Expecting the stock market to crash soon?
There seems to be lots of consensus that we're about due for a crash. Is it worth moving some funds out of the market and into something more stable for the short term? I've got most of my savings in Vanguard's Retirement 2050 fund, and while it's done well (~15% per year) the last couple of years, it's 90% stocks, and the risk level according to Vanguard is 4 out of 5. Is it worth moving to a less risky (2 or 3 out of 5) fund for the next year or two and then moving back into an aggressive 4 or 5 out of 5 fund after the market crashes a good bit? Risk is the market won't crash immediately and I'll lose out on some big (15%) gains during that time. But I should still have moderate (5%) gains during that time. Benefit is if the market does crash, I won't lose nearly as much, and I can put most of it back into stocks and ride the wave back up. Is this naive? I remember my portfolio taking a hit during the 2008 recession and it took a couple years to get back to even. Would be nice to avoid the dip. Seems extremely unlikely for the market to rise indefinitely without any correction.
I would add some safe bonds (Apple ones for example) in the mix to counterbalance the risk mix
Depends on your risk tolerance, bonds will hurt your returns since they return much much lower than stocks. It's impossible to know when a recession is coming but the economy is very healthy. Unemployment is record low, housing is great, companies have had best earnings so far, and inflation is uncontroll
Someone on here put it perfectly awhile ago. Time in market beats Timing the market. Always. (Unless you have orange crop insider trading materials for next year)
Doesn’t matter unless you’re about to retire. You still own the same number of shares, it’ll come back.
Actually it's better during a dip because if u reinvest divs you get more shares
This is where the adage, Buy on the Rumor, Sell on the News comes from. The market will correct at times.
REITs are a good way to diversify and they provide a solid passive income. Fundrise.com is what I'm currently using. Put some more into municipal bonds. You might get a little less return for a bit but will certainly protect from big losses in case of a downturn.
One of my colleagues went “all cash” last December in anticipation that the market was about to crash. Did it?
No, but let's consider $100k cash that could have otherwise been earning 10% per year: $100k today $110k - in one year $121k - in two years $133k - in three years $146k - in four years $102k - 30% crash in five years He'll be no further behind 5 years from now than if he'd kept it invested. If it crashes in the next 4 years, he'll come out ahead.
“Cash” in that case was “bought us bonds”
I sold most of my stock last Oct-Nov timeframe expecting a stock crash. Last week I swallowed my pride and rebought it. Biggest mistake of my life trying to time the market.
Hmm... not to make you second guess, but I think the mistake might have been rebuying. If you're going to try to time when you sell, I think you have to stick with it more than a year. This is probably why it's best not to try to time the market in the first place. But what if you'd moved from stocks to bonds and lowered your return from 15% to 5%? You'd be behind today compared to the market but ahead today compared to cash. It's a safer form of trying to time the market.
+1 on the bonds part. Not sure about correct time to rebuy stock. For all you know, this could go on another year!
Stop trying to time the market. If there is a downturn, double down on your positions while asset values are low and then recoup your losses and then some when the market bounces back
Double down with what money? That's the point of pulling some out early, no?
LOL at "double down". Were you around in 2009?
If you aren't savy enough to not use vanguard you aren't savy enough to try to time the market. If you don't need the money till 2050 anyway stay invested.
No one has a crystal ball. The consensus you mention is horseshit. The market goes up and down but up over the long haul. Stay invested.
This ^
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