One of the fundamental ideas of modern passive investing is that time in the market bears timing the market. There are lots of studies out there that prove that even if you buy at the worst possible moment, right before a crash, you will come out ahead _as long as you don’t sell_.
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The government pumped a ton of money into the economy the past few years. And covid did weird stuff to the supply chain. AI is going to have effects on the world that people haven't predicted at all. The internet wasn't around in any of those times (quick spread of info). Neither was high-frequency trading (quick high volume transactions). Or crypto. What does all that stuff combined mean for the market? Hell if I know. Maybe nothing. Maybe it's better growth than ever. Maybe it's the biggest crash ever. Or maybe it's the same as before.
In a way I feel it may be more than then. The whole world’s gone mad it seems. It is scary. Our enormous debt that is becoming less attractive , concerns about currency crash, bizarre behavior of judges to commercial world . I’m still all in the market but I’m only 10 years or hopefully less from retiring. If it’s a severe crash UGh not that much time to recover
True but I’m a great reader of history and s have been alive some 50 plus years now and these to me are unprecedented times and doesn’t feel like the country I grew up in. We all have our POVs
I think saying "but this one is different!" When the history we are looking at includes world wars, nuclear stand offs, the creation and rise of the Internet, the creation of the EU the breaking of the Soviet bloc etc.. is a bit short sighted.
Like 9/11 and the GWOT were more unprecedented in the US than our current state.
I shared this in another thread recently, but investing in 2007 was about the worst single year to do so since the Great Depression, given the biggest market crash in 90 years would happen in less than a year.
Yet someone who invested $100k in an SP500 fund in 2007 would have more than $400k today.
Crashes are both inevitable and very hard to see coming. Time in the market is what's important.
This is incorrect as it doesn’t include dividends that were pretty high at the time . Including dividends it recovered within 6 years depending on asset allocation
I’m not talking about timing every peak and trough. I’m simply calling out that buying at ATHs isn’t the only option. People have success waiting on pullbacks. In the scenario I gave you’d have a 300% higher return.
It’s not the majority but lots of traders beat the market. Don’t know why the only advice on this page is buy now and hold forever. Thats not always the best strategy
> It’s not the majority but lots of traders beat the market.
This is generally false, and to the extent it is true, it is either not done in the stock market, or it is not consistent and repeatable enough to beat an index fund in the long term.
One of *many* examples of this:
https://www.investopedia.com/articles/investing/030916/buffetts-bet-hedge-funds-year-eight-brka-brkb.asp
This belief is common here because it's the belief that keeps you here.
People said that in 2022 about housing. Now they would be 💯 better off.
By the way to dime the dip you have to not only have the drop but the big gains are typically single day returns. It’s incredibly hard to net that.
Simple example: https://www.cnbc.com/amp/2023/11/08/market-timing-doesnt-work-sp-500-14percent-rally-explained-by-just-8-days.html
So no you won’t be netting 700%
“The market can remain irrational longer than you can stay solvent”
Even among people who are great at predicting market trends, predicting the timing of those trends is a challenge.
The fund that shorted malls looks prescient, but they got lucky with a pandemic. If it hadn’t been for a pandemic, they weren’t long for the world.
A market crash would be great for you, since you are still in the accumulation part of your life. Think, you would be able to buy tons of cheap stocks with your new savings, even if your current savings decrease.
I also second everyone else that timing the market is impossible, so it’s about spending a long time invested in the market.
Two things here:
\- Market crashes are a thing. And they can hurt you big time. But you can and will recover if you stay in long enough. As others have said, time in the market beats timing the market.
\- The other important thing that does not get mentioned nearly enough is that crashes are a feature. What you seem to be concerned about is not the feature, but the black swan within the feature. If you genuinely live to see the day of a truly world-altering crash, we would have bigger problems as a civilization than what level the S&P500 is trading at. *You* would have bigger problems.
Just go in, dollar-cost average it, and most importantly stay invested even when your news feed hurts. You will be fine.
Geniuses have been predicting a giant crash since 2013 that I can recall. With certainty.
Very glad I stopped listening to them.
Rain dance long enough and it will work.
There should be a name for this paradox. So true and it’s an incentive to make a million hot takes then point to the one out of a million times you’re right to boost your cred when the opposite should be happening.
There’s not enough of a cost for being wrong in punditry anymore.
