US stock market crash tonight/tomorrow

[diseasex]

Try this as a paper exercise.

Sit quietly in a room by yourself. Imagine that you've just lost 80% of your investment overnight. How do you feel?

Would still be on plus!
I'm carrying on!

[diseasex]

There, I've said it.

so how much did you lose on short pal ? because my shares went nuts to the point i'm thinking of cashing in in fear of crash on US stocks....
prefer slow and steady long term growth

[WordIsBond]

a) you need to be able to perform a quick analysis on company reports. If you're not downloading the company accounts before you invest and screening the company, you shouldn't really be buying its shares.

Your analysis had best be better than that.

Company reports A) can be slanted in some ways B) can even be Enron-esque C) are backwards looking, not forwards looking. Even if they are accurate, they tell you what was, not what is and what will be.

For a company to be successful going forward, they have to have products that people are going to want to buy. They have to have management that knows how to run a company, control costs, and form and implement good long-term strategy. They have to have marketing people who are good and a marketing approach that works. Unless you have good reason to believe in those things, forget about reading the company reports and buy a tracker. If you believe in those things, then check the company reports to make sure there are no financial disasters impending and that the company has the resources to implement all of the above.

And if you want to pay a fund manager, find one who you actually know does that kind of analysis. Otherwise, again, buy a tracker.

[diseasex]

Your analysis had best be better than that.

Company reports A) can be slanted in some ways B) can even be Enron-esque C) are backwards looking, not forwards looking. Even if they are accurate, they tell you what was, not what is and what will be.

For a company to be successful going forward, they have to have products that people are going to want to buy. They have to have management that knows how to run a company, control costs, and form and implement good long-term strategy. They have to have marketing people who are good and a marketing approach that works. Unless you have good reason to believe in those things, forget about reading the company reports and buy a tracker. If you believe in those things, then check the company reports to make sure there are no financial disasters impending and that the company has the resources to implement all of the above.

And if you want to pay a fund manager, find one who you actually know does that kind of analysis. Otherwise, again, buy a tracker.

I've spent good 20 hours over the weekend on analysis found like 4-6 ,but my god all of them were like +5 - +20% yesterday.
I invested in one but it's madness, i prefer steady and calm growth. Now I'm fearing crash too.....
Post on this forum is already sign that things not right, when we hear about share stock market from barber it's time to pack things (I'm waiting for +4% on indexes though)

[lukemg]

So - this is the risk you take for the potential of a better return. The long-term graphs look nice as they march upwards but hidden in there are sickening lurches downwards that shake people out.

Average return from market is something like 6pc over inflation, average private investor makes 3pc entirely due to poor decisions, trading costs, trying to time the market, losing bottle in a downturn etc.

These are the people you need to make money from, so:
1. If you cant hold your nerve, buy bonds, leave in 1% bank account.
2. Diversify globally and rebalance to your required asset allocation (%'ages in countries/sectors) using thresholds (or chuck in a Vanguard Lifestrategy 80 fund, which will rebalance to bonds for you)
3. NEVER SELL and consider using Value Cost Averaging to automatically make you buy more at lower prices.
It's really simple but it's not easy...

[jamesbrown]

NEVER SELL

And die rich? Aside from fear, greed is what motivates people to sell, i.e. wanting the money now. I agree with everything you say, but the difficulty with this strategy, as a prescription, is that different people have different objectives in their investing. Personally, I find the long-term value play very boring (something for the pension), although I fully appreciate the logic.

[BlasterBates]

So - this is the risk you take for the potential of a better return. The long-term graphs look nice as they march upwards but hidden in there are sickening lurches downwards that shake people out.

Average return from market is something like 6pc over inflation, average private investor makes 3pc entirely due to poor decisions, trading costs, trying to time the market, losing bottle in a downturn etc.

These are the people you need to make money from, so:
1. If you cant hold your nerve, buy bonds, leave in 1% bank account.
2. Diversify globally and rebalance to your required asset allocation (%'ages in countries/sectors) using thresholds (or chuck in a Vanguard Lifestrategy 80 fund, which will rebalance to bonds for you)
3. NEVER SELL and consider using Value Cost Averaging to automatically make you buy more at lower prices.
It's really simple but it's not easy...

You've hit the nail on the head. It's not just private investors that get hit by the crashes. Basically a crash occurs in a liquidity crisis, i.e. companies as well as individuals are all "maxed out" Hedge funds, banks as well as companies and individuals are rolling over loans, investing loans in shares, making profits and "bang" liquidity dries up. Individuals are forced to liquidate their investments because they lost their job, or businesses too. This means they throw shares onto the market at rock bottom prices

Basically if you hold cash and remain liquid, a crash is a marvellous opportunity to sweep up "money" i.e. cheap shares from "hard-up" hedge funds who can't roll over their loans.

[diseasex]

edit : said too much.

[WordIsBond]

edit : said too much.

You should learn how to copy-paste and use the above technique more frequently.

[lukemg]

And die rich? Aside from fear, greed is what motivates people to sell, i.e. wanting the money now. I agree with everything you say, but the difficulty with this strategy, as a prescription, is that different people have different objectives in their investing. Personally, I find the long-term value play very boring (something for the pension), although I fully appreciate the logic.

If you want/need the money now (or in the next 5 years), then you should not even consider investing in the first place.
The objective is FIRE (Financial Independence/Retire Early) not to accumulate till you die. This can happen of course but imagine being 50-55 and completely financially secure for the rest of your life. You can carry on working or not, pick and choose work and locations, walk away from sh*t jobs you would usually have to stick in, take 3 or 6 month breaks, have every summer off. It is a freedom few people will ever get. So you build up the pot and then run it down as you need.

If you are talking short-term trading then that is a different chat. For day traders the standard is 90% lose 90% of their money in 90 days. I know people can get lucky for a while and some do have the aptitude to consistently be ahead (just like some can bet on horses and win or be professional footballers, it dont mean you can).
You are competing against thousands of smarter people with better, quicker information than you can ever get. This is no different from betting on horses cos you like the names, I don't fancy those odds...