5 ms·

Fyi, people have been predicting the crash for about 12 years now. I'm not saying their won't be another crash. It's just that anyone claiming they know when it

Fyi, people have been predicting the crash for about 12 years now. I'm not saying their won't be another crash. It's just that anyone claiming they know when it will be is either lying or a 1-in-a-million genius who could make a fortune working for a hedge fund but for some reason is giving the information away for free on HN... I have a share portfolio that's 70/30 stocks/bonds because that suits my age and risk appetite. If it crashes I can live with losses, if the market goes up I can live with the missed opportunity. I have some "gambling" money in a separate account that I buy risky stuff with. If I lose it all, cest la vie. That's all anyone can do really. (Edit, I should have been clear: my portfolio is in index funds, not individual stocks. The "gambling" money is in individual stocks ONLY because its gambling money not a real investment. Index funds are where 95% of us should be with 95% of our case IMHO.)

ethanpil 6y ago
It's not about knowing when because, as you say, it's difficult to predict... Still preparing or defending your assets for the possibility would be wise.
- LatteLazy 6y ago
  Preparing for a crash is easy if you don't care when it is: sell everything and sit on the cash (or better still gold). Of course, if you do that you'll lose out on more from missed opportunities than you save from missed crashes. Soneone who did that in 2008 would be perfectly safe right now. They'd have missed out on quadrupling their money. But they'd be perfectly prepared. So you can do as suits you. But the best strategy is to have a mix of bonds and stock. Never more than 70% bonds (as risk goes UP past roughly that point). The more you are able to deal with big movements (up or down), the more stock. This is what Warren Buffet and others have endorsed for normal every day humans like us. The mathematics backs it up.
- mmargerum 6y ago
  It’s only difficult to predict because of the fed pumping money.
  - stouset 6y ago
    “It’s only difficult to predict because of all these unpredictable events.”
- tootie 6y ago
  Meh. I've let my investments ride through multiple crashes. I know I can't call a top or a bottom. The value always recovers.
  - Triv888 6y ago
    If you wont need the money any time soon (5+ years from now) then that is probably an ok strategy.
    - jensneuse 6y ago
      It's the strategy. If you need the cash sub 5 years you should probably not invest.
blowfish721 6y ago
How does it work in the US with index funds? If the index fund contains stocks with dividends, do you get some of that money? Where I live I haven’t seen any broker that doesn’t keep these for themselves which is kind of a bummer to be honest.
- LatteLazy 6y ago
  For the US I'm not sure I'm afraid. Here in the UK, we get the money if we want it. You can select either to have the dividend re-invested (called growth or accumulating) or to receive it normally quarterly (called distributing)... I'm surprised you can't get a re-investing one.
- pedrosorio 6y ago
  Can you give an example of a broker that keeps the dividends for themselves? I know outside of the US there is a concept of distributing vs accumulating funds (and in both cases you get the dividends, just in a different form): https://www.bogleheads.org/wiki/Comparison_of_accumulating_ETFs_and_distributing_ETFs https://www.bogleheads.org/wiki/Comparison_of_accumulating_E...
  - blowfish721 6y ago
    You probably right, I could have been so hung up on cash payouts that I missed that. As for example I haven’t seen any broker in Sweden that does cash payouts but like you said the money is probably going back to the investors just not as cash.
    - rebuilder 6y ago
      For tax reasons, reinvesting the dividends is preferable as (here at least) that doesn't trigger a tax event like a dividend paid outside the fund would.
      - deanmoriarty 6y ago
        I wish that was the case in the US!
stouset 6y ago
Further, the best thing you can to protect your assets from a crash is: have a regular investment plan, follow it, and stop looking at the market. If you’re ten or more years from retirement, the overwhelming likelihood is that a crash simply does not matter. A drop in prices only matters when you’re buying (good) or selling (bad). Everything in between is noise that only affects you on paper. Selling due to a crash is the ideal way to lock in losses. Just contribute to your retirement accounts as normal, regardless of what the market is doing. If anything, feel happy you’re getting a discount on your regular purchases. If you’re nearing retirement, the answer is that you should be gradually shifting over time from riskier assets to more conservative ones. While young you might be at and 80:20 ratio of stock market index funds to bond market index funds, but nearing retirement that might flip to 60:40 with the remaining 10% in fixed-income assets (exact numbers are determined by your personal risk threshold and not meant as absolutes). For most people, a Target Retirement fund is probably the best choice here since they’re fire-and-forget. As an anecdote, I have a friend who felt very strongly that a crash was imminent in early 2018. He argued passionately that markets would drop, and wouldn’t it be great to be in a position to be able to swoop back in and grab everything at a discount when this happened? I bet beers that the S&P would be greater than or equal to its current price (~2715) on Jan 1 2019. He also sold everything and held cash. Well, as luck would have it, there was a “crash”. Based on the exact timing of our bet, I ended up losing by a few dollars (it was at ~2700) and had to buy him beers. He stayed in cash while I’ve continued buying. If he’d had perfect knowledge and changed course at rock bottom, he would have squeezed out an extra 8% return. In practice, he’s actually lost out on a 40%+ return that required simply doing nothing. I think my strategy has pretty soundly won in retrospect.
- votepaunchy 6y ago
  FYI, “The S&P 500 is a total return index of U.S. large-cap stocks, meaning that its price level includes dividends as well as capital gains.” https://www.investopedia.com/ask/answers/040915/does-sp-500-index-include-dividends.asp https://www.investopedia.com/ask/answers/040915/does-sp-500-...
  - stouset 6y ago
MrDresden 6y ago
How frequently do you rebalance the portfolio?
- LatteLazy 6y ago
  Every 3 months roughly. I'm paying into mine still, so usually I can rebalanced without selling if I do it once every few months. I'm not super precise with it, 70% means anything over 65 and under 75.

ethanpil 6y ago

It's not about knowing when because, as you say, it's difficult to predict... Still preparing or defending your assets for the possibility would be wise.