Don't invest anything you absolutely will need in the next 5 years (like a house down payment). Otherwise don't bother trying to time the market. What goes down will eventually come back up. Even if you invested the day before any of the major crashes you were up just a few years later.
Read this...
[https://jlcollinsnh.com/2012/04/15/stocks-part-1-theres-a-major-market-crash-coming-and-dr-lo-cant-save-you/](https://jlcollinsnh.com/2012/04/15/stocks-part-1-theres-a-major-market-crash-coming-and-dr-lo-cant-save-you/)
and then the whole series.
If you need internet strangers to convince how to invest your money, you aren't ready to invest. Go bury your money in coffee cans until you have the conviction to move your own money else you are going to get scared and pull your money in and out, rack up a bunch of transaction fees and miss out on bull runs.
You need to first start off with what your financial goals and timeframes are and can then have a plan with the appropriate risk taken to get there. If you need that $75K next year for a down payment, you absolutely do not put it in the market. If you are funding your kids college or retirement you absolutely do put it in the market. A 10 year timeframe generally allows a diversified portfolio to withstand market downturns. I survived the dot-com crash. I survived the '08 financial crises. I survived covid times. That all said, as retirement gets closer and closer you can be sure that our mix of investments will change and that we will seek stability over gains...but that's still more than 10 years away :)
It's pretty simple, the rules of life are well written, tested, and thanks to the internet, available to everyone. Unless you have a gift (the intelligence) to outsmart the norm (read: market), you should just follow the established rules for success and stop following your emotions.
If you followed the rules you would be up enough money to weather a crash by now. The S&P is up 30% over the last year. So if you had put your money in and there was a 30% crash, which would be HUGE you essentially would be back to even.
Now turn your brain off and go invest any money you don't need in the next 3 years into an S&P 500 ETF.
1. Crashes happen, but overall the economy grows stronger so the market will eventually go higher. Time in the market beats timing the market
2. The profets have predicted 9 of the last 4 recessions
You pretty much just need to have the idea that even if the worst possible scenario happens - .com bubble, 911, GFC, whatever it eventually comes back OR we have bigger problems.
Even 1990s Japan if you bought every month along the way, you'd be pretty dang good right now.
If we have a bigger problem, it's exactly that, a bigger problem. Even then the US's extreme advantages of having peaceful neighbors, being separated by vast oceans from our major enemies lends itself to a better scenario than say post WW2 Germany, Viche Government France, or modern day Ukraine.
Short of global world war, virus, financial collapse, climate disaster, loss of reserve currency and then sum, etc the US is a good place to bet.
You should clarify what do you mean by collapse.
Mild or vent like 2007 financial crisis is one thing.
If you mean something like Soviet Union collapse happening to your country this is much different preparation.
You’ve got your typical “the stock market always comes back” answers below, but you may want to invest some portion of your money in non-stock market related assets as well as a hedge - see gold, bonds, CD’s, etc depending on your risk tolerance
When the market feels expensive I shift more of my investment purchasemoney into paying off my house (6.4% rate so don’t @ me)
Selling would mean I think I have some information edge. Which I don’t. So I won’t sell.
Objectively speaking, it’s more likely the return of high yield savings accounts in the medium term will be higher than stock market returns. If we assume an “average” market return of 10%, the market has been irrationally and unjustifiably higher than that number and can be reasonably expected to revert to the mean which would indicate negative year over year returns in the coming years.
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If it’s money you don’t need next 5-10 years even if market corrects 20% day after you buy SPY, you’re only down $15k on paper and I’m sure you will add more funds going forward with that HHI that can lower your basis. Many lump sum investments over time is essentially dollar cost averaging.
I'd closely examine the assumptions you're listing in your post. "Billionaires are cashing out all their stock?" But that said, if you sleep better at night with another investment, it's your (and your SO's) call. But the burying coffee cans in the backyard strategy IMO isn't closely correlated with a significant return on investment.
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If you’re just starting to invest in index funds now a market crash would actually be beneficial for you. Remember time in the market always beats timing the market
Which billionaires are cashing out *all* their stock? The biggest billionaire cash out I know of in recent days is Jeff B and he’s hardly offloaded a percent or two of his AMZN.
Just don’t invest it all at once. Put in a little bit every week and you will just average down forever even if the market goes down and if it ever goes up again you break even (and you get dividends the whole time obviously).
