Is waiting for a stock market crash to invest a viable strategy?

[divs4ever]

well i prepared as best as i saw fit for a proper crash in 2013 , having only started investing in 2011 ,

i am still waiting for that crash , with several moves paying off anyway

but here we are , even the ASX ( XJO ) is making new highs , while the US seems to set new records most ( recent ) weeks

now i do not expect the market to go to zero , but goodness me , there are plenty of ridiculously priced stocks out there , surely a big dose of rationality is due sooner than later

if so can we positions ourselves for that downturn

i am currently nibbling on the edges with BEAR , but it will certainly not be the blast of cash , i got in 2020 ( for holdings in BEAR , BBOZ and BBUS)

now several other 'reverse ETFs have entered the market since 2020 , but i am an investor , so i should be looking at which stocks ( and at which priority ) to put on the shopping list ready for the next crash

what looked to be obvious bargains in 2020 turned out not always to be so

so maybe i need to revise that shopping list .

certain ETFs will have their fans ( when trading at BIG price drops , ) , some LICS as well

actual stocks might be more challenging , for example i probably won't be looking at stumble-prone WOW and WBC much

will the government rush out with initiatives ( lifelines ) like they did in 2020 , which would hint the mid caps will get punished disproportionately

 

[TimeISmoney]

the market to go to zero , but goodness me , there are plenty of ridiculously priced stocks out there , surely a big dose of rationality is due sooner than later

if so can we positions ourselves for that downturn

It always happens when everyone least expects it, I'm speculating it's going to go bear or bull but not sideways when Trump takes over.

 

[Dona Ferentes]

post 21 ..wordsalad

 

[Bellcose]

post 21 ..wordsalad

Thank you. Saves me reading it.

 

[StockyGuy]

Some people being a bit rough on Mr Divs

 

[Dona Ferentes]

Some people being a bit rough on Mr Divs

he said the moon landing was fake.

 

[Value Hunter]

i am currently nibbling on the edges with BEAR , but it will certainly not be the blast of cash , i got in 2020 ( for holdings in BEAR , BBOZ and BBUS)

Be careful with that stuff. Volatility decay means most of those bear ETFs are only suitable for day traders........

If you want to place bearish bets on the market over a longer time frame index options are a better bet.

 

[cynic]

he said the moon landing was fake.

Are you suggesting that it wasn't?!!

I'm of the strong opinion that the first lunar landing was faked in order to relieve (space race, and other) pressures in the hope of creating an environment, that would allow NASA to work through the obstacles, at a more leisurely pace, before ultimately achieving a series of real landings. I cannot prove this, but, consider myself to be entitled to as much certainty, about my own opinions, as those holding contrary viewpoints.

In relation to the actual thread topic, I've encountered a couple of (fundamental analysis style) investors, over the years, for whom the preferred approach was, to have a number of well researched targets in mind, whilst awaiting a decent correction, before swooping in and purchasing at fire sale prices.
From what I could discern, the patience and discipline of this approach was serving them quite well.

Whilst some investors may find such strategies rewarding and comfortable, others may struggle in adherence due to (non- conducive) behavioural characteristics.

In my opinion, the investor/trader, ideally needs to discover for themselves, an approach suited to their individual characteristics, circumstances, objectives etcetera.

 

[Value Collector]

Are you suggesting that it wasn't?!!

I'm of the strong opinion that the first lunar landing was faked in order to relieve (space race, and other) pressures in the hope of creating an environment, that would allow NASA to work through the obstacles, at a more leisurely pace, before ultimately achieving a series of real landings. I cannot prove this, but, consider myself to be entitled to as much certainty, about my own opinions, as those holding contrary viewpoints.

The second Moon landing was only 4 months after the first, hardly enough extra time to work at a "leisurely pace" and risk the credibility of the entire decade long program.

The third moon landing took over a year, because in-between the second and the third they had the troubled Apollo 13 mission, which caused them to put the brakes a bit.

In relation to the actual thread topic, I've encountered a couple of (fundamental analysis style) investors, over the years, for whom the preferred approach was, to have a number of well researched targets in mind, whilst awaiting a decent correction, before swooping in and purchasing at fire sale prices.
From what I could discern, the patience and discipline of this approach was serving them quite well.

That is pretty much my strategy, except I don't wait for big entire market crashes, I just buy when ever I can see value.

 

[Bellcose]

Some people being a bit rough on Mr Divs

Because it goes like this.

 

[qldfrog]

Because it goes like this.

Which way?

 

[Smurf1976]

but here we are , even the ASX ( XJO ) is making new highs , while the US seems to set new records most ( recent ) weeks

Stick with the trend until it ends.

The most likely thing you'll get after a new high is another new high.

So that's my view, stick with the trend until there's evidence of a reversal.

 

[divs4ever]

It always happens when everyone least expects it, I'm speculating it's going to go bear or bull but not sideways when Trump takes over.

now going heavy cash , risks ( temporary income loss , and several positions are VERY juicy , income-wise

the second possibility is .. IF the market drops 50% some of the positions sold will not come down to my previous entry prices

sell high and buy back higher ( than previously ) doesn't sound like a great formula

now i might suffer from a little paranoia , but the global economic math doesn't seem solid to me , it might not need a whole black swan , just a few feathers might do it ( and the fear/panic goes to work )

 

[divs4ever]

Be careful with that stuff. Volatility decay means most of those bear ETFs are only suitable for day traders........

