Should I still buy index funds now at such a high price before an impending recession?

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summer2017
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Should I still buy index funds now at such a high price before an impending recession?

Post by summer2017 »

Hey everyone,
I would like your advice on the following questions.
I think a recession will occur in the near future. Should I still buy index funds now at such a high price before an impending recession?
I have some stocks that are losing and some are gaining, but in the recession I expect it to drop a lot, should I sell them to exchange for index funds or is it better to hold on to them for another 10 years so it will bounce back from a recession and I won't lose any money?
Thanks.
Inverted Pyramid
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by Inverted Pyramid »

i don't want to miss out, What date is this recession happening on?
Gropes & Ray
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by Gropes & Ray »

Selling stocks with a gain now may result in capital gains taxes. Selling them at a loss later may help you save on capital gains taxes in the future. But, if you're concentrated in a single stock and that makes you nervous, then maybe now is the time to switch to index funds. You need to know and consider the tax consequences.

And, as everyone on this forum would say, I caution you against thinking you know when there will be a recession. That leads to market timing, which is a sure loser in the long run. Good luck, and welcome to the forum!
aristotelian
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by aristotelian »

Are you buying for the short term or for the long term? If you are buying for the short term, you should only look at savings accounts or maybe short term bond fund. If you are buying for the long term, buy whatever you want according to your desired allocation and risk tolerance.
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David Jay
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by David Jay »

aristotelian wrote:Are you buying for the short term or for the long term? If you are buying for the short term, you should only look at savings accounts or maybe short term bond fund. If you are buying for the long term, buy whatever you want according to your desired allocation and risk tolerance.
This is a good point - If you have spending plans you need to select your holdings based on the length of time until you need the money.

If these are retirement funds then invest them in a long-term asset allocation at today's prices. Read this: The World's Worst Market Timer - link: http://awealthofcommonsense.com/2014/02 ... ket-timer/
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by KyleAAA »

Market timing doesn't work. Don't try to time the market.
heyyou
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by heyyou »

Yes, there is a crash coming, always is, sooner or later.
When will you start using your retirement savings? How long do you expect to be retired? By then, today's prices will not matter, but as an investor you will experience some stressful market events along the way.

Market uncertainty is constant. Yes, there will be a drops and crashes and someday those crashes will eventually look like buying opportunities, but not when they are happening. That is how risk and reward feels. The risk is in your face every day and the reward is tiny, inconsistent, slow, and only obvious after 10-20 years. As long term investors, we just have to live with that.
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ruralavalon
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by ruralavalon »

Welcome to the forum :) .
summer2017 wrote:Hey everyone,
I would like your advice on the following questions.
I think a recession will occur in the near future. Should I still buy index funds now at such a high price before an impending recession?
I have some stocks that are losing and some are gaining, but in the recession I expect it to drop a lot, should I sell them to exchange for index funds or is it better to hold on to them for another 10 years so it will bounce back from a recession and I won't lose any money?
Thanks.
I don't believe that anyone can know for certain that a recession will, or will not, occur "in the near future".

It's usually better to be invested, rather than uninvested. So if I had extra money available to invest, then I would invest it in spite of such predictions.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
DKD
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by DKD »

Advice: don't be concerned about impending recessions or impending upswings. You're always better off with a balanced portfolio and adjusting the balance accordingly as stocks rise or fall. Trying to do decide when to jump in or jump out, has proven to be a fools game, and only leads to frustration and less wealth.
ponyboy
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by ponyboy »

Could someone let me know when the market is going to bottom out? I want to sell way before then and buy when the time is perfect.
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by Dottie57 »

summer2017 wrote:Hey everyone,
I would like your advice on the following questions.
I think a recession will occur in the near future. Should I still buy index funds now at such a high price before an impending recession?
I have some stocks that are losing and some are gaining, but in the recession I expect it to drop a lot, should I sell them to exchange for index funds or is it better to hold on to them for another 10 years so it will bounce back from a recession and I won't lose any money?
Thanks.

There is always an impending recession.
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nisiprius
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by nisiprius »

The National Bureau of Economic Research refuses to say anything about the dates of recession until it is after the recession is over. In other words, not only will they not predict recessions, they will not say whether or not we are in one while it is happening. They're wise.

