Bad time to buy stock?

Uriziel

I have been moving money into stocks but realized that both the S&P500 and the FTSE100 are at an all time high which did not bother me at first since it is possible for them to still grow in one year's time.
After checking the graphics historically I noticed that nearly the whole growth stems from 6 months of increases up to the end of year. It seems that nearly always after an all time high the market drops during the next 3 months, then stays the same for a while and then starts going up.
This means that instead of moving any money into stocks now it makes more sense to keep the money in interest accounts and then move the money in Q2 after the market dipped. This would also lower the chances of me losing money but also increase the gain since I would be buying low.

Is there anyone with any experience on this?

HappyHarry

Ah - timing the market.  A fools game.

Catplan

How long do you intend to stay in the market, for example my S&S ISA is at least planned for ten years probably more, so I’m not looking at it monthly, quarterly time scales you mention, I do check it maybe 3 or 4 times a year but I’m comfortable with what it’s doing and expect many a fluctuation and possibly big drops in my time frame. Edit I should add held it for 5 years, t adding to it yearly, sometimes twice yearly as opposed to monthly…. It might be a twenty year thing, but it’s a long term thing and not something I intend to cash in within the next ten years.

Uriziel

I understand but there has never been a time where the market was at an all time high and then it just kept going up. I think there is even a possibility that if you buy now, the market will crash in a few months and in a year's time you'll be back where you started.
I am not talking about waiting for a specific news report in the hopes of stock shooting up. It feels like a no brainer to wait for a dip even a small one?

Uriziel

Catplan said:

How long do you intend to stay in the market, for example my S&S ISA is at least planned for ten years probably more, so I’m not looking at it monthly, quarterly time scales you mention, I do check it maybe 3 or 4 times a year but I’m comfortable with what it’s doing and expect many a fluctuation and possibly big drops in my time frame. Edit I should add held it for 5 years, t adding to it yearly, sometimes twice yearly as opposed to monthly…. It might be a twenty year thing, but it’s a long term thing and not something I intend to cash in within the next ten years.

I don't mind keeping the money for 5 years in the S&P 500 but if I wait for a small dip I could have a significantly larger return than if I buy now and in exactly 1 year it might be up 10% but if I had bought mid year it would be 20%. Until then I would be getting interest in a savings account so I would end up with more in the long run.

Catplan

So it dips 10% next week would you buy? 

It might then dip another 10% the following week.

Uriziel

Catplan said:

So it dips 10% next week would you buy? 

It might then dip another 10% the following week.

Yes I would buy but I would also maybe wait until it starts going up and then ride the wave back up which might lose me a couple of % compared to buying at the lowest but then I would feel confident that I am seeing growth.

If you buy now it is very possible that it will crash next year which is very realistic since the market seems to always go up and down during a year and then end up exactly at the same spot as now, all time high to all time high with nearly the same result depending on what happens.
I cannot find any examples where the market just kept going up throughout the year. Most of the time an all time high is reached over 6 months. As long you invest around that time you make a return.

Alistair31

Good luck.

Eco_Miser

Uriziel said:

I understand but there has never been a time where the market was at an all time high and then it just kept going up. 

That's just plain wrong.

If the market never kept going up after reaching an all time high it would never pass that all time high, whereas in reality runs of all time highs are frequent.

I suppose the effect does depend a bit on how frequently you measure - every 15 minutes would show a lot more dips than every month, and just measuring every year would cut out a lot more dips. 

Don't forget that for many shares, dividends form part of the return, and they pay out whatever the share price is doing.

jaypers

There is never a bad time to enter the market, providing you are thinking long term. Whether you put a lump sum in or drip feed is another matter and if the former, timing can be everything. 

jimjames

Uriziel said:

Catplan said:

So it dips 10% next week would you buy? 

It might then dip another 10% the following week.

Yes I would buy but I would also maybe wait until it starts going up and then ride the wave back up which might lose me a couple of % compared to buying at the lowest but then I would feel confident that I am seeing growth.

How do you know when it's going up and not a dead cat bounce?