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> ...will drive the market down So what? Let the weak long positions panic and sell at the bottom. Everyone else gets a few years of discount prices to buy.

by human20190310 7y ago

> ...will drive the market down So what? Let the weak long positions panic and sell at the bottom. Everyone else gets a few years of discount prices to buy. The hardest hit will be those who are leveraged and arguably deserve to get hosed for taking that much risk. If you don’t have to meet a margin call, you can ride out a crisis; if you’ve got cash in reserve, you can profit from it.

rocqua 7y ago
Presuming you are saving for later. Besides a margin call, you might want to exit for, buying a house, going into retirement, covering a period between jobs, or to deal with a medical emergency. Doing that during a crisis hurts. This risk diminishes the value of investments as a safety cushion.
- human20190310 7y ago
  Index funds aren’t a safety cushion. Vanguard rates it’s own S&P 500 index fund as a 4 out of 5 for risk. [0] [0] https://advisors.vanguard.com/iippdf/pdfs/FS540.pdf https://advisors.vanguard.com/iippdf/pdfs/FS540.pdf
- throw0101a 7y ago
  > Besides a margin call, you might want to exit for, buying a house, going into retirement, covering a period between jobs, or to deal with a medical emergency. In all of those scenarios you should not be in stocks/equities in the first place. If there is a possibility of needing cash with-in the next 5 years, that money should be in either bonds or term deposits. One's downpayment, first/next few retirement years' income, and emergency fund(s) should not be in equities.
gridlockd 7y ago
After 1989 it took the Nikkei more than a decade to finds its bottom (and then another bottom in 2009) and it hasn't recovered since. How many years of "discount buying" are you planning in?
lovecg 7y ago
Systemic risk. If a ton of smaller companies see their shares plummet all at the same time, there might be repercussions for the economy as a whole. It’s true that individual investors might be able to ride it out (and the same was true in 2008).

rocqua 7y ago

Presuming you are saving for later. Besides a margin call, you might want to exit for, buying a house, going into retirement, covering a period between jobs, or to deal with a medical emergency. Doing that during a crisis hurts. This risk diminishes the value of investments as a safety cushion.

human20190310 7y ago
Index funds aren’t a safety cushion. Vanguard rates it’s own S&P 500 index fund as a 4 out of 5 for risk. [0] [0] https://advisors.vanguard.com/iippdf/pdfs/FS540.pdf https://advisors.vanguard.com/iippdf/pdfs/FS540.pdf
throw0101a 7y ago
> Besides a margin call, you might want to exit for, buying a house, going into retirement, covering a period between jobs, or to deal with a medical emergency. In all of those scenarios you should not be in stocks/equities in the first place. If there is a possibility of needing cash with-in the next 5 years, that money should be in either bonds or term deposits. One's downpayment, first/next few retirement years' income, and emergency fund(s) should not be in equities.

gridlockd 7y ago

After 1989 it took the Nikkei more than a decade to finds its bottom (and then another bottom in 2009) and it hasn't recovered since. How many years of "discount buying" are you planning in?

lovecg 7y ago

Systemic risk. If a ton of smaller companies see their shares plummet all at the same time, there might be repercussions for the economy as a whole. It’s true that individual investors might be able to ride it out (and the same was true in 2008).