The stock market is not as closely linked to recessions as many people think. Jeremy Siegel, author of Stocks for the Long Run, did a study on what would happen if you went to cash on the beginning of each NBER-stated recession and bought back into stocks at the end. In real life you can't do this because, as noted, the beginning of the recession is not determined until after it's over. But what Siegel showed is that it would make almost no difference--a tiny improvement, less than 0.5% IIRC, but not the huge improvement you'd expect.

He and others have also compiled data on what would happen to an investor who bought only at market tops. The take-home is that, yes, such an investor wouldn't get as high an average return as one who stayed the course, but would still have gotten a decent return in the long run.

I feel strongly that the best thing for me to do is grit my teeth and stay the course. Yes, I'll be making some of my purchases at prices that are "too high" but I will be making others at times when prices are low, and it will average out. What Bogleheads seek to do is to have the highest chance of getting as close as possible to the average return of the market over our investing lifetime. Even if your market timing attempts don't make things worse, you are adding on your own personal "manager risk." If you are in the market constantly for twenty years, you get an average over twenty years. If you are in and out of the market, and are in for only a total of ten years, you are averaging over less time and there's a greater chance of ending up farther from the market's underlying average (if it has one). Of course the difference could go either way, but basically it's gambling. All investing includes an element of gambling but my personal goal is to minimize it.
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livesoft
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by livesoft »

Certainly sell all your individual stocks now and buy index funds. If you cannot do that, then at least sell all your stocks that have losses and buy index funds.
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MN-Investor
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by MN-Investor »

I rolled over a 401(k) back in 2012 and I was sure that the market was going to drop so I held off on investing that money. I continued to hold off until late in 2014 when I said to myself "This is stupid! This is not the Boglehead's way. I don't care what happens, I'm going to invest it NOW." Well, the DOW had gone up 31% in that intervening time, so I missed that. But my investment is now up 25% from when I did invest. So, that's my lesson learned the hard way.
The key to success - Save early, save often, invest well.
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BL
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by BL »

This is a pretty hard question to answer without any background on your circumstances. Consider putting all your information together in this format, which is more easily followed and answered by folks here
Asking Portfolio Questions:
viewtopic.php?f=1&t=6212

You will learn a lot of valuable information about yourself and your finances while putting this together.

Also, read in Wiki: Getting Started is a good place to start. Pick out a couple of suggested books, I like Boglehead's Guide to Investing. A super quick start is this online for beginners or a quick review for all of us (pdf):
https://www.etf.com/docs/IfYouCan.pdf

Doing a little reading and then writing out your own Investment Plan will help you make and carry out a plan without giving up at the wrong time.
Runner01
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by Runner01 »

I am still waiting for the double dip recession in 2010 that many "financial experts" warned us about.
lostdog
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by lostdog »

I am looking forward to the next recession. What date will it hit bottom? Let me know, thanks...
Thesaints
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by Thesaints »

summer2017 wrote:Hey everyone,
I would like your advice on the following questions.
I think a recession will occur in the near future. Should I still buy index funds now at such a high price before an impending recession?
I have some stocks that are losing and some are gaining, but in the recession I expect it to drop a lot, should I sell them to exchange for index funds or is it better to hold on to them for another 10 years so it will bounce back from a recession and I won't lose any money?
Thanks.
Obviously, not. You should short the market instead. Look SDS up.
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triceratop
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by triceratop »

Thesaints wrote:
summer2017 wrote:Hey everyone,
I would like your advice on the following questions.
I think a recession will occur in the near future. Should I still buy index funds now at such a high price before an impending recession?
I have some stocks that are losing and some are gaining, but in the recession I expect it to drop a lot, should I sell them to exchange for index funds or is it better to hold on to them for another 10 years so it will bounce back from a recession and I won't lose any money?
Thanks.
Obviously, not. You should short the market instead. Look SDS up.
This is not consistent with Boglehead philosophy. You are proposing that one should make short-term speculation in assets which have negative expected value. Or even if not agreeing with the OP, the correct answer is that no one knows when a recession will occur. That is, a recession is always "impending".
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."
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TomatoTomahto
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by TomatoTomahto »

ruralavalon wrote:Welcome to the forum :) .
summer2017 wrote:Hey everyone,
I would like your advice on the following questions.
I think a recession will occur in the near future. Should I still buy index funds now at such a high price before an impending recession?
I have some stocks that are losing and some are gaining, but in the recession I expect it to drop a lot, should I sell them to exchange for index funds or is it better to hold on to them for another 10 years so it will bounce back from a recession and I won't lose any money?
Thanks.
I don't believe that anyone can know for certain that a recession will, or will not, occur "in the near future".

