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The next market recession will happen the same as the previous ones: some lucky people will predict it, most won't, and everyone will in hindsight declare how o

The next market recession will happen the same as the previous ones: some lucky people will predict it, most won't, and everyone will in hindsight declare how obvious the signs were. The best strategy is still to diversify your investments, keep enough emergency assets to ride the wave, and not worry about it.

jreynojustin 9y ago
Completely agree with this mindset. All the non-cash assets and investments I hold onto I intend to keep for over 20 years. Short term corrections in the market even as bad as 2008/9 don't concern me. As long as you're not speculating debt against market performance and have emergency cash on hand you can hold and buy the assets at a lower valuation.
- junkscience2017 9y ago
  but frankly even trying to time a bottom as a buying opportunity can be dangerous, because it can prevent you from making common sense investments at decent prices.
  - jreynojustin 9y ago
    I buy assets on a consistent scheduled basis and am not waiting for some big crash to happen. But if I do notice the market is pretty bearish then I may decide to purchase more beyond that regular investment schedule.
- e40 9y ago
  Yep. This is a problem for people like my parents, who are 80+ and living off investments. A big downward correction is very scary for people in that situation, but not at all worrying for me.
  - jreynojustin 9y ago
    Yeah agreed I know some folks in that situation back in 08/09. I'm still in my 20's so not sure how I'm going to deal with investing as I get into my retirement years. It can be scary to have over half your retirement wipe out with no time for correction. Probably a more cash heavy asset allocation would be the solution. Not sure though.
    - prewett 9y ago
      I think dividend income is a typical solution. It doesn't matter what the stock price does if the company continues paying dividends. If the company is strong and pays a dividend, the stock can be looked at like a low-yield bond. Except that dividend-companies tend to increase the dividend every year when possible, so it's also a bond where the yield increases. Coca-Cola has paid about 3% for years and years.
    - mathgeek 9y ago
      That's not something worth worrying about in your 20's. Just set up a recurring investment in index funds or similar and forget it exists until you're at least in your 50's or later. Random catastrophes do happen to younger folks, of course, but those are something to deal with if and when they happen.
  - 31reasons 9y ago
    Shouldn't their investments already been moved to Bonds/Money markets? At 85, if you have to worry about stock market, you are doing it wrong.
    - hkmurakami 9y ago
      Depends on whether they want to pass on appreciated equity at a step up basis to their offspring.
    - e40 9y ago
      That's a good point. My mother is 80 (in a few months) and it's all about life expectancy. Her mother lived to 95. She is in good health. Should she assume the best or worst case? The choice she makes will greatly effect her lifestyle. Hard problem.
junkscience2017 9y ago
exactly! you should really only be worried about a need to time some action if you are very close to retirement. otherwise just watch and wait, markets tend to rise and they will rise again eventually.
dominotw 9y ago
>diversify your investments Diversify into what though? Once market crashes, it takes everything down with it.
- SteveCoast 9y ago
  Not cash.
  - Raz2 9y ago
    Could you explain why? In 08/09 everything became cheaper -> cash became more expensive. Isn't it?
    - mathgeek 9y ago
      The benefits of having assets in cash during a crash only outweigh the downsides if you know when the crash is going to happen. Since you don't know that timing, you're statistically better off investing anything beyond your emergency funds.
- ppeetteerr 9y ago
  Healthcare index funds weathered the last recession very well (e.g. https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=5485&ps_disable_redirect=true#tab= https://personal.vanguard.com/us/funds/snapshot?FundIntExt=I... )
- the_gastropod 9y ago
  This is not necessarily true. To avoid volatility, invest across asset classes with low correlation [1]. E.g., bonds will probably not tank when U.S. equities do. [1] https://www.investopedia.com/terms/c/coefficientofvariation.asp https://www.investopedia.com/terms/c/coefficientofvariation....
  - qznc 9y ago
    Bitcoin does not correlate with anything. Should people diversify into it?

jreynojustin 9y ago

Completely agree with this mindset. All the non-cash assets and investments I hold onto I intend to keep for over 20 years. Short term corrections in the market even as bad as 2008/9 don't concern me. As long as you're not speculating debt against market performance and have emergency cash on hand you can hold and buy the assets at a lower valuation.

junkscience2017 9y ago
but frankly even trying to time a bottom as a buying opportunity can be dangerous, because it can prevent you from making common sense investments at decent prices.
- jreynojustin 9y ago
  I buy assets on a consistent scheduled basis and am not waiting for some big crash to happen. But if I do notice the market is pretty bearish then I may decide to purchase more beyond that regular investment schedule.
e40 9y ago
Yep. This is a problem for people like my parents, who are 80+ and living off investments. A big downward correction is very scary for people in that situation, but not at all worrying for me.
- jreynojustin 9y ago
  Yeah agreed I know some folks in that situation back in 08/09. I'm still in my 20's so not sure how I'm going to deal with investing as I get into my retirement years. It can be scary to have over half your retirement wipe out with no time for correction. Probably a more cash heavy asset allocation would be the solution. Not sure though.
  - prewett 9y ago
    I think dividend income is a typical solution. It doesn't matter what the stock price does if the company continues paying dividends. If the company is strong and pays a dividend, the stock can be looked at like a low-yield bond. Except that dividend-companies tend to increase the dividend every year when possible, so it's also a bond where the yield increases. Coca-Cola has paid about 3% for years and years.
  - mathgeek 9y ago
    That's not something worth worrying about in your 20's. Just set up a recurring investment in index funds or similar and forget it exists until you're at least in your 50's or later. Random catastrophes do happen to younger folks, of course, but those are something to deal with if and when they happen.
- 31reasons 9y ago
  Shouldn't their investments already been moved to Bonds/Money markets? At 85, if you have to worry about stock market, you are doing it wrong.
  - hkmurakami 9y ago
    Depends on whether they want to pass on appreciated equity at a step up basis to their offspring.
  - e40 9y ago
    That's a good point. My mother is 80 (in a few months) and it's all about life expectancy. Her mother lived to 95. She is in good health. Should she assume the best or worst case? The choice she makes will greatly effect her lifestyle. Hard problem.

junkscience2017 9y ago

exactly! you should really only be worried about a need to time some action if you are very close to retirement. otherwise just watch and wait, markets tend to rise and they will rise again eventually.

dominotw 9y ago

>diversify your investments Diversify into what though? Once market crashes, it takes everything down with it.

SteveCoast 9y ago
Not cash.
- Raz2 9y ago
  Could you explain why? In 08/09 everything became cheaper -> cash became more expensive. Isn't it?
  - mathgeek 9y ago
    The benefits of having assets in cash during a crash only outweigh the downsides if you know when the crash is going to happen. Since you don't know that timing, you're statistically better off investing anything beyond your emergency funds.
ppeetteerr 9y ago
Healthcare index funds weathered the last recession very well (e.g. https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=5485&ps_disable_redirect=true#tab= https://personal.vanguard.com/us/funds/snapshot?FundIntExt=I... )
the_gastropod 9y ago
This is not necessarily true. To avoid volatility, invest across asset classes with low correlation [1]. E.g., bonds will probably not tank when U.S. equities do. [1] https://www.investopedia.com/terms/c/coefficientofvariation.asp https://www.investopedia.com/terms/c/coefficientofvariation....
- qznc 9y ago
  Bitcoin does not correlate with anything. Should people diversify into it?