Leveraged100to1 wrote: ↑
Wed May 22, 2019 9:59 am
I don't need to know exactly when the crash will be over, because I don't think anyone can deny the benefit of waiting for a lower price and buying somewhere around the bottom of the market crash rather than buying now (I am guessing that the next crash is starting in 1-2 years, since it's been a long time from the last 2008 crash, but that's a guess). Buying somewhere around the bottom, using almost any definition of the word "somewhere", is better than buying before the peak starts heading down. It's easy to tell when we are in a crash...turn on the news and you'll see Lehman Brothers going bankrupt and Bear Stearns failing (if it was 2008).
What if the next crash doesn't come until after more bull market?
I will wait. I'm patient. I have no fear of missing out.
What if the cycle turns into a peak with valleys?
Correct me if I am misunderstanding you... do you mean the general economic cycle with cease to exist and instead the stock market will become a steep, upward sloping line with small dips along the way (with no 50% crashes)? Well, that would be awesome for everyone, but what would make that happen?
You are making assumptions about the future based on an expectation that it will go reasonably like it already has gone
The assumption I'm making is that economic cycles exist. I believe they exist because I read and am convinced by Ray Dalio's debt cycle book (the first part of it). Do you believe economic cycles won't exist anymore? Why do you believe that?
there is no need to wait and no need to gamble or guess about your market timing
The phrase "market timing" has negative connotations, but what I am doing (waiting for a crash) is an exception. Buying somewhere around the bottom, using almost any definition of the word "somewhere", is better than buying before the peak starts heading down. I am not timing the market the way a day trader who already has a portfolio would.
I don't have a portfolio of stocks yet.
Yes, buy low and sell high. Sounds easy. Except, well, you know, the fortune telling part.
But why wait until there is a "crash"? If you can tell when the crash is at bottom and also when there is a peak, then why have a 1-4 year cycle? Why not just do it during the day every day. Surely, you can tell during the day when the market is crashing. I mean if it's down 300 points, it's a crash, right, time to buy. Or do you wait for 600? What if it goes up to 282? Back up? Or a blip on the way down. Everyone knows 600 is a lot. So, sure, once you're at 600, let's say that's a crash. Ok, now what. Buy at 599? Wait for 601?
I think it's relatively easy to see the fallacy in your thinking if you impose your view on your ability to predict 1-4 year "cycles" with your ability to predict intra-day (week, year, decade) peaks and valleys. Newflash: You can't.
Here's a game for you that hopefully illustrates the point. Pretend you had asked this question just three years ago. Pull up an S&P 500 chart for the last 3 years. The S&P was around 2200 3 years ago. Let's say you had $100,000 in your pocket waiting for a "crash". You watch the S&P 500 go all the way up to 2900 in early 2018. But you've been sitting there waiting for a crash. Rats. Ok, now, it dips 200 points in mid-2018. Was that a "crash"? Certainly it's not what anyone would define as one. But, well, you've missed the boat on a collossal bull market and so now maybe you're tempted to think it's a crash because you have missed out. But, let's say you have discipline. You say, no this isn't even a correction -- I'm going to stay true to my philosophy. Uh oh, now the market goes even higher getting almost to 2950, but then quickly drops to 2548. Is this a crash? When did you decide it was a crash? At 2650? At 2600? At 2550? Or are you just saying you are so good at this that you would know that the instant it hits 2548 that it's at rock bottom?
No, probably what you'll do is wait a few days to make sure you're not trying to catch a falling knife, and to see if it has further to go. It works it's way back to 2600, then 2650, very quickly. Uh oh. What do you do? Ok, you jump. It wasn't a crash, but close enough. You buy at 2650. You did very well! Because the market quickly rebounds to 2900. You bought low and you now are high. Very clever!!!
But, are you? You timed a dip nearly perfectly. You did everything right. Except . . . If you'd just invested your $100,000 3 years ago, you would have been in at 2200. All that time waiting for the dip cost you tens of thousands of dollars. Compounded over your life as an investor if you are willing to invest it correctly, you've cost yourself millions. Read that again. You timed things really well. You bought at the most significant dip in 3 years. Yet cost yourself millions.