It's usually better to be invested, rather than uninvested. So if I had extra money available to invest, then I would invest it in spite of such predictions.
OP, I was going to get snarky, then realized that you were a first time poster, and was glad to see that ruralavalon had welcomed you to the forum.

I have no dog in this fight, and I don't stand a chance to make a nickel from you whether you invest or not, but trust me, timing the market is a mug's game.

As livesoft suggests, sell your individual stocks, perhaps with some consideration of capital gains. Don't reduce your exposure to the market.
Okay, I get it; I won't be political or controversial. The Earth is flat.
Tamalak
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by Tamalak »

triceratop wrote:
Thesaints wrote:
summer2017 wrote:Hey everyone,
I would like your advice on the following questions.
I think a recession will occur in the near future. Should I still buy index funds now at such a high price before an impending recession?
I have some stocks that are losing and some are gaining, but in the recession I expect it to drop a lot, should I sell them to exchange for index funds or is it better to hold on to them for another 10 years so it will bounce back from a recession and I won't lose any money?
Thanks.
Obviously, not. You should short the market instead. Look SDS up.
This is not consistent with Boglehead philosophy. You are proposing that one should make short-term speculation in assets which have negative expected value. Or even if not agreeing with the OP, the correct answer is that no one knows when a recession will occur. That is, a recession is always "impending".
Boglehead philosophy only makes sense if you don't know what the market is going to do. I don't know and you don't know but apparently the OP does, so he should cash in on that knowledge.
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triceratop
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by triceratop »

Tamalak wrote:
triceratop wrote:
Thesaints wrote:
summer2017 wrote:Hey everyone,
I would like your advice on the following questions.
I think a recession will occur in the near future. Should I still buy index funds now at such a high price before an impending recession?
I have some stocks that are losing and some are gaining, but in the recession I expect it to drop a lot, should I sell them to exchange for index funds or is it better to hold on to them for another 10 years so it will bounce back from a recession and I won't lose any money?
Thanks.
Obviously, not. You should short the market instead. Look SDS up.
This is not consistent with Boglehead philosophy. You are proposing that one should make short-term speculation in assets which have negative expected value. Or even if not agreeing with the OP, the correct answer is that no one knows when a recession will occur. That is, a recession is always "impending".
Boglehead philosophy only makes sense if you don't know what the market is going to do. I don't know and you don't know but apparently the OP does, so he should cash in on that knowledge.
I understand your point. I should say that my working theory here is that someone with the ability to accurately predict a recession without relying on luck would know how to capitalize on that. Since this question was posed we should operate as if they are as unable to predict market movements, just as we are.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."
Thesaints
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by Thesaints »

triceratop wrote: This is not consistent with Boglehead philosophy. You are proposing that one should make short-term speculation in assets which have negative expected value. Or even if not agreeing with the OP, the correct answer is that no one knows when a recession will occur. That is, a recession is always "impending".
If the OP knows that prices are high and a recession is impeding, who are we to turn him away from easy gains ?
I'm sure John Bogle himself would not leave free money on the table.

If instead we want to discuss the OP knowledge from a gnoseological point of view, of course I'm game!
H-Town
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by H-Town »

summer2017 wrote:Hey everyone,
I would like your advice on the following questions.
I think a recession will occur in the near future. Should I still buy index funds now at such a high price before an impending recession?
I have some stocks that are losing and some are gaining, but in the recession I expect it to drop a lot, should I sell them to exchange for index funds or is it better to hold on to them for another 10 years so it will bounce back from a recession and I won't lose any money?
Thanks.
To answer your question above: Yes you should.

Perhaps, the right question to ask is how much you can save each month so that you have additional funds to buy more when we get to the recession.
cbr shadow
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by cbr shadow »

To answer your question very clearly; yes it's best to buy low and to sell high. You wont find Bogleheads selling all of their stocks right now though. Generally (as you can see from the above posts) bogleheads believe that nobody knows what's going to happen in the market, and that the market will relentlessly trend upwards over long periods of time. Most here would advise to just buy in and be done with it.
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midareff
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by midareff »

Inverted Pyramid wrote:i don't want to miss out, What date is this recession happening on?

me too.... please do tell.
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HomerJ
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by HomerJ »

summer2017 wrote:Hey everyone,
I would like your advice on the following questions.
I think a recession will occur in the near future. Should I still buy index funds now at such a high price before an impending recession?
I would sell your crystal ball for a billion gajillion dollars!