If you want to place bearish bets on the market over a longer time frame index options are a better bet.

yes i got a nasty after-taste of that with BBUS when i bought the last holding too late in 2020

( but it worked a treat between late 2019 to March 2020 )

 

[TimeISmoney]

now going heavy cash , risks ( temporary income loss , and several positions are VERY juicy , income-wise

the second possibility is .. IF the market drops 50% some of the positions sold will not come down to my previous entry prices

sell high and buy back higher ( than previously ) doesn't sound like a great formula

now i might suffer from a little paranoia , but the global economic math doesn't seem solid to me , it might not need a whole black swan , just a few feathers might do it ( and the fear/panic goes to work )

I sold down everything in the green last week, the market looks too volatile to me at this stage.

Might see if I can squeeze a bit more out of the last 2 that I'm holding with a loss, it might even be worth taking the capital loss to counteract tax gains.

 

[divs4ever]

I sold down everything in the green last week, the market looks too volatile to me at this stage.

Might see if I can squeeze a bit more out of the last 2 that I'm holding with a loss, it might even be worth taking the capital loss to counteract tax gains.

i can see your logic , but i am equally worried that my access to the cash stockpile could be restricted it the crash is steep enough , at the critical times .

essentially the reason i handled March 2020 so well was that i had the same concerns , so had moved to a big ( for me ) position in 'rapid liquidity

for example the combined 'reverse ETFs ' were easily my second largest holding , ( which meant selling them dumped money and profits straight into my share trading accounts ) i also has some cash in the actual banks ( in 2020 )

i noted that LIC CDM went to 100% cash in March 2020 , and started 'cherry-picking ' on the way into the recovery ( i hold CDM )

i am not PLANNING a large sell down ( currently ) , but sometimes i will suddenly change my mind and strategy , and thus working on a list , just in case .

before 2020 WOW ( i hold ) would be an obvious target , but my opinion has changed there , would i add more COL ( i hold courtesy of the WES demerger ) or would i look for some cheap WES or maybe BWP as examples

and depending on the contagion i am attracted to Asian-based operations ( that includes India )

but again what works for me , may not work for others , that has it's bonuses ( sometimes the only buyer in that market ) and it's flaws ( no damn buyers to sell to )

 

[DannyB0000]

I was 91% invested in shares through my super fund, am now 54% cash and will build up my cash position towards the end of the year. My super balance is up 40% because of shares. Going into next year I will be mostly cash with GOLD etf with my super and Boss energy through Commsec.

Am worried about Inflation starting to climb again next year because of Trump's economic policies and how that will effect the Stockmarket and what the FED will do. Looking at the Buffett index(Wilshire 5000), the current market is even more overvalued than Dot com bubble. Term deposits are paying almost 5% now.

 

[divs4ever]

Stick with the trend until it ends.

The most likely thing you'll get after a new high is another new high.

So that's my view, stick with the trend until there's evidence of a reversal.

the current plan is to stay mostly invested ( there are several stocks 'in the bottom drawer ' with no cash risk attached .. including my two largest holdings , it would take a really compelling deal to get me to liquidate them )

at the end of the financial year ( 2024 )

( by $value )

1. PME ( 'free-carried ' )

2. MQG ( 'free-carried ' )

3 WES ( some profit taken )

4. CMW ( at full cash risk )

5. BHP ( some profit taken )

6. CLW ( at full cash risk )

7. CDM ( at full cash risk )

8. REP ( at full cash risk )

9. CUP ( at full cash risk )

10. SGLLV ( at full cash risk ) ( about $50 behind )

close behind is CAM ( at full cash risk ) ,APE ( ' free-carried' ) , KGN ( at reduced cash risk ) ,NIC ( at full cash risk ), and HCW ( at full cash risk ) in a big clump

now some of these positions have changed ( while the top two have stretched their lead ) for example CLW has jumped ahead of WES , currently

some might note i am using selected REITs as bond proxies ( to provide reasonably stable income )

now IF there is a crash , where does the cash reserves go ( i wonder )

 

[divs4ever]

I was 91% invested in shares through my super fund, am now 54% cash and will build up my cash position towards the end of the year. My super balance is up 40% because of shares. Going into next year I will be mostly cash with GOLD etf with my super and Boss energy through Commsec.

Am worried about Inflation starting to climb again next year because of Trump's economic policies and how that will effect the Stockmarket and what the FED will do. Looking at the Buffett index(Wilshire 5000), the current market is even more overvalued than Dot com bubble. Term deposits are paying almost 5% now.

i suspect inflation is baked into the cake , already , whether Trump makes that worse or better remains to be seen , of course there is the possibility of an almighty financial collapse/depression , but how many life-lines will the various governments throw to their friends .

it may sound strange , but i have never invested in a term deposit that has paid less than 5% ( and i stopped investing there years back ) i use selected REITs instead .

remember as savvy as Buffett can be .. when he invests in a company he becomes an influential share-holder ( buys a seat on the board ) and thus helps steer the company forward

( only rarely does my vote ever help change the management decisions )

BTW i liquidated my super in 2010 , and for me that was the right thing to do , the cash did better in AMP shares until 2018 , than it did under their 'management ' .. and i was extremely fortunate to exit AMP in 2018 ( before the Hayne Royal Commission , after digesting a Bell Potter report into super-fund changes proposed ) .. the AMP proceeds went into PSQ ( currently up 71% for me , but under take-over pressure )

so MAYBE more cash whether i desired it or not

 

[Value Collector]

remember as savvy as Buffett can be .. when he invests in a company he becomes an influential share-holder ( buys a seat on the board ) and thus helps steer the company forward

no he doesn’t, quite the opposite actually.

He actually admits there is some companies that he owns 100% of and hasn’t spoken to the management in years, besides a generic letter he writes once a year addressed to all his managers.

And the companies on the share market he owns he doesn’t really contact at all.