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I hold 50% of my assets in shares and 50% in money. I cannot decide if I should hope for the stock market to go up or down. What do the wise people of HN think

by TekMol 9y ago

I hold 50% of my assets in shares and 50% in money. I cannot decide if I should hope for the stock market to go up or down. What do the wise people of HN think?

maaaats 9y ago
Up. If you hope for a crash so that you can invest your other money in a dip, you are foolish to try to time the market and would probably be better of to invest it earlier and just spend more time in the market.
- TekMol 9y ago
  Would you argue the same way if I was holding 99.9% of my assets in money and 0.1% in shares? Would you still say I should hope for the stock market to go up? Or is it related to the percentages? If so, where is the threshold?
  - maaaats 9y ago
    My answer was under the assumption that you were interested in changing your allocation.
tyingq 9y ago
Guessing the bottom is hard. Spreading risk, like you have done, is a better idea. Maybe be more granular than "money market" and "stocks" though. There's bonds, annuities, real estate, foreign derivitives, and other vehicles too.
- TekMol 9y ago
  You seem to imply that I am looking for investment advice or that my approach of asset allocation might change. Neither is the case. I will simply continue to hold 50% in shares and 50% in money. My question is what is better for me. If stocks go up or if stocks go down.
  - tyingq 9y ago
    Ok. Great stock earnings far exceed great money market years. And vice versa for losses...you're geared for the good times. But you don't want advice, so I'm a little confused at the redirect. If this was 2007, you would be screwed for the short term. Like 5-10 years screwed if you are retirement aged. If not, you're brilliant. I don't get why the advice to not go 50% stock, 50% money market because it's too coarse is bad though. It's like betting half/half on black/red in roulette, depending on the specific timeframe. They usually have opposite (or close to that) outcomes, except that the stock losses/gains are far more wild than the money market losses/gains. You're hedging a wild swing with a mild swing.
  - corin_ 9y ago
    If you don’t know what the effect on your 50/50 decision would be depending on how the stock market performs, why are you so set on that decision as to not want advice if it were offered? If you don’t know the effects, how do you know it wouldn’t be better to be 55/45, or 45/55? Tyinguq gave you a good answer already, but to add to what s/he said: anything kept in cash will almost certainly earn less than inflation, meaning that with cash you’re losing, even if the numbers appear to go slightly up. There are plenty of times when it’s worth taking this hit for the benefits of cash. Maybe you want the cash as an energy fund to cover ‘x’ months of living costs should you lose a job, maybe you’re planning a big purchase in the near future, maybe you think the stock market is about to crash and want to invest when it’s at or near its next major low point, maybe you’re about to retire and want some of your wealth extremely low risk, I’m sure there’s plenty of other reasons. (If you’re trying to time the market and buy more when it’s cheap, you might do much better than investing it now, or you might do much worse, but that’s a whole new topic). Unless a specific reason, in the context of however big or small your wealth is, means that you specifically need exactly 50% in cash, you might consider investing more in something that can give better returns than cash. If you’re trying to hedge against a stock market crash but think historical patterns in the finance world will continue, maybe bonds are a good option. If you’re worried that there’ll be a wider downtown then you might consider precious metals or even cryptocurrency. And maybe cash should be a part of the hedge, but maybe not all. Disclaimer: I’m an amateur not a professional adviser, and I’m not advising you to do anything other than to consider why you think 50/50 is the best choice and whether it actually is or not.
- taneq 9y ago
  If you can afford to ride it out, and you're not worried about the companies actually going bankrupt, you don't have to guess the bottom. You just have to buy low and then hope you don't have to sell before it's high.
sumedh 9y ago
If you don't want the money right now then you want a stock market to go down so that you can buy stocks at a discount.
- walshemj 9y ago
  Exactly I have just toped up a couple of my long term holdings in my ISA to take advantage of Pound Cost Averaging.
andrewmcwatters 9y ago
You're either naïve or have little to no assets. At particular cash volume thresholds, it doesn't make sense to hold that much in percentage.
- TekMol 9y ago
  Hard to say as I don't know your definition of 'little to no'.

by TekMol 9y ago

I hold 50% of my assets in shares and 50% in money. I cannot decide if I should hope for the stock market to go up or down. What do the wise people of HN think?

maaaats 9y ago

Up. If you hope for a crash so that you can invest your other money in a dip, you are foolish to try to time the market and would probably be better of to invest it earlier and just spend more time in the market.