Just joking. No one knows if a recession will occur in the "near future". However, a recession WILL happen in the future.

But that's okay. You know that 10% long-term historical return from the stock market? It INCLUDES recessions and crashes.

Read that again. You don't have to avoid the recessions and crashes to get the very good long-term historical return. How sweet is that!

Of course, don't forget the "long-term" part of that sentence. If you are retiring in a few years, you may not have "long-term" for the stock market to recover. If you are retiring in 20+ years on the other hand...

As others have said, you can't time the market, and you really shouldn't be picking individual stocks.
ETadvisor
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by ETadvisor »

DKD wrote:Advice: don't be concerned about impending recessions or impending upswings. You're always better off with a balanced portfolio and adjusting the balance accordingly as stocks rise or fall. Trying to do decide when to jump in or jump out, has proven to be a fools game, and only leads to frustration and less wealth.
+1
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nedsaid
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by nedsaid »

Has somebody rung the magic bell that signals the next recession? I would not invest based upon economic forecasts, one reason being that the markets have discounted forecasts into prices already. In fact, the market could dip in anticipation of a future recession and start recovering during the recession in anticipation of the recovery. The market looking ahead and pricing based upon expectations are what make market timing so difficult. What do I know about the economy that the markets don't already know? Even if I know when the next recession will hit, how will I know when markets will dip in anticipation?

The other big factor is that economic forecasts, even by economic experts, are often wrong. There is the old joke about economists and the markets predicting seven out of the last four recessions.
A fool and his money are good for business.
WhiteMaxima
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by WhiteMaxima »

If you have balanced fund 50% stock and 50% bond, then you don't have to worry about next recession.
afan
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by afan »

At some point there will be another deep decline in the stock market.
I do not believe anyone knows when this will happen.
I do not believe that any of the (many) people who claim to know when it will happen have any idea what they are talking about.

If I did believe I knew when a major drop was coming I would sell and short stocks. Then I would buy, probably using leverage and options, when the market was about to go up again.

Since I don't believe I or anyone else knows when the drop or rise will happen, I don't speculate on predicted stock returns.

Pick an asset allocation with which you are comfortable, set it and forget it. If someone claims they know what the market will do, remember they have no idea what they are talking about and ignore them
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama
michaeljc70
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by michaeljc70 »

When did the price become "high"? When will it become "low" again? There is always an "impending" recession.

Either keep what you have or move it into index funds. Don't try to time the market.
Last edited by michaeljc70 on Wed Jul 05, 2017 7:03 pm, edited 1 time in total.
coincollector
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by coincollector »

The markets have always had a mind of their own and for years now people have been saying that the market can't go any higher. That the market is historically overpriced. Yet, the market has continued to push on higher and higher despite the dooms day predictions. There is no way to know what tomorrow will hold, as many have stated.
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by arcticpineapplecorp. »

summer2017 wrote:Hey everyone,
I would like your advice on the following questions.
I think a recession will occur in the near future. Should I still buy index funds now at such a high price before an impending recession?
I have some stocks that are losing and some are gaining, but in the recession I expect it to drop a lot, should I sell them to exchange for index funds or is it better to hold on to them for another 10 years so it will bounce back from a recession and I won't lose any money?
Thanks.
Welcome to the forum.

At the end of my comments, you will find a few links (The first one David Jay already posted, but I'm posting it again for emphasis). Look at them all. Read them. Play around with them (the last two of them are games, sort of). Learn that it is time in the market, not timing the market that matters.

Pay attention to your words as you speak about investing. People often use the future tense when they should really be using the past tense. Because we only know what's happened. Not what's going to happen. You don't have some stocks that "are losing". You have stocks that "have lost" or "have declined." You don't have some stocks that "are gaining"; you have some stocks that "have gained." See the difference? You don't know if they will continue to move in the same or different direction tomorrow. No one does.

What are the reasons you've bought individual stocks? Have those reasons changed? If you didn't own the stocks you now hold, would you buy them at their current price? If not, why are you holding them now? If yes, why would you sell them?

