it's quite difficult to ignore all the negative talk about bubbles bursting and the end being nigh, even when you've seen it all before.

Not tempted to switch to cash and buy back into the market after a crash.

The Berkshire Hathaway approach.

That is not the Berkshire Hathaway approach.

It is at the moment.

They ARE currently holding a lot of cash, 

.......but much of that cash pile has come from numerous stock sales over the last few years along with very little in the way of stock purchases. One could easily conclude that BH are indeed "timing the market" - though perhaps in a more controlled manner than many understand the term to mean. 

BlackKnightMonty

snowlaser said:

BlackKnightMonty said:

snowlaser said:

BlackKnightMonty said:

Qyburn said:

I'm thinking along the lines of riding out a 50% drop with four following years to recover. That would need a cash buffer of 1.5 years.  

That is crackers. Switch to cash/gold and buy back in 30-50% cheaper. (If you think the market is going to crash)

That's not investing or risk management though, that's just gambling.

If you're wrong you could be in all sorts of trouble.  

Passively taking a 50% hit doesn’t make any sense. Where is the risk management in that!

But you don't know whether there will be a 50% drop.  You might THINK there will be one, but you also need to be prepared for the fact that you might be wrong.

Risk management is planning for a variety of possible outcomes and not just gambling 100% of your assets on a hunch.  There are all sorts of things you can do on the spectrum between "sit 100% in equities and risk a 50% drop" and your alternative "move 100% into cash and gold".

If you expect a 50% fall why wouldn’t you switch put?

The answer is no one knows if the market will tank 50%!

MEM62

Spivo46 said:

I know this is not something generally recommended, however, given the talk of market crashes and market corrections would it not make sense to lower the investment risk for the short term? 

There is always talk of a market crash or correction.  How are you going to decide which one you are going to take seriously and act upon?  

SVaz

I have 5 years income in Money market funds,  ready to take in 2027 - 2032, followed by a 5 year Gilt ladder.
In 5 years time I will decide how to proceed, I will have partly refilled a cash buffer with dividends but not enough for comfort. 

If the markets are good then I’ll skim off some of the growth ( anything over 5% after fees) to cash. 

I might switch to a different portfolio approach depending on whether an annuity is on the horizon.  

I sleep easier knowing my early retirement is covered and I won’t have to sell equities at a low point.  

HedgehogRulez

Im taking a punt and moved £200k into cash a month back. Happy to take any upside risk of losing out on growth but will move back into full equities over the next 6 months regardless.

ali_bear

I moved about half of my big DC fund into less volatile investments a couple of months ago only because I plan to use that much to purchase an annuity soon. 

There seems to be a lot of euphoria and greed diving markets right now, with only a small number of excessively high valued stocks driving the indices upward. Meanwhile the actual world economy is not looking too healthy, with huge amounts of debt piled up, and various wars going on. 

Qyburn

BlackKnightMonty said:

snowlaser said:

BlackKnightMonty said:

Qyburn said:

I'm thinking along the lines of riding out a 50% drop with four following years to recover. That would need a cash buffer of 1.5 years.  

That is crackers. Switch to cash/gold and buy back in 30-50% cheaper. (If you think the market is going to crash)

That's not investing or risk management though, that's just gambling.

If you're wrong you could be in all sorts of trouble.  

Passively taking a 50% hit doesn’t make any sense. Where is the risk management in that!

If that's referring to my comment, my plan avoids taking any sort of hit, so long as the assets recover within the timescale I've allowed for.

BlackKnightMonty

Qyburn said:

BlackKnightMonty said:

snowlaser said:

BlackKnightMonty said:

Qyburn said:

I'm thinking along the lines of riding out a 50% drop with four following years to recover. That would need a cash buffer of 1.5 years.  

That is crackers. Switch to cash/gold and buy back in 30-50% cheaper. (If you think the market is going to crash)

That's not investing or risk management though, that's just gambling.

If you're wrong you could be in all sorts of trouble.  

Passively taking a 50% hit doesn’t make any sense. Where is the risk management in that!

If that's referring to my comment, my plan avoids taking any sort of hit, so long as the assets recover within the timescale I've allowed for.

Recover implies loss of potential growth.

DT2001

Spivo46 said:

I know this is not something generally recommended, however, given the talk of market crashes and market corrections would it not make sense to lower the investment risk for the short term? I am due to fully retire in 6 months. I currently have a diverse pension portfolio, 57% of which is in stocks. I do have a 2 year cash buffer.  - thoughts please?

Look at James Shack’s latest YouTube video as it might help you 

How to ACTUALLY Manage Your Money in Retirement (Step-by-step guide)

My OH is continuing to work despite us being in the fortunate position of being able to retire comfortably now. As I am unsure of when she’ll decide enough is enough I have taken my 25% TFLS and used that to refill my flexible cash ISAs (that I used to help one of our children onto the property ladder). I now have 60% equities, 20% short term bonds and 20% cash. The cash will cover another property project that might need short (I hope) funding. It is matching your requirements/plan to the level of the cash buffer - when the market corrects what effect will it have on your drawdowns. Do you intend to adjust your spending, use only your cash or reduce the amount drawn from equities/bonds and top up from the buffer?