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Message
Basic investment question with the likely recession coming
Posted on 12/14/22 at 12:14 pm
Posted on 12/14/22 at 12:14 pm
I’m 31 and have typical investment account where I’ll transfer money and let my financial advisor do the work. Low risk type of account where I’ve built up a decent amount.
My question is: if we know a recession is coming why not take all my money out and wait for the DOW to hit like 29k and then reinvest?
I know you’re not supposed to “time the market” but if we know a recession is coming then why not try and make money off it long term?
My question is: if we know a recession is coming why not take all my money out and wait for the DOW to hit like 29k and then reinvest?
I know you’re not supposed to “time the market” but if we know a recession is coming then why not try and make money off it long term?
14
Posted on 12/14/22 at 12:28 pm to lsutigerelizabeth
quote:
I know you’re not supposed to “time the market”
If you KNOW this, you will be fine.
If you have money you need in the next 3 years invested in stocks, you might want to cash that portion in, with or without a recession.
Posted on 12/14/22 at 12:34 pm to lsutigerelizabeth
quote:Because you won't correctly guess the timing and level of the bottom. If you miss it and the market starts going back up sooner than you realize, your toast. What if the DOW doesn't get to 29k? What if *gasp* we don't actually experience a recession?
I know you’re not supposed to “time the market” but if we know a recession is coming then why not try and make money off it long term?
Timing the market is impossible. Consistency over a long period of time will build wealth.
I would respectfully disagree with makers, though. My rule of thumb is generally 12-18 months - not 3 years. If you will need it in 3 years, I wouldn't be super aggressive with it, but I might invest most or all of it in Bonds (I think Bonds will outperform cash in the next 3 years).
ETA: Maybe makers was saying the same thing - not to invest money you need in the next 3 years in STOCKS...to that I would generally agree. But I would invest money I need in 3 years in Bonds.
This post was edited on 12/14/22 at 12:35 pm
Posted on 12/14/22 at 12:37 pm to lsutigerelizabeth
You're 31.
Dollar cost averaging will work in your favor. Use it.
Trying to time the market may work, but in all likelihood it won't.
Dollar cost averaging will work in your favor. Use it.
Trying to time the market may work, but in all likelihood it won't.
Posted on 12/14/22 at 12:41 pm to lsutigerelizabeth
Markets are forward looking and will bottom before the peak of the recession is hit.
Posted on 12/14/22 at 12:52 pm to lsutigerelizabeth
All known is already priced in and markets look ahead 3-36 months. If/when a recession hits, markets move up in anticipation of a recovering. That and not sure we are really going into a recession next year. Inflation has been slowly coming down for 3 months, labor market is strong and earnings are still very good.
Posted on 12/14/22 at 12:56 pm to lsutigerelizabeth
quote:
: if we know a recession is coming
We don't know shite, that's why. We are all guessing and playing the odds in the short term. Recession could come next month, We could be in it already, it could come mid 2023, it could come early 2024, it could not come at all. I'll let you know how the next 2 years are gonna go in 2 years.
Ask drizzt, he's sold everything now twice literally just before 10 to 15% rallies the last 2 years. I love those threads.
Posted on 12/14/22 at 12:59 pm to lsutigerelizabeth
If you CAN time the market, then go right ahead.
Posted on 12/14/22 at 1:12 pm to lsutigerelizabeth
Hey baw we’re in the same age bracket
The stock market will die in our lifetimes and become more like crypto where everything is a rug pull waiting to happen. The stock market will keep going down as boomers pull out and there’s no money to replace it since most people our age live hand to mouth
The us economy is fake. We don’t make anything we just put stuff from China in different boxes and sell it to each other.
People our age will work til we can’t anymore then the democrats will put us to sleep like in Canada
ETA: lol there are boomers in this thread telling you to dollar cost average
That means throw your money into the Ponzi scheme that is the stock market so some boomer can cash out
The stock market will die in our lifetimes and become more like crypto where everything is a rug pull waiting to happen. The stock market will keep going down as boomers pull out and there’s no money to replace it since most people our age live hand to mouth
The us economy is fake. We don’t make anything we just put stuff from China in different boxes and sell it to each other.
People our age will work til we can’t anymore then the democrats will put us to sleep like in Canada
ETA: lol there are boomers in this thread telling you to dollar cost average
That means throw your money into the Ponzi scheme that is the stock market so some boomer can cash out
This post was edited on 12/14/22 at 1:15 pm
Posted on 12/14/22 at 1:17 pm to el Gaucho
quote:OP - don't take the bait.
Hey baw we’re in the same age bracket
The stock market will die in our lifetimes and become more like crypto where everything is a rug pull waiting to happen. The stock market will keep going down as boomers pull out and there’s no money to replace it since most people our age live hand to mouth
The us economy is fake. We don’t make anything we just put stuff from China in different boxes and sell it to each other.