Are the stocks in a taxable account or tax deferred account? The difference is important if you intend to sell them. Something to consider as Gropes and Ray already stated.

http://awealthofcommonsense.com/2014/02 ... ket-timer/

http://awealthofcommonsense.com/2016/05 ... t-returns/

http://www.schwab.com/insights/stocks/i ... -to-invest

https://www.prudential.com/personal/ins ... ends-game/

https://qz.com/487013/this-game-will-sh ... cks-right- now/

Does this make sense? Tell us what you've learned and/or if you have more questions.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
cutehumor
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by cutehumor »

OP,

buy index funds now! when you buy, the share price will go up, so my 401k will go up! it's a win win for both of us :beer
mortfree
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by mortfree »

Amazing that you are going right to calling a recession.

Why not start with predicting a correction first?


It's like saying every year in October I will lose power for a week because of that one freak snowstorm a few years ago.

* note: I didn't lose power but others did.
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Gort
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by Gort »

summer2017 wrote:Hey everyone,
I would like your advice on the following questions.
I think a recession will occur in the near future. Should I still buy index funds now at such a high price before an impending recession?
I have some stocks that are losing and some are gaining, but in the recession I expect it to drop a lot, should I sell them to exchange for index funds or is it better to hold on to them for another 10 years so it will bounce back from a recession and I won't lose any money?
Thanks.
I see this is your first post. Welcome to the Bogleheads forum!! You will gain much knowledge from what you read here while at the same time you will occasionally get some snarky comments (which have already been posted to your question). Good luck on your learning adventure and be sure to ask questions about anything you don't understand.
Gort
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Taylor Larimore
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by Taylor Larimore »

summer2017:

Welcome to the Bogleheads Forum!

I agree with Gort that you (unfortunately) received some "snarky" comments. I'll bet many, perhaps most of us, originally thought market-timing was easy. I know I did. Fortunately, I learned that stay-the-course is the way to go. You can read what experts say about market timing HERE.

This is the Boglehead Philosophy based on the wisdom of Jack Bogle:

1 Develop a workable plan
2 Invest early and often
3 Never bear too much or too little risk
4 Diversify
5 Never try to time the market
6 Use index funds when possible
7 Keep costs low
8 Minimize taxes
9 Invest with simplicity
10 Stay the course

If you would like help developing your portfolio, please use this format:

ASKING PORTFOLIO QUESTIONS

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
Angst
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by Angst »

summer2017 wrote:Hey everyone,
I would like your advice on the following questions.
I think a recession will occur in the near future. Should I still buy index funds now at such a high price before an impending recession?
I have some stocks that are losing and some are gaining, but in the recession I expect it to drop a lot, should I sell them to exchange for index funds or is it better to hold on to them for another 10 years so it will bounce back from a recession and I won't lose any money?
Thanks.
OMG... at 8:50-something this morning summer2017 posted his/her first post ever at our website regarding "high price" "index funds" and the "impending recession", and at 10:04 pm he/she has yet to respond to any of the 38 subsequent posts... I don't think I'm going to bother reading this thread!
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whodidntante
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by whodidntante »

I always like to sell before the market goes down.
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munemaker
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by munemaker »

Yes, of course you should, because you never know when a recession is going to occur.
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TD2626
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by TD2626 »

People predict recessions all the time. By random chance, a few of them turn out to be right. We live in a world where those few who correctly predicted the recession by chance end up being put in charge of hedge funds (which then often underperform).

Mabye someone is capable of making better-than-chance predictions. This person, if they exist, would probably be a quant, a PhD academic, a financial analyst, etc with years of experience. Certainty, once they figured out their research breakthrough (which would take thousands of hours of work), they would know how to quietly execute a strategy instead of asking about it here.

Even still - I think most quants/PhDs/financial analysts/pundits/etc who try to predict a recession are unable to do so with accuracy that is distinguishable from random chance.
KyleAAA
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by KyleAAA »

I actually think a recession is fairly unlikely in the next year or two, but I'm just as apt to be wrong than somebody saying the opposite. Certainly the markets don't seem to be pricing one in.
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JonnyDVM
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by JonnyDVM »

Personally I think this is a troll. The name Summer2017 is most suspect. Regarldless, my advice for anyone thinking this would be four simple words- Read the Wiki.
I’d trade it all for a little more | -C Montgomery Burns
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summer2017
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by summer2017 »

Thank you for all the great responses. I didn't mean to cause arguments.
I'm new at investing. My stocks haven't gone through a recession yet, so I'm nervous about what will happen.
Just started reading The Boglehead's Guide to Investing, but hadn't had time to read much of it yet.
I have lots to learn and read up on still.
Thank you for sharing your experiences and learned knowledge.
Much appreciated.
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Taylor Larimore
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by Taylor Larimore »

summer2017 wrote:Thank you for all the great responses. I didn't mean to cause arguments.
I'm new at investing. My stocks haven't gone through a recession yet, so I'm nervous about what will happen.
Just started reading The Boglehead's Guide to Investing, but hadn't had time to read much of it yet.
I have lots to learn and read up on still.
Thank you for sharing your experiences and learned knowledge.
Much appreciated.
summer2017:

Thank you for responding to your many replies.