LatteLazy 6y ago
Preparing for a crash is easy if you don't care when it is: sell everything and sit on the cash (or better still gold). Of course, if you do that you'll lose out on more from missed opportunities than you save from missed crashes. Soneone who did that in 2008 would be perfectly safe right now. They'd have missed out on quadrupling their money. But they'd be perfectly prepared. So you can do as suits you. But the best strategy is to have a mix of bonds and stock. Never more than 70% bonds (as risk goes UP past roughly that point). The more you are able to deal with big movements (up or down), the more stock. This is what Warren Buffet and others have endorsed for normal every day humans like us. The mathematics backs it up.
mmargerum 6y ago
It’s only difficult to predict because of the fed pumping money.
- stouset 6y ago
  “It’s only difficult to predict because of all these unpredictable events.”
tootie 6y ago
Meh. I've let my investments ride through multiple crashes. I know I can't call a top or a bottom. The value always recovers.
- Triv888 6y ago
  If you wont need the money any time soon (5+ years from now) then that is probably an ok strategy.
  - jensneuse 6y ago
    It's the strategy. If you need the cash sub 5 years you should probably not invest.

blowfish721 6y ago

How does it work in the US with index funds? If the index fund contains stocks with dividends, do you get some of that money? Where I live I haven’t seen any broker that doesn’t keep these for themselves which is kind of a bummer to be honest.

LatteLazy 6y ago
For the US I'm not sure I'm afraid. Here in the UK, we get the money if we want it. You can select either to have the dividend re-invested (called growth or accumulating) or to receive it normally quarterly (called distributing)... I'm surprised you can't get a re-investing one.
pedrosorio 6y ago
Can you give an example of a broker that keeps the dividends for themselves? I know outside of the US there is a concept of distributing vs accumulating funds (and in both cases you get the dividends, just in a different form): https://www.bogleheads.org/wiki/Comparison_of_accumulating_ETFs_and_distributing_ETFs https://www.bogleheads.org/wiki/Comparison_of_accumulating_E...
- blowfish721 6y ago
  You probably right, I could have been so hung up on cash payouts that I missed that. As for example I haven’t seen any broker in Sweden that does cash payouts but like you said the money is probably going back to the investors just not as cash.
  - rebuilder 6y ago
    For tax reasons, reinvesting the dividends is preferable as (here at least) that doesn't trigger a tax event like a dividend paid outside the fund would.
    - deanmoriarty 6y ago
      I wish that was the case in the US!

stouset 6y ago

Further, the best thing you can to protect your assets from a crash is: have a regular investment plan, follow it, and stop looking at the market. If you’re ten or more years from retirement, the overwhelming likelihood is that a crash simply does not matter. A drop in prices only matters when you’re buying (good) or selling (bad). Everything in between is noise that only affects you on paper. Selling due to a crash is the ideal way to lock in losses. Just contribute to your retirement accounts as normal, regardless of what the market is doing. If anything, feel happy you’re getting a discount on your regular purchases. If you’re nearing retirement, the answer is that you should be gradually shifting over time from riskier assets to more conservative ones. While young you might be at and 80:20 ratio of stock market index funds to bond market index funds, but nearing retirement that might flip to 60:40 with the remaining 10% in fixed-income assets (exact numbers are determined by your personal risk threshold and not meant as absolutes). For most people, a Target Retirement fund is probably the best choice here since they’re fire-and-forget. As an anecdote, I have a friend who felt very strongly that a crash was imminent in early 2018. He argued passionately that markets would drop, and wouldn’t it be great to be in a position to be able to swoop back in and grab everything at a discount when this happened? I bet beers that the S&P would be greater than or equal to its current price (~2715) on Jan 1 2019. He also sold everything and held cash. Well, as luck would have it, there was a “crash”. Based on the exact timing of our bet, I ended up losing by a few dollars (it was at ~2700) and had to buy him beers. He stayed in cash while I’ve continued buying. If he’d had perfect knowledge and changed course at rock bottom, he would have squeezed out an extra 8% return. In practice, he’s actually lost out on a 40%+ return that required simply doing nothing. I think my strategy has pretty soundly won in retrospect.

votepaunchy 6y ago
FYI, “The S&P 500 is a total return index of U.S. large-cap stocks, meaning that its price level includes dividends as well as capital gains.” https://www.investopedia.com/ask/answers/040915/does-sp-500-index-include-dividends.asp https://www.investopedia.com/ask/answers/040915/does-sp-500-...
- stouset 6y ago

MrDresden 6y ago

How frequently do you rebalance the portfolio?

LatteLazy 6y ago
Every 3 months roughly. I'm paying into mine still, so usually I can rebalanced without selling if I do it once every few months. I'm not super precise with it, 70% means anything over 65 and under 75.