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  • FIRST POST
    • henryandmay
    • By henryandmay 9th May 18, 4:27 PM
    • 15Posts
    • 2Thanks
    henryandmay
    Bear market
    • #1
    • 9th May 18, 4:27 PM
    Bear market 9th May 18 at 4:27 PM
    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
Page 1
    • Aegis
    • By Aegis 9th May 18, 4:30 PM
    • 4,895 Posts
    • 3,108 Thanks
    Aegis
    • #2
    • 9th May 18, 4:30 PM
    • #2
    • 9th May 18, 4:30 PM
    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 an Independent Financial Adviser
    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
    • By El Torro 9th May 18, 4:32 PM
    • 286 Posts
    • 267 Thanks
    El Torro
    • #3
    • 9th May 18, 4:32 PM
    • #3
    • 9th May 18, 4:32 PM
    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
    • By henryandmay 9th May 18, 4:34 PM
    • 15 Posts
    • 2 Thanks
    henryandmay
    • #4
    • 9th May 18, 4:34 PM
    • #4
    • 9th May 18, 4:34 PM
    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.
    Originally posted by El Torro
    But then why not hold out for the crash? Same stock cheaper price., or am I missing something?
    • Alexland
    • By Alexland 9th May 18, 4:47 PM
    • 2,388 Posts
    • 1,790 Thanks
    Alexland
    • #5
    • 9th May 18, 4:47 PM
    • #5
    • 9th May 18, 4:47 PM
    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
    • By ColdIron 9th May 18, 4:52 PM
    • 4,152 Posts
    • 5,238 Thanks
    ColdIron
    • #6
    • 9th May 18, 4:52 PM
    • #6
    • 9th May 18, 4:52 PM
    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
    • By Prism 9th May 18, 4:52 PM
    • 335 Posts
    • 253 Thanks
    Prism
    • #7
    • 9th May 18, 4:52 PM
    • #7
    • 9th May 18, 4:52 PM
    But then why not hold out for the crash? Same stock cheaper price., or am I missing something?
    Originally posted by henryandmay
    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
    • By Thrugelmir 9th May 18, 4:55 PM
    • 58,475 Posts
    • 51,848 Thanks
    Thrugelmir
    • #8
    • 9th May 18, 4:55 PM
    • #8
    • 9th May 18, 4:55 PM
    All the sound bites I'm reading; there is a 40% correction on the horizon?
    Originally posted by henryandmay
    Care to share them? Market normally collapse in price on the unexpected. Not the known.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • dividendhero
    • By dividendhero 9th May 18, 5:17 PM
    • 200 Posts
    • 180 Thanks
    dividendhero
    • #9
    • 9th May 18, 5:17 PM
    • #9
    • 9th May 18, 5:17 PM
    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
    • By ValiantSon 9th May 18, 5:20 PM
    • 1,867 Posts
    • 1,725 Thanks
    ValiantSon
    But then why not hold out for the crash? Same stock cheaper price., or am I missing something?
    Originally posted by henryandmay
    Yes, you are missing something: you don't know when the crash will occur.
    • TBC15
    • By TBC15 9th May 18, 6:02 PM
    • 465 Posts
    • 240 Thanks
    TBC15
    As you were typing your post the FTSE went up about 11/4 % today, food for thought.
    • BLB53
    • By BLB53 9th May 18, 6:07 PM
    • 1,266 Posts
    • 1,049 Thanks
    BLB53
    All the sound bites I'm reading; there is a 40% correction on the horizon?
    If you take much notice of the scribblers then probably best to avoid investing.
    If you choose index funds you can never outperform the market.
    If you choose managed funds there's a high probability you will underperform index funds.
    • rathernot
    • By rathernot 9th May 18, 6:08 PM
    • 255 Posts
    • 72 Thanks
    rathernot
    I heard it was going to be 41% so I'm waiting for that.
    • dunstonh
    • By dunstonh 9th May 18, 6:16 PM
    • 92,620 Posts
    • 59,937 Thanks
    dunstonh
    All the sound bites I'm reading; there is a 40% correction on the horizon?
    in the last 35 years, there have only been two 40% drops. They are not common.