I am one of the authors of your Bogleheads Guide to Investing. If you have any questions, please ask. Probably best to start a new topic

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
mortfree
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by mortfree »

summer2017 wrote:Thank you for all the great responses. I didn't mean to cause arguments.
I'm new at investing. My stocks haven't gone through a recession yet, so I'm nervous about what will happen.
Just started reading The Boglehead's Guide to Investing, but hadn't had time to read much of it yet.
I have lots to learn and read up on still.
Thank you for sharing your experiences and learned knowledge.
Much appreciated.
Say you have $10,000 in XYZ fund.

Tomorrow you log on and you only have $5000 in XYZ fund.

what do you do - sell or logoff the computer?





the answer should be obvious. BUY more, then logoff :D
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arcticpineapplecorp.
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by arcticpineapplecorp. »

Angst wrote:
summer2017 wrote:Hey everyone,
I would like your advice on the following questions.
I think a recession will occur in the near future. Should I still buy index funds now at such a high price before an impending recession?
I have some stocks that are losing and some are gaining, but in the recession I expect it to drop a lot, should I sell them to exchange for index funds or is it better to hold on to them for another 10 years so it will bounce back from a recession and I won't lose any money?
Thanks.
OMG... at 8:50-something this morning summer2017 posted his/her first post ever at our website regarding "high price" "index funds" and the "impending recession", and at 10:04 pm he/she has yet to respond to any of the 38 subsequent posts... I don't think I'm going to bother reading this thread!
Just a couple days ago someone PM'd me about something I posted many months ago. I too assumed she hadn't read my post at all. But she hadn't read it yet.

You never know when the poster will read a response. But even if they don't, it's quite possible the information you impart might help someone else. You just never know.
Last edited by arcticpineapplecorp. on Thu Jul 06, 2017 8:50 pm, edited 2 times in total.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
Helo80
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by Helo80 »

mortfree wrote:Say you have $10,000 in XYZ fund.

Tomorrow you log on and you only have $5000 in XYZ fund.

Double down because if it goes up 50%, I've broken even.
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arcticpineapplecorp.
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Re: Should I still buy index funds now at such a high price before an impending recession?

Post by arcticpineapplecorp. »

summer2017 wrote:Thank you for all the great responses. I didn't mean to cause arguments.
I'm new at investing. My stocks haven't gone through a recession yet, so I'm nervous about what will happen.
You didn't cause any arguments. At Bogleheads, you'll usually get a variety of different responses (some of them might even be helpful :wink: ). Most (even the snarky ones I believe) are intended to help. Sometimes people are trying to be funny to make a point or to show you the humor of your ways.

Do you own individual stocks or just index funds or a bit of both? The reason I ask is that both individual stocks and the market as a whole can decline during a recession but the market has always recovered, while some individual stocks sometimes do not. As an example of this, during the Great Recession (2007-2009) some companies like Bear Stearns went completely out of business. But as you can see, while the market went down at that time, it eventually recovered and has gone higher. So what I'm saying is that you should be more nervous if you're holding individual stocks but if you're holding the market, well...markets go up and down, up and down, etc.

I'm posting a picture below so you can see that the stock market actually declines fairly regularly (maybe not recession level 20%+ or more) but this doesn't mean you should get out of the stock market (if you're invested in the market and not in individual stocks). The chart below shows annual gains and losses (the grey bars) and "intrayear declines" in purple. See that every year from 1980-2016 the market had drops, but just because there were declines, doesn't mean the year didn't end with a gain (or a smaller loss). The chart says it all: "Despite average intra-year drops of 14.2%, annual returns positive in 27 of 36 years". Stay the course. And keep reading and asking questions. It's the better way to learn (better than making mistakes).

Image

source: https://am.jpmorgan.com/blob-gim/138328 ... lebook.pdf
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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