What to do if recession hits

[limster]

With US election coming, market likely go zigzag up and down for some time. For those who are waiting very frustrating. Those who HODL also very sickening to see such big swings. Likelihood of cut loss in one of the fake correction is very high.

if you think market likely to go zigzag up and down, you can easily make a lot of money if your prediction turns out to be correct

but prediction is free (analysts do it all the time on CNBC), question is whether you are willing to put down the money to make money from your prediction.

 

[BBCWatcher]

if you think market likely to go zigzag up and down, you can easily make a lot of money if your prediction turns out to be correct

Via VIX-related plays. Practically all forms of gambling are available on Wall Street.

I don't recommend gambling.

 

[peipei1]

I am thinking V shape is the norm going forward, sold tiny Iwda hoping to get it cheaper last friday and to accumulate the 10 minimium commission. Today it went straight up ignored the bad news and dow jones drop!

It does look this way, if 60% of the market actively trade against each other, the 40% rest just buys the dips regularly, you cannot get a lengthy depressed market. Economic cycles will of course slow down until the next break through, if half of the market continues the buying, market will recover faster than ever before!

What are the cons of passive index investors overcrowding? We can lose efficiency, markets stay overpriced, Apple and Amazon will continue get access to capital, making it harder for new start-ups to get a share, Blackrock Vanguard will holds majority shares. But investors buy quallity companies, and are less likely to get burn buying unicorns or being sold toxic products, so a big crash less probable! 20% downside is still stomachable between every 5, 10 years of economic recession!

I saw this feed last weekend, US markets have gone up strongly in the last 10 years, but a lot of americans are staying on the sideline, those invested do it using passive long term strategy. There is still a big market for us to enjoy capital growth! Haha i find i am flipping between bearish and bullish too easily, reading all type of news feeds and comments!
https://www.nytimes.com/2019/03/09/business/bull-market-anniversary.html?partner=rss&emc=rss

 

[Shiny Things]

Your second point, I have a counter point to it: So you are saying people will capitulate and end up buying at the top, but if people stay invested and you have a long drawn bear market, the same people could capitulate and sell at the bottom.

That's exactly what I'm saying, yes. That's what most retail investors do.

We have had a straight up going market aberration for last 10 years, so people are trained to BTFD and think it is a sure shot win.

I get you. The thing is, BBCW is right: we haven't had a "straight up going market aberration" for ten years. In the US market, there's been two 20% drawdowns between the ding-dong low in March 2009 and today; one of them was literally two months ago!

And even just eyeballing it, I don't think the stats support your argument that retail investors are just blindly buying. The ICI investment flow statistics for the last month say that there was pretty massive selling of equity ETFs and mutual funds in January... and that was a couple of thousand Dow points lower from where we are.

The upshot is that the average retail investor is very bad at market timing. They tend to buy high and sell low. They tend to chase winners. They tend to follow hot sectors and buy things after they've gone up. And the fund flows data bears that out. That's why the average retail investor underperforms the market so dramatically, and that's why I don't think it's worth it for most people (myself included) to have a warchest—because you won't know when the "right" time to invest it is.

 

[MajinBuui]

Recession has hit liao... in turkey!
So do what you think is right with your warchest on turkey businesses?
https://www.bbc.com/news/business-47522338

concensus is that time in the market is more important than timing the market
and missing 10 best days in the market going to cost you alot.
But all these are referring to if you are buying the index summing up the market~!
Lots of articles online just google: time in the market vs timing the market / missing 10 best days in the market.

https://www.ifa.com/12steps/step4/missing_the_best_and_worst_days/

https://am.jpmorgan.com/us/en/asset...ted-stay-invested-navigating-volatile-markets

But on the other hand 1 famous investor called warren buffett currently has a warchest!
But he playing hard mode(100+ billion cash to deploy) in game la so his tactics and strategy different from us playing normal mode and easy mode , we way lesser money to deploy. And he is buying individual stocks / businesses and not the whole market.

So do what you think is right for your own money after reading all other hwz members' input!

 

[peipei1]

If JPMorgan is right, can expect some more dips. Since selling some iwda last week, it rips up higher! Missed the boat, where is the fear, who is pushing up the broad indices?