People our age will work til we can’t anymore then the democrats will put us to sleep like in Canada
ETA: lol there are boomers in this thread telling you to dollar cost average
That means throw your money into the Ponzi scheme that is the stock market so some boomer can cash out
Posted on 12/14/22 at 1:24 pm to lsutigerelizabeth
quote:
I know you’re not supposed to “time the market”
And yet…
quote:
why not take all my money out and wait for the DOW to hit like 29k and then reinvest?
Posted on 12/14/22 at 1:27 pm to lsutigerelizabeth
Won't repeat the "no crystal ball" points above
Sounds like you may already by doing Dollar Cost Averaging (DCA), and that is not a bad strategy over the long haul.
LINK
I bolded 3 of my DCA favorites
Sounds like you may already by doing Dollar Cost Averaging (DCA), and that is not a bad strategy over the long haul.
LINK
quote:
KEY TAKEAWAYS
Dollar-cost averaging is the practice of systematically investing equal amounts of money at regular intervals, regardless of the price of a security.
Dollar-cost averaging can reduce the overall impact of price volatility and lower the average cost per share.
By buying regularly in up and down markets, investors buy more shares at lower prices and fewer shares at higher prices.
Dollar-cost averaging aims to prevent a poorly timed lump sum investment at a potentially higher price.
Beginning and long-time investors can both benefit from dollar-cost averaging.
I bolded 3 of my DCA favorites
Posted on 12/14/22 at 1:29 pm to Niner
quote:
OP - don't take the bait.
not so fast my friend.
el guacho's "baws guide to investing" made me a millionaire. ignore his sage advice at your own financial peril.
Posted on 12/14/22 at 1:36 pm to Bunsbert Montcroff
It always seems like people who post about these decisions make it all or nothing.
I agree that you should just stay in the market but if you want to move maybe 20% to cash and get interest while you wait to deploy, that's an option. The question is when will you call the bottom.
I agree that you should just stay in the market but if you want to move maybe 20% to cash and get interest while you wait to deploy, that's an option. The question is when will you call the bottom.
Posted on 12/14/22 at 1:44 pm to el Gaucho
quote:
The stock market will die in our lifetimes
quote:
The us economy is fake.
quote:
dollar cost average...that means throw your money into the Ponzi scheme that is the stock market so some boomer can cash out
The rule of 7 berled down into 3:
Never bet against human greed and pride with a splash of envy (it shows up boldly in many markets, stocks included...and will as long as there are humans involved)
Boomer wrath is born from Millenial envy
Lustfully DCA like a gluttonous sloth
And do not look back
Posted on 12/14/22 at 1:53 pm to lsutigerelizabeth
Too high risk of a missing the low and potentially capital gains taxes to pay wiping out a big portion of your dip buy gains. My two cents.
Posted on 12/14/22 at 2:38 pm to Niner
quote:
My rule of thumb is generally 12-18 months - not 3 years. If you will need it in 3 years, I wouldn't be super
The older you are, the more time this period would be.
I use 5 years for my almost 80 year old mom, 3 years for my almost 60 year old self, and 1 year for my 20s kids.
To each his own. At the end of the day, in the long run we will all be dead so 1,3, or 5 years worth of low risk investments may not matter.
Posted on 12/14/22 at 3:19 pm to lsutigerelizabeth
Time IN the market > TimING the market for 99% of the population
You’re 31 bro. You want the market to fall, honestly at this age to acquire shares cheaper!
By continually contributing, you are dollar cost averaging down, so when the market returns to all time highs (and it will!), you’ll be set!!
You’re 31 bro. You want the market to fall, honestly at this age to acquire shares cheaper!
By continually contributing, you are dollar cost averaging down, so when the market returns to all time highs (and it will!), you’ll be set!!
Posted on 12/14/22 at 3:21 pm to lsutigerelizabeth
quote:
My question is: if we know a recession is coming why not take all my money out and wait for the DOW to hit like 29k and then reinvest?
The most important point is there's absolutely no guarantee the DOW will hit 29k (nor any specific low).
While the common consensus is that a recession is likely coming for 2023, it's not a concrete certainty. It should have already happened in 2022 but consumers flocked to credit cards in order to keep spending enough to maintain their lifestyles. This has largely staved off the economic crush which was expected this Fall.
One of the big signals the Fed is looking for to tell them to pause/pivot on rates is an increase in Unemployment. How big an increase and over what amount of time? Will it be a small bump which comes in time to help a majority of people with high debt keep from defaulting then balance out or will it end up snowballing to a higher level of unemployment as people default (thus adding a bit of snowballing)?
It could well be that we see a pause/pivot in rates before we start seeing large numbers of people defaulting on their debts. When (not if) that pause/pivot happens, the market is going to look like it's on Viagra.
Over time the market always rebounds. You're young so time is on your side and it's not like you can really touch a lot of this money anyway (assuming it's a retirement account). If you're that worried, simply buy something like i-bonds for the next few months.
Posted on 12/14/22 at 3:36 pm to Bard
If the Dow hits 29k it’s gonna keep dropping
29k is sacred cow resistance level
29k is sacred cow resistance level
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