Are you planning for a stock market correction

Bostonerimus1

How can you plan for a specific, yet poorly defined, event in the future that may or may not be correlated with a wet finger held in the air? You can't. So no, I'm not doing any tactical planning for a correction. But I have an asset allocation that has worked for me through several previous corrections and as my time horizon is several decades I expect it to work for me through future corrections.

Middle_of_the_Road

https://forums.moneysavingexpert.com/discussion/comment/81899698#Comment_81899698

Maybe different for anyone nearer retirement. I've halved my exposure to the US. It may well reduce potential returns, but it also reduces the effect of a possible US tech correction.

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/81899713#Comment_81899713

A strategic rather than tactical approach to investing works for all ages. I wouldn't change the way I invested in anticipation of some market correction, but I would to plan for a known event like retirement where income generation might become more important than growth.

[Deleted User]

The trick, and it really is an art form that can take many years to perfect, is to find that goldilocks allocation that is niether too much or too little, the one that let's you sleep at night without worrying about potential losses, nor the fear of missing out. It took me seven years but I am finally there. You may get there faster because I'm a slow learner.

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/81899929#Comment_81899929

Because of the large number of investors and investment products there are an almost infinite number of "Goldilocks allocations". Trying to find the perfect allocation will send you mad. However, an ok allocation is easy to come by because it's a large set, the perfect allocation is basically a "null set".

[Deleted User]

https://forums.moneysavingexpert.com/discussion/comment/81901341#Comment_81901341

I disagree. One mans meat is another……! Plus age and financial circumstances are infinite variables, as are individual attitudes to risk when layered onto ever changing market conditions. Finding the combination of products or investables that constitutes your own personal Goldilocks solution, one that is ideal for you personally, is not a simple matter because it's a fairly narrow band that needs to be tested against various market conditions to ensure it's what you think it is. I can't speak for others but "just OK" was never something that would make me happy for long, instead I would always search for something better…..mediocrity doesn't make me sleep well at night. I have no doubt that others who are much smarter than me have been able to chance upon their ideal solution quickly, just don't be suprised if you don't and don't be suprised if there's not a ready made one on the shelf.

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/81901456#Comment_81901456

Different horses etc. but I could not live with your approach. I see investing as a vast array of paths to a large number of acceptable results and the highest probability of reaching an acceptable result is index investing using the Efficient Frontier as a guide. I actively avoid trying to find the perfect solution because it increases the probability of "failure"…whatever that is.

boingy

I'm not really planning for one but I agree we are due a correction. The problem is, it's felt like that for a couple of years now and it may continue to feel that way for another couple. In the meantime the growth has been crazy.

And will it be a brief slump, a significant correction or a Trump-sized disaster? No-one knows.

What I would observe is that the US market is so influential that any significant dip there tends to be reflected in other major markets anyway. So I'll just sit tight as usual.

kempiejon

I am led to believe that there's a number of people posting on here cleverer than average. If one can successfully time the market long term or with enough capital on a few key events then they'll be rich and should crack on. I don't think I or many other people have that skill but can get lucky.

So although I do make regular changes to my portfolio, topping up and rebalancing asset but very little by way of seismic changes due to my view of the outlook over the next 3, 6 12 or 24 months.

I'm not sure that news reports or changes in fashion in equity and consumer markets are the route to the information to significantly outperform markets consistently but again think those that can do it should crack on. A global cap weighted index does have a bias towards US tech/software and if that doesn't suit an investing style change. Equity investing has served me well by just plugging away. I've bought UK banks and gold over a few years which has worked out well but my green energy not so cool.

[Deleted User]

https://forums.moneysavingexpert.com/discussion/comment/81901996#Comment_81901996

I question whether the long term view is always the right one, I'm not sure that always necessary. I like to take things a year at a time and then revisit everything at the end of each year to see what needs to be changed. Perhaps the long term view is the right one for a twenty something year old investor but if you're sixty something, should you do the same thing? I say no. I don't think it's about trying to be cleverer than average or necessarily "beating the market" (whatever that means any more). I think older age can offer or demand a different style of investing by eating the elephant in small bites. Neither do I think it's about trying to become rich, investing is not about that for me, if I wanted to try to get rich I'd go to Vegas! Instead it's about trying to lower the risk of making a reasonable to good return, every year…..that's all.