Next correction
- Thread starter lolihop
- Start date
The last good opportunity was Trump's liberation day.
The trigger for the next crash will come out of nowhere and be acute. It probably won't be AI or private credit or anything that is a known as investors are cognizant of it and have mentally and/or financially prepared for it.
The market is ripe for a crash due to historically high PEs, but the actual trigger is anyone's guess.
I hold ~15% in a money market fund, ready to deploy in case of crash. I also hold berkshire and plan on buying more berkshire as they would be in the best position to find good deals after the crash.
With that said, I think it is more likely that the opposite of a crash will happen. The US fed will find an excuse to drop rates and the good times will be back. You do not want to miss out on that bull run, it will probably be the last bull run before a crash.
The trigger for the next crash will come out of nowhere and be acute. It probably won't be AI or private credit or anything that is a known as investors are cognizant of it and have mentally and/or financially prepared for it.
The market is ripe for a crash due to historically high PEs, but the actual trigger is anyone's guess.
I hold ~15% in a money market fund, ready to deploy in case of crash. I also hold berkshire and plan on buying more berkshire as they would be in the best position to find good deals after the crash.
With that said, I think it is more likely that the opposite of a crash will happen. The US fed will find an excuse to drop rates and the good times will be back. You do not want to miss out on that bull run, it will probably be the last bull run before a crash.
Here is a very big issue with your plan
So we have a crash when do you deploy the 15%?
20% drop 30,40 , 50? You really want to get in when things can reverse in a minute which they will
as it is never straight down then back up ?
It seems easy in hindsight only
Use a robot to buy and sell triggered by what you want?
I have never used them but I think you could say something like when my 15% cash becomes 25% of portfolio
(that means stocks have dropped so time to buy an etf) so robot executes trade from cash to ETF
I know TD will do it as they are my traders and bankers but I have to have an account manager to do it and it appears that banks do not have roboadvisors
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Another thought, you wait for the 30% dip and in the meantime stocks rose 40%
so you lost 10% did you not?
You do it in tranches; it is equivalent to DCA. I would roughly follow the advice of this video,
My cash reserve is now at 25%. I only have 2 companies that I really want to buy at low prices: Apple and Google.
Buying in tranches, or DCA - dollar cost averging- where you slowly put money in does not get better returns than lump-sum investing on average it is actually worse the majority of the time. It does CHANGE THE TIMING RISK you take as you invest over time and redistributes risk. As Vanguard put it, "Dollar-cost averaging just means taking risk later." It is a mutual fund companies marketing tool to get you to give them your money then they grab 2.5% and never beat the market. Putting savings in every paycheck is a solid idea that they call DCA meaning you will get the average over time
DCA is tricky as it sounds so good so I looked it up for an explanation
DCA means your average cost per share ends up lower than the simple average price over the same period . That’s the harmonic mean effect.
So yes: you end up paying less per share on average than the simple average of the prices you bought at.
Example: invest $10 at $1, then $10 at $2.
- Total spent: $20
- Total shares: 15
- Average cost: $20 ÷ 15 = **$1.33**
- Simple average price: ($1 + $2) ÷ 2 = $1.50
DCA investing is slightly less risky but research shows lump sum is the better gamble
Thanks for making me look this guy up I was intrigued. With due respect hungsowel , you need to stop being so incredibly naïve. You believe a cat on the net who makes untold wealth on a scheme because he made a good vid?
I call obvious scammer. There are huge red flags.
First, if he you are buying individual stock stop
- J.P. Morgan states : Since 1980, about 40% of stocks suffered a permanent 70%+ decline,
- two-thirds underperformed the Russell 3000,
- and roughly 7% of stocks accounted for all net gains.
Even the experts cannot find the winners as mutual funds are run by experts who fail
The odds of you picking a winner is 7%
Buy indexes then forget about it
His economic talk is sound but nothing new about crashes
This is where the business model becomes clear. Prehn's free content is a funnel. He presents conventional wisdom with the authority of a former banker (which he just says he is but I doubt it if he is a scammer ) and the framing of a researcher who has "analyzed 100+ crashes." The implication is that he has uncovered something the market does not know. He analyzed nothing he just uses other research and claims it is his
The recovery shapes (V, U, W, L), the 20-35% buying zone, the sector rotation sequence—these are all standard concepts that he read. This is a huge red flag as there are thousands of PHDs on this very subject, it is extremely well researched now this "genius" has outsmarted everyone and is giving "free" advice because he cares about you
If there were a simple, reliable secret to timing crashes and rotating sectors, it would have been published, replicated, and then arbitraged away. PhDs are not dumb; this guy is not dumb either, he is a smart scammer.
Watch his videos for well known economics on the market not his advice on how to beat it.
He charges thousands of dollars for his paid advice and that is his goal to sucker you in
If he is so brilliant why does he need your money to buy his yacht ?
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Just a minute, let me check my crystal ball...
Good point. You want to sell before the high point then buy at the low.
Never will happen
So, you put some money in cash by selling then now wait
The market will contiunue to rise with certainty
if it rises 15% after you sell then drops 20% you will make 5% only if you buy at low but that will never happen either
My math is off but
my math isn’t the issue. The issue is you have to be right twice:
- Sell before the drop.
- Buy before the rise.
better to rebalance
You set a target allocation — say 80% stocks / 20% cash or bonds.
When stocks rise and become 85%, you sell 5% to get back to 80%.
When stocks fall and become 75%, you buy 5% from cash.
You never predict the top or bottom but you sell high then buy low at a small scale .
That’s what robos do. That’s what some big players do, with nuances as they deal in billions, and what smart players do who just have millions
The belief that smart people with millions use exclusive investment firms who want millions to let you into their secret world or buy hedge funds is total nonsense. They do what someone with thousands should do. They do the balance dance or reserve fund technique . The zeros change, not the principle.
Pick an allocation you can live with, set rebalancing bands, and let the robo do the work or some etfs do it as well.
If you want to hold extra cash in case of major bear you can spend instead of selling you already have that
if cash/bonds are separate from the stocks
It is called using a cash reserve
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Depends what you are holding IMHO
Sounds like you hold a specific sector or a few stocks as the market did not fall like that over the last few weeks
The market will rebound but sectors or a few select stocks may or may not
What are you holding?