TekMol 9y ago
Would you argue the same way if I was holding 99.9% of my assets in money and 0.1% in shares? Would you still say I should hope for the stock market to go up? Or is it related to the percentages? If so, where is the threshold?
- maaaats 9y ago
  My answer was under the assumption that you were interested in changing your allocation.

tyingq 9y ago

Guessing the bottom is hard. Spreading risk, like you have done, is a better idea. Maybe be more granular than "money market" and "stocks" though. There's bonds, annuities, real estate, foreign derivitives, and other vehicles too.

TekMol 9y ago
You seem to imply that I am looking for investment advice or that my approach of asset allocation might change. Neither is the case. I will simply continue to hold 50% in shares and 50% in money. My question is what is better for me. If stocks go up or if stocks go down.
- tyingq 9y ago
  Ok. Great stock earnings far exceed great money market years. And vice versa for losses...you're geared for the good times. But you don't want advice, so I'm a little confused at the redirect. If this was 2007, you would be screwed for the short term. Like 5-10 years screwed if you are retirement aged. If not, you're brilliant. I don't get why the advice to not go 50% stock, 50% money market because it's too coarse is bad though. It's like betting half/half on black/red in roulette, depending on the specific timeframe. They usually have opposite (or close to that) outcomes, except that the stock losses/gains are far more wild than the money market losses/gains. You're hedging a wild swing with a mild swing.
- corin_ 9y ago
  If you don’t know what the effect on your 50/50 decision would be depending on how the stock market performs, why are you so set on that decision as to not want advice if it were offered? If you don’t know the effects, how do you know it wouldn’t be better to be 55/45, or 45/55? Tyinguq gave you a good answer already, but to add to what s/he said: anything kept in cash will almost certainly earn less than inflation, meaning that with cash you’re losing, even if the numbers appear to go slightly up. There are plenty of times when it’s worth taking this hit for the benefits of cash. Maybe you want the cash as an energy fund to cover ‘x’ months of living costs should you lose a job, maybe you’re planning a big purchase in the near future, maybe you think the stock market is about to crash and want to invest when it’s at or near its next major low point, maybe you’re about to retire and want some of your wealth extremely low risk, I’m sure there’s plenty of other reasons. (If you’re trying to time the market and buy more when it’s cheap, you might do much better than investing it now, or you might do much worse, but that’s a whole new topic). Unless a specific reason, in the context of however big or small your wealth is, means that you specifically need exactly 50% in cash, you might consider investing more in something that can give better returns than cash. If you’re trying to hedge against a stock market crash but think historical patterns in the finance world will continue, maybe bonds are a good option. If you’re worried that there’ll be a wider downtown then you might consider precious metals or even cryptocurrency. And maybe cash should be a part of the hedge, but maybe not all. Disclaimer: I’m an amateur not a professional adviser, and I’m not advising you to do anything other than to consider why you think 50/50 is the best choice and whether it actually is or not.
taneq 9y ago
If you can afford to ride it out, and you're not worried about the companies actually going bankrupt, you don't have to guess the bottom. You just have to buy low and then hope you don't have to sell before it's high.

sumedh 9y ago

If you don't want the money right now then you want a stock market to go down so that you can buy stocks at a discount.

walshemj 9y ago
Exactly I have just toped up a couple of my long term holdings in my ISA to take advantage of Pound Cost Averaging.

andrewmcwatters 9y ago

You're either naïve or have little to no assets. At particular cash volume thresholds, it doesn't make sense to hold that much in percentage.

TekMol 9y ago
Hard to say as I don't know your definition of 'little to no'.