    There is always a 40% crash (not correction as that is 10-19%) on the horizon. They are always coming. You just don't know when. It could be tomorrow, next week, month, year or decade or even two decades.

    What is more likely to be coming in the short term is a more typical crash. The type you see every 3-5 years. A 20-25% level. Again, they are always coming. You just don't know when.

    Sites and people that call crashes tend to do so every year. Sooner or later they will be right. Just like a stopped clock is correct twice a day.

    why would someone invest today when tomorrow the same investment might be a fraction of today price?
    Because you don't know what is going to happen tomorrow and growth periods outnumber negative.

    But then why not hold out for the crash? Same stock cheaper price., or am I missing something?
    When is that 20% crash coming?
    Will it be after a 5% gain? Will it be after a 10% gain? Will it be after a 40% gain?

    How will you know when to reinvest? Crashes occur over a period. Not one moment in time. That "crash" could be over a week or it could be over 6 months. The early part of the millennium saw the decline over 3 years. So, when is the high point and when will you know when the low point is?

    You don't know any of that. You just know that there are always gains coming and losses coming. You know an economic cycle is around 10 years and you will get good years, bad years and nothing years and that you average them out. Beyond that, you know nothing.
    Last edited by dunstonh; 10-05-2018 at 5:43 PM. Reason: spelling
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • AnotherJoe
    • By AnotherJoe 9th May 18, 6:34 PM
    • 9,413 Posts
    • 10,404 Thanks
    AnotherJoe
    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
    Originally posted by henryandmay
    And are the people issuing those sound bites multi Mega millionaires on account of their abilty to predict the stock market?

    Why aren't they lounging on their own personal Dr No style private island being served mint juleps rather than earning a a crust writing ?
    • ChesterDog
    • By ChesterDog 9th May 18, 7:13 PM
    • 878 Posts
    • 1,643 Thanks
    ChesterDog
    Markets very, very often pay no attention whatsoever to hype, scaremongering or even to thoroughly researched, logical reasoning.

    Quite often, they seem to do the opposite of what they "should".

    In the short term they are unpredictable. In the long term, they rise.
    I am one of the Dogs of the Index.
    • Filo25
    • By Filo25 9th May 18, 11:14 PM
    • 1,466 Posts
    • 2,127 Thanks
    Filo25
    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
    Originally posted by Prism
    Indeed, nobody is saying anything much new now compared to the comments in the press years ago that equities were primed for a crash, if you sold up every time you heard that you would never invest in equities.

    There will be a significant crash at some stage, nobody has a clue when it will be, how much the markets will have gone up before that, how deep it will be, how long it will last and how long it will take to recover.

    Apart from that I suppose it's all pretty predictable
    • dividendhero
    • By dividendhero 10th May 18, 6:45 AM
    • 200 Posts
    • 180 Thanks
    dividendhero
    And are the people issuing those sound bites multi Mega millionaires on account of their abilty to predict the stock market?

    Why aren't they lounging on their own personal Dr No style private island being served mint juleps rather than earning a a crust writing ?
    Originally posted by AnotherJoe
    In some cases they are...but not because they've any special insight.

    Just finished reading "Cityboy", it's written by a former city analyst - he was paid megabucks for his wisdom. But he says it was all tosh, but if major institutions were happy to pay massive wages and bonuses to write such rubbish he was happy to oblige. Also read of a hedge fund manager who advised his own friends and family to simply invest in trackers...
    • talexuser
    • By talexuser 10th May 18, 2:58 PM
    • 2,398 Posts
    • 1,896 Thanks
    talexuser
    The difference from the past is this bull run has been financed by historically unknown (in the modern era) interest rates and QE, which we should have wound up a long time ago, but coming off the drug has been difficult since if there is a crash there was no worthwhile interest rate reductions to counteract it.
    • jimjames
    • By jimjames 10th May 18, 5:34 PM
    • 12,584 Posts
    • 11,230 Thanks
    jimjames
    I think the comment often said is something like .. commentators have predicted 40 of the last 3 crashes.
    Remember the saying: if it looks too good to be true it almost certainly is.
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