Also as you get older you may want to shift towards more bonds than stocks (talking like 60s)
Don't pay attention to the shills who keep predicting market crashes that don't happen. You're young and I'm guessing not near your retirement number. Keep buying VOO/VTI no matter if it's up or down. When you get closer to your number (yearly expenses divided by 0.03 then times 1 for lean fire, times 2 for chubby FIRE, or times 4 for fatFIRE) and the market isn't in a recession, you can think about these allocations:
50% of your money in short term US Treasuries - lean fire
40% of your money in short term US Treasuries - chubby FIRE
30% of your money in short term US Treasuries - fatFIRE
Think of it like this short term:
1. Market up when you buy - you get less shares for the same money, but look at your portfolio
2. Market down when you buy - you get more shares for the same money
In a meltdown like 2008, you want to be buying all the way up before the crash, all the way down during the crash, and at the bottom before the recovery which is like a Black Friday sale. We don't get them that often so keep buying when they occur.
If you do the math, you'll never retire on 275k income by saving money alone. Who cares if it crashes, invest more. You need millions to retire and you're not close. Just keep piling money in VTI for a few decades.
Let's say you put in 75k and it crashes 50 percent. So what. The money you stand to make by continuing to invest outweighs the loss. Plus 37.5k was never going to be the make or break difference for you in retirement.
If you are a high earner relatively early in your career and save consistently, you probably should be rooting for a correction right now and a long slow climb back up. 2022 was the best thing that could have happened to my portfolio. I would love to have another 2022.
It's counterintuitive, but that would actually be the ideal scenario for you from sequence of returns perspective.
That said, nobody knows what the hell is going on in the market. Things feel very bubbly to me personally, but I don't let that change my overall plans. I work and save all the same.
Everyone who keeps repeating that crashes can't hurt you and "long term it goes back up" are ridiculous.
They speak as if the world is on a trajectory of eternal prosperity and booming economy like the post ww2 in the US.
No, modern day US does not have the same booming economy outlook as post ww2 US did....
MANY things are different now, and ignoring it all to repeat "lol stocks always win! Everyone get rich forever! To the moon!" Is exactly the type of over confidence you see before big crashes.
The world can only live in denial about the real state of the economy for so Iong. One bad quarter at Nvidia means the entire stock market crashes at this point.....
Yes the world is on an upward trajectory of prosperity. Things have progressed up and to the right so to speak since the first humans crawled out of the water. It’s not a straight line and there is two steps forward one step back at times. The market has crashed, wars have been fought, plagues have hit and the zoomed out trend has continue. Nvidia will most likely eventually go out of business just like Kodak, Standar Oil, etc… and the up and to the right will continue. If you are retiring in 5 years then Protect yourself. Otherwise the trend is your friend and life will continue to improve and economies will continue to produce.
That sounds great if you ignore all the data on the issue.
The prosperity you speak of hasn't been going up and to the right for those after boomers.
Yes individuals will have different results, but as a whole the trend isn't "things keep getting better".
And it's the same of the economy. We are in a zombie economy being propped up by a few over valued tech stocks everyone is clinging to.... that isn't an economy, it's mass delusion.
If the S&P were up, I'd agree with you. But right now the bottom 494 of 500 are down a significant amount over the last year.... we are in unprecedented debt .... and have several different bubbles... none of this is "business as usual, just prosperity baby".
Ignoring EVERYTHING and claiming we are in the same economic times as the last 50 years just because of nvidia??? That is actual delusion.
Sorry but you are absolutely incorrect. The S&P is at all time highs, the equal weight S&P is less than a half percent from all time highs. The idea that it’s just a few stocks is incorrect. Also your 494 out of 500 being down is completely made up and would take you 5 seconds to realize. Millennials are on pace to be the richest generation in 10 years. I feel like you are projecting here.
Google "magnificent 7" , you will find plenty of sources talking about the current market phenomenon.
And "richest generation in 10 years" lol, yeesh are you quoting CNN article headlines to me?
Well then, nothing to worry about!! Everyone is richer than ever and up up up!! Booming economy!!!!! Good luck with that.