 

[Doc Madatay]

I don’t keep a war-chest. Two reasons:

1) I wouldn’t know when to invest it. Like people have said upthread, how do you know when the bottom is?
2) While it’s not invested, you’re missing out on gains from the market going up, and you’ll probably end up capitulating and buying when things have already gone up instead of buying before things go up.

You’re better off just regularly dollar-cost-averaging in, and staying invested in a mix of stocks and bonds.

It is true because I have war chest for 15 years.
When crash come didn’t buy much
Perhaps should have invested over time

 

[Maeda_Toshiie]

It is true because I have war chest for 15 years.
When crash come didn’t buy much
Perhaps should have invested over time

You must have a plan to decide on how much to put in when the market reaches X% correction, and execute it when the time comes. Otherwise, you will forever be waiting.




Investing requires mechanical execution. Human emotions is what that reduces profits.

 

[Mecisteus]

If JPMorgan is right, can expect some more dips. Since selling some iwda last week, it rips up higher! Missed the boat, where is the fear, who is pushing up the broad indices?

In the short term, there will always be 2 outcomes. Either up or down.

So 50% of analysts are likely to be right or wrong.

This is just a short term bet.

 

[manlymanly]

It is true because I have war chest for 15 years.
When crash come didn’t buy much
Perhaps should have invested over time

mine too! I grow my warchest since 2008... now my warchest is bigger than my 2008 portfolio

 

[limster]

mine too! I grow my warchest since 2008... now my warchest is bigger than my 2008 portfolio

It is true because I have war chest for 15 years.
When crash come didn’t buy much
Perhaps should have invested over time

after the GFC, my warchest didn't grow because I also bought my current home and I used my excess funds to pay back the housing loan. didn't invest much because STI was above 3,000.

but paid back the housing loan a few years back, and slowly building up the warchest again after spending most of it in 2016...

 

[havealaughclown]

Bro, its creeping and its already here! Watch out! Better be smart you guys!

 

[touchring1]

It is true because I have war chest for 15 years.
When crash come didn’t buy much
Perhaps should have invested over time

Wow, 15 years a long time, that's like 2004. 2004 that time can buy freehold 4 bedrooms terrace house for $800k.

 

[peipei1]

Sp500 now reaching >2800, breakout soon?? Where is the dip.
Some recession period, stock market went upthrust too, so don't count out the last oct period dip is the unofficial bear market, short term still a technical bear drop.

 

[mummy1234]

I am not very good with stocks so I invest with insurance and endowment plans where they do DCA. Not bad returns. I don't keep large amts in cash either, mostly will use it to pay off my 2 properties to save on interest. If recession comes, and I have excess of 6 mths emergency funds, I will buy blue chips like bank stocks.

 

[iantao99]

In event of recession / expected prolonged downturn, what type of investment would you suggest to park funds to wait out for equity bottom?
What has an inverse correlation with equity?
Bonds, Gold, Crude Oil? Or SSB?

 

[Doc Madatay]

Wow, 15 years a long time, that's like 2004. 2004 that time can buy freehold 4 bedrooms terrace house for $800k.

I did I got 1m and now 2.7m and loan left with 3k
But I didn’t not touch cash when I buy
When I bought as I neee space and didn’t buy due to “investment “

 

[touchring1]

I did I got 1m and now 2.7m and loan left with 3k
But I didn’t not touch cash when I buy
When I bought as I neee space and didn’t buy due to “investment “

If I were you, I will sell it, buy a smaller apartment, take the money and buy a apartment overseas when the timing is right. A house in Singapore is a liability for the future generation, not an asset.

 

[pmstudent]

Sp500 now reaching >2800, breakout soon?? Where is the dip.
Some recession period, stock market went upthrust too, so don't count out the last oct period dip is the unofficial bear market, short term still a technical bear drop.

Pei Pei, why don't you just follow Shinny Things / BBCWatcher method ?
Just buy Global Index Fund, DCA and stay the course for long term.

It is empirically proven and it is so much easier.
You wasted so much of your time in this forum, but still not learning anything.

 

[Doc Madatay]

If I were you, I will sell it, buy a smaller apartment, take the money and buy a apartment overseas when the timing is right. A house in Singapore is a liability for the future generation, not an asset.

Thinking about it too but when I look around I was ended up in Singapore as the safest bet
Which country do you suggest?
I actually prefer CHina is it’s the world center for the next century
I don’t like to go to a country where I will be the minority