Author Topic: Market Crash  (Read 1477 times)

Jimmyjon

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Market Crash
« on: May 01, 2017, 12:35:44 PM »
How likely is it that the U.S. economy crashes anytime soon?  I realize it's about impossible to predict but I'm curious what you guys think??  I also realize that the key to long term investing is to weather the storm, but I'm thinking about buying some individual stocks and am hesitant right now because everything is on such an upward trend.

How do you guys protect yourselves from market downturns?

RetireAbroadAt35

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Re: Market Crash
« Reply #1 on: May 01, 2017, 01:02:18 PM »
How likely is it that the U.S. economy crashes anytime soon?  I realize it's about impossible to predict but I'm curious what you guys think??
I think it's impossible to predict, so my savings/investing/FI plans take that into account.

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I also realize that the key to long term investing is to weather the storm, but I'm thinking about buying some individual stocks and am hesitant right now because everything is on such an upward trend.
If ya wanna gamble, go ahead and gamble.  Maybe you'll get lucky.

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How do you guys protect yourselves from market downturns?
Since I don't like to gamble, and I don't have any special insight or advantage over other traders, I protect myself by choosing a solid asset allocation, maintain an optimal savings rate, and staying the course.

All that said, downturns are inevitable.  It's been a while since the last one.  There haven't been any structural changes put in place to change the cycle.  The current leadership is not exactly confidence-inspiring on the competence front.  I wouldn't be surprised at all to see a downturn in the coming year.  Then again, there could be a prolonged flat period or even a prolongued Trumpian boost. 
« Last Edit: May 01, 2017, 01:04:21 PM by RetireAbroadAt35 »

Raenia

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Re: Market Crash
« Reply #2 on: May 01, 2017, 01:23:54 PM »
I'm responding to the current uncertainty by reading more and trying to educate myself about asset allocation so I can be sure I'm taking on the right amount of risk for where I am right now.  I have a feeling I may decide I need a larger emergency fund as a cushion.  In the meantime, though, I'm holding to my present allocation (10% bonds, 15% international, the rest VTSAX) and continuing to add to my investments regularly.  I'm not the type to play the odds and try to stock pick or time a downturn, so that's really all I can do.

Frankies Girl

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Re: Market Crash
« Reply #3 on: May 01, 2017, 01:37:03 PM »
No one, no matter what they say, has the ability to predict the future.

If you want to be smart about investing, you figure out your asset allocation and ride out any dips/crashes without trying to time the market. If you can't stand the idea of a short term (I consider anything under 5 years short term) crash/recovery cycle, then you should set your AA to be super conservative and lose out on growth in exchange for safety.

If you understand how the market actually works (short term volatility is not the same as risk/the losses aren't locked in unless you panic and sell at the bottom) then you'll be less likely to worry about market crashes or dips in general.

I'm in FIRE so a market downturn might conceivably be worse for me than someone still working and adding to their portfolio. But I'm not worried. I've already seen losses of over $50K in the last couple of years and fortunately become desensitized to losing large sums since I've also seen recovery. I know in any given year, I have a years worth of expenses for my emergency fund, an AA I can live with, and I'm not going to need 100% of my portfolio in any given year anyway... leave it alone and it will build back up eventually. Worse case scenario I get a part time job and leave the $ alone to recover for a year or two. 
« Last Edit: May 01, 2017, 01:38:37 PM by Frankies Girl »