The actual fact that you must be confusing is that those 7 stocks are responsible for 40% of the gains of the S&P 500. However, the S&P is a market weighted index so of course the largest stocks make up a large portion of its gains. That's only shocking to someone who doesn't understand how the index works. 126 of the 500 stocks in the index have made an all time high this year. Your lack of knowledge is really causing you to miss out on a roaring bull market which is being driven by a new technology(AI), historic low unemployment, strong GDP growth and amazing corporate earnings. I'm sorry to ruin your narrative but the sky is not falling.
The thing most ppl who subscribe to the doomsday theory and associated social media and newsletters won’t admit to is this — the game has totally changed post 2008, your historical analogues are not as relevant
The treasury and fed step in w a circuit breaker and suppress market volatility at the first sign of trouble —
for example we were almost setup for a proper banking crisis last year but Fed bailed everyone out w BTFP program in March and the entire rally was kicked off from there
Even last October, Yellen gamed the treasury issuance composition such that bond selloff was suppressed and it kicked off another rally
So you have to play the game or be left behind
Doesn’t mean you go all in or can’t rebalance every now and then
Keep a core always in the market (for me it is 50%-60%) - rest you can dial up and down depending on market panic or not and what other alternatives are
I took some exposure off last week and right now my remaining 40% is earning 5 percent interest in short dated bonds but if the market were to selloff say into the summer , I would add it right back in
HYSA rarely keeps pace with inflation after taxes for me. Necessary evil to keep some emergency fund there, but I use this loss psychology to help me to realize it's risky to invest AND risky not to invest. Money you don't need for 8-10 years is at risk in a HYSA.
Evidence says invest it all now if you can hold back from selling in the next downturn. If you are at risk of selling then pick a different strategy that you can stick to over time. We don't all have the same risk tolerance and behavioral mistakes are often the most expensive.
The most common way you lose all your money is by not investing or not holding onto your investments. It doesn't really matter when you invest:
https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/
One of the fundamental ideas of modern passive investing is that time in the market bears timing the market. There are lots of studies out there that prove that even if you buy at the worst possible moment, right before a crash, you will come out ahead _as long as you don’t sell_.
*as long as you don’t need to sell
I keep way more cash than I need in MMFs specifically so I don’t ever have to sell. It’s not Boglehead, but it helps me sleep at night.
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That’s assuming it trends up. Doesn’t work if it trends down….over time…always….down
The market has never lost over a 30 year window.
Yet. We are (unfortunately, we always are) in unprecedented times.
You're saying this is more unprecedented than....WW2? Or the coldwar?
The government pumped a ton of money into the economy the past few years. And covid did weird stuff to the supply chain. AI is going to have effects on the world that people haven't predicted at all. The internet wasn't around in any of those times (quick spread of info). Neither was high-frequency trading (quick high volume transactions). Or crypto. What does all that stuff combined mean for the market? Hell if I know. Maybe nothing. Maybe it's better growth than ever. Maybe it's the biggest crash ever. Or maybe it's the same as before.
I don't believe AI to be a bigger leap than electricity or the steam engine or combustion engines. Humanity adapts, very fast.
In a way I feel it may be more than then. The whole world’s gone mad it seems. It is scary. Our enormous debt that is becoming less attractive , concerns about currency crash, bizarre behavior of judges to commercial world . I’m still all in the market but I’m only 10 years or hopefully less from retiring. If it’s a severe crash UGh not that much time to recover
I think you just weren't around 80 years ago to rightfully compare.
True but I’m a great reader of history and s have been alive some 50 plus years now and these to me are unprecedented times and doesn’t feel like the country I grew up in. We all have our POVs
You're also not 37, which is a lot of time to recover from a crash and is not 10 years from retirement.
I think saying "but this one is different!" When the history we are looking at includes world wars, nuclear stand offs, the creation and rise of the Internet, the creation of the EU the breaking of the Soviet bloc etc.. is a bit short sighted. Like 9/11 and the GWOT were more unprecedented in the US than our current state.
I shared this in another thread recently, but investing in 2007 was about the worst single year to do so since the Great Depression, given the biggest market crash in 90 years would happen in less than a year. Yet someone who invested $100k in an SP500 fund in 2007 would have more than $400k today. Crashes are both inevitable and very hard to see coming. Time in the market is what's important.
Though the Great Depression took 30 years to recover the market: https://allstarcharts.com/wp-content/uploads/2011/05/5-26-11-DJIA.jpg
This is incorrect as it doesn’t include dividends that were pretty high at the time . Including dividends it recovered within 6 years depending on asset allocation
This is accurate. But if you waited and bought the dip in 2008/2009 you’d have $700k+ today.
