Bear market

henryandmay
henryandmay Posts: 54 Forumite
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in Savings & investments
I'm new to investing and was wondering; why would someone invest today when tomorrow the same investment might be a fraction of today price?

All the sound bites I'm reading; there is a 40% correction on the horizon?

thanks
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Comments

  • Aegis
    Aegis Posts: 5,688 Forumite
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    Because tomorrow it may cost more, and when the next crash happens the bargain price might not be as good when you factor in the growth, interest and dividends you would have received in the interim.

    I'd be a much better (and wealthier) adviser if I could successfully predict when the highs and lows of a stock or market were going to be.
    I am a Chartered Financial Planner
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
  • El_Torro
    El_Torro Posts: 1,463 Forumite
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    Time in the market is more important than timing the market.

    You're probably right that there's a 40% (or more) correction coming. When though? It's been "on the horizon" for years now.

    While it's highly likely that a crash is coming, it's also highly likely that stocks will recover within a year or two of the crash happening. Which takes us back to my first comment.
  • henryandmay
    henryandmay Posts: 54 Forumite
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    El_Torro wrote: »
    Time in the market is more important than timing the market.

    You're probably right that there's a 40% (or more) correction coming. When though? It's been "on the horizon" for years now.

    While it's highly likely that a crash is coming, it's also highly likely that stocks will recover within a year or two of the crash happening. Which takes us back to my first comment.

    But then why not hold out for the crash? Same stock cheaper price., or am I missing something?
  • Alexland
    Alexland Posts: 9,653 Forumite
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    If you hold out you don't get any returns (dividends and capital growth) in the meantime. While there might be a crash in the next few days it could take many years and still not crash below today's price. Even then you might not buy at the right time as you are holding out for an even lower number than never happens.

    If you ignore the currency movements as a result of the Brexit vote we are otherwise in a 'slow burn' bull market that has not delivered the traditional annual returns and is grinding them out over a longer period of time.

    Alex.
  • ColdIron
    ColdIron Posts: 9,042 Forumite
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    How long are you prepared to wait? 5 years? 10? How low would it have to go? Would you skip a 20% or 30% drop waiting for 40% that may only come after a 50% rise? UK, US, European, EM and Asian markets can move independently of each other, which one would trigger your buy?

    You would also miss out on the dividends which are one of the primary engines of growth. What do you do while you're waiting? Cash at ~ 1% and no capital growth?
  • Prism
    Prism Posts: 3,803 Forumite
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    henryandmay wrote: »
    But then why not hold out for the crash? Same stock cheaper price., or am I missing something?

    Because nobody has a clue when it will happen. This horizon could be tomorrow or 5 years away. In the meantime you miss out on the current growth and dividends. You also have no way of predicting low it will go. What happens if the crash is only 31% rather than 40% for example. If you sit waiting for the bottom you might blink and miss it.

    Three years ago the same people were predicting an imminent crash. Since then my investments are up over 50%. Good job i didn't listen then, and I'm certainly not listening now
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    henryandmay wrote: »
    All the sound bites I'm reading; there is a 40% correction on the horizon?

    Care to share them? Market normally collapse in price on the unexpected. Not the known.
  • dividendhero
    dividendhero Posts: 2,417 Forumite
    If anyone's really sure there'll be a 40% correction in the next month, they'd short the market - but as usual, people predict things either years ahead of when they happen..or more commonly after they've happened.
  • ValiantSon
    ValiantSon Posts: 2,586 Forumite
    henryandmay wrote: »
    But then why not hold out for the crash? Same stock cheaper price., or am I missing something?

    Yes, you are missing something: you don't know when the crash will occur.
  • TBC15
    TBC15 Posts: 1,452 Forumite
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    As you were typing your post the FTSE went up about 11/4 % today, food for thought.
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