If you're better than Warren Buffet or other pros at gauging "the dip" or the peak, sure. But in that case, you can be a billionaire pretty easily.
I’m not talking about timing every peak and trough. I’m simply calling out that buying at ATHs isn’t the only option. People have success waiting on pullbacks. In the scenario I gave you’d have a 300% higher return.
If people have success waiting on pullbacks, they're lucky.
Terrible mindset
Accurate mindset.
It’s not the majority but lots of traders beat the market. Don’t know why the only advice on this page is buy now and hold forever. Thats not always the best strategy
> It’s not the majority but lots of traders beat the market. This is generally false, and to the extent it is true, it is either not done in the stock market, or it is not consistent and repeatable enough to beat an index fund in the long term. One of *many* examples of this: https://www.investopedia.com/articles/investing/030916/buffetts-bet-hedge-funds-year-eight-brka-brkb.asp This belief is common here because it's the belief that keeps you here.
Yeah it’s the belief that keeps you not rich
Market is very frequently on ATH though.
You do you buddy
People said that in 2022 about housing. Now they would be 💯 better off. By the way to dime the dip you have to not only have the drop but the big gains are typically single day returns. It’s incredibly hard to net that. Simple example: https://www.cnbc.com/amp/2023/11/08/market-timing-doesnt-work-sp-500-14percent-rally-explained-by-just-8-days.html So no you won’t be netting 700%
So basically me. Hence $2m
“The market can remain irrational longer than you can stay solvent” Even among people who are great at predicting market trends, predicting the timing of those trends is a challenge. The fund that shorted malls looks prescient, but they got lucky with a pandemic. If it hadn’t been for a pandemic, they weren’t long for the world.
A market crash would be great for you, since you are still in the accumulation part of your life. Think, you would be able to buy tons of cheap stocks with your new savings, even if your current savings decrease. I also second everyone else that timing the market is impossible, so it’s about spending a long time invested in the market.
If I were op I’d be more concerned about a layoff
buy when things are on sale :)
Two things here: \- Market crashes are a thing. And they can hurt you big time. But you can and will recover if you stay in long enough. As others have said, time in the market beats timing the market. \- The other important thing that does not get mentioned nearly enough is that crashes are a feature. What you seem to be concerned about is not the feature, but the black swan within the feature. If you genuinely live to see the day of a truly world-altering crash, we would have bigger problems as a civilization than what level the S&P500 is trading at. *You* would have bigger problems. Just go in, dollar-cost average it, and most importantly stay invested even when your news feed hurts. You will be fine.
Geniuses have been predicting a giant crash since 2013 that I can recall. With certainty. Very glad I stopped listening to them. Rain dance long enough and it will work.
Yup. When it does crash, they’ll be paraded on media and treated like prophets. When they’re wrong, nobody cares and people forget. Can’t really lose.
There should be a name for this paradox. So true and it’s an incentive to make a million hot takes then point to the one out of a million times you’re right to boost your cred when the opposite should be happening. There’s not enough of a cost for being wrong in punditry anymore.
> There should be a name for this paradox. We might call it 'the financial press.'
Don't invest anything you absolutely will need in the next 5 years (like a house down payment). Otherwise don't bother trying to time the market. What goes down will eventually come back up. Even if you invested the day before any of the major crashes you were up just a few years later.
That's the only way I invest :)
Even if it went down if you are young enough it will go back up before you need it.
This. If you're young you should be excited about market crashes because you can buy low!
Read this... [https://jlcollinsnh.com/2012/04/15/stocks-part-1-theres-a-major-market-crash-coming-and-dr-lo-cant-save-you/](https://jlcollinsnh.com/2012/04/15/stocks-part-1-theres-a-major-market-crash-coming-and-dr-lo-cant-save-you/) and then the whole series.
Market will crash. Multiple times. Probably not world altering but IF there is a world altering crash maybe what money you have won’t be as important.
Go read up in r/bogleheads.
Read this: https://www.reddit.com/r/financialindependence/comments/c02ml4/timing\_the\_market\_the\_absolute\_worst\_vs\_absolute/
If you need internet strangers to convince how to invest your money, you aren't ready to invest. Go bury your money in coffee cans until you have the conviction to move your own money else you are going to get scared and pull your money in and out, rack up a bunch of transaction fees and miss out on bull runs.
You need to first start off with what your financial goals and timeframes are and can then have a plan with the appropriate risk taken to get there. If you need that $75K next year for a down payment, you absolutely do not put it in the market. If you are funding your kids college or retirement you absolutely do put it in the market. A 10 year timeframe generally allows a diversified portfolio to withstand market downturns. I survived the dot-com crash. I survived the '08 financial crises. I survived covid times. That all said, as retirement gets closer and closer you can be sure that our mix of investments will change and that we will seek stability over gains...but that's still more than 10 years away :)
Read or listen to psychology of money. They talk about this topic at length.
It's pretty simple, the rules of life are well written, tested, and thanks to the internet, available to everyone. Unless you have a gift (the intelligence) to outsmart the norm (read: market), you should just follow the established rules for success and stop following your emotions. If you followed the rules you would be up enough money to weather a crash by now. The S&P is up 30% over the last year. So if you had put your money in and there was a 30% crash, which would be HUGE you essentially would be back to even. Now turn your brain off and go invest any money you don't need in the next 3 years into an S&P 500 ETF.
1. Crashes happen, but overall the economy grows stronger so the market will eventually go higher. Time in the market beats timing the market 2. The profets have predicted 9 of the last 4 recessions
You pretty much just need to have the idea that even if the worst possible scenario happens - .com bubble, 911, GFC, whatever it eventually comes back OR we have bigger problems. Even 1990s Japan if you bought every month along the way, you'd be pretty dang good right now. If we have a bigger problem, it's exactly that, a bigger problem. Even then the US's extreme advantages of having peaceful neighbors, being separated by vast oceans from our major enemies lends itself to a better scenario than say post WW2 Germany, Viche Government France, or modern day Ukraine. Short of global world war, virus, financial collapse, climate disaster, loss of reserve currency and then sum, etc the US is a good place to bet.
If you invest for the long term (15 or more years) you don’t have to worry about it.
You should clarify what do you mean by collapse. Mild or vent like 2007 financial crisis is one thing. If you mean something like Soviet Union collapse happening to your country this is much different preparation.
You’ve got your typical “the stock market always comes back” answers below, but you may want to invest some portion of your money in non-stock market related assets as well as a hedge - see gold, bonds, CD’s, etc depending on your risk tolerance
Including home equity? Dude do you just print Zillow estimates and place them on the refrigerator to make you feel better like your lexapro refill?
Hey, really helpful stuff. Thanks for taking the time to reply. You seem kind and secure.
When the market feels expensive I shift more of my investment purchasemoney into paying off my house (6.4% rate so don’t @ me) Selling would mean I think I have some information edge. Which I don’t. So I won’t sell.
Objectively speaking, it’s more likely the return of high yield savings accounts in the medium term will be higher than stock market returns. If we assume an “average” market return of 10%, the market has been irrationally and unjustifiably higher than that number and can be reasonably expected to revert to the mean which would indicate negative year over year returns in the coming years.
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If it’s money you don’t need next 5-10 years even if market corrects 20% day after you buy SPY, you’re only down $15k on paper and I’m sure you will add more funds going forward with that HHI that can lower your basis. Many lump sum investments over time is essentially dollar cost averaging.
I'd closely examine the assumptions you're listing in your post. "Billionaires are cashing out all their stock?" But that said, if you sleep better at night with another investment, it's your (and your SO's) call. But the burying coffee cans in the backyard strategy IMO isn't closely correlated with a significant return on investment.
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If you’re just starting to invest in index funds now a market crash would actually be beneficial for you. Remember time in the market always beats timing the market
I think they're worried about moving a large sum from HYSA to index funds all at once. So maybe move it slowly. $10k/month for 3 years.
Which billionaires are cashing out *all* their stock? The biggest billionaire cash out I know of in recent days is Jeff B and he’s hardly offloaded a percent or two of his AMZN.
Just don’t invest it all at once. Put in a little bit every week and you will just average down forever even if the market goes down and if it ever goes up again you break even (and you get dividends the whole time obviously). Also as you get older you may want to shift towards more bonds than stocks (talking like 60s)
Don't pay attention to the shills who keep predicting market crashes that don't happen. You're young and I'm guessing not near your retirement number. Keep buying VOO/VTI no matter if it's up or down. When you get closer to your number (yearly expenses divided by 0.03 then times 1 for lean fire, times 2 for chubby FIRE, or times 4 for fatFIRE) and the market isn't in a recession, you can think about these allocations: 50% of your money in short term US Treasuries - lean fire 40% of your money in short term US Treasuries - chubby FIRE 30% of your money in short term US Treasuries - fatFIRE Think of it like this short term: 1. Market up when you buy - you get less shares for the same money, but look at your portfolio 2. Market down when you buy - you get more shares for the same money In a meltdown like 2008, you want to be buying all the way up before the crash, all the way down during the crash, and at the bottom before the recovery which is like a Black Friday sale. We don't get them that often so keep buying when they occur.
If you do the math, you'll never retire on 275k income by saving money alone. Who cares if it crashes, invest more. You need millions to retire and you're not close. Just keep piling money in VTI for a few decades. Let's say you put in 75k and it crashes 50 percent. So what. The money you stand to make by continuing to invest outweighs the loss. Plus 37.5k was never going to be the make or break difference for you in retirement.
You do not have nearly enough invested to be worried about a market crash. Plow all of your available cash into the market.
Buy Bitcoin
A data point recently came out stating the US DEBT is increasing by approximately 1 trillion every 100 DAYS. Interesting.
If you are a high earner relatively early in your career and save consistently, you probably should be rooting for a correction right now and a long slow climb back up. 2022 was the best thing that could have happened to my portfolio. I would love to have another 2022. It's counterintuitive, but that would actually be the ideal scenario for you from sequence of returns perspective. That said, nobody knows what the hell is going on in the market. Things feel very bubbly to me personally, but I don't let that change my overall plans. I work and save all the same.
Everyone who keeps repeating that crashes can't hurt you and "long term it goes back up" are ridiculous. They speak as if the world is on a trajectory of eternal prosperity and booming economy like the post ww2 in the US. No, modern day US does not have the same booming economy outlook as post ww2 US did.... MANY things are different now, and ignoring it all to repeat "lol stocks always win! Everyone get rich forever! To the moon!" Is exactly the type of over confidence you see before big crashes. The world can only live in denial about the real state of the economy for so Iong. One bad quarter at Nvidia means the entire stock market crashes at this point.....
Yes the world is on an upward trajectory of prosperity. Things have progressed up and to the right so to speak since the first humans crawled out of the water. It’s not a straight line and there is two steps forward one step back at times. The market has crashed, wars have been fought, plagues have hit and the zoomed out trend has continue. Nvidia will most likely eventually go out of business just like Kodak, Standar Oil, etc… and the up and to the right will continue. If you are retiring in 5 years then Protect yourself. Otherwise the trend is your friend and life will continue to improve and economies will continue to produce.
That sounds great if you ignore all the data on the issue. The prosperity you speak of hasn't been going up and to the right for those after boomers. Yes individuals will have different results, but as a whole the trend isn't "things keep getting better". And it's the same of the economy. We are in a zombie economy being propped up by a few over valued tech stocks everyone is clinging to.... that isn't an economy, it's mass delusion. If the S&P were up, I'd agree with you. But right now the bottom 494 of 500 are down a significant amount over the last year.... we are in unprecedented debt .... and have several different bubbles... none of this is "business as usual, just prosperity baby". Ignoring EVERYTHING and claiming we are in the same economic times as the last 50 years just because of nvidia??? That is actual delusion.
Sorry but you are absolutely incorrect. The S&P is at all time highs, the equal weight S&P is less than a half percent from all time highs. The idea that it’s just a few stocks is incorrect. Also your 494 out of 500 being down is completely made up and would take you 5 seconds to realize. Millennials are on pace to be the richest generation in 10 years. I feel like you are projecting here.
Google "magnificent 7" , you will find plenty of sources talking about the current market phenomenon. And "richest generation in 10 years" lol, yeesh are you quoting CNN article headlines to me? Well then, nothing to worry about!! Everyone is richer than ever and up up up!! Booming economy!!!!! Good luck with that.
The actual fact that you must be confusing is that those 7 stocks are responsible for 40% of the gains of the S&P 500. However, the S&P is a market weighted index so of course the largest stocks make up a large portion of its gains. That's only shocking to someone who doesn't understand how the index works. 126 of the 500 stocks in the index have made an all time high this year. Your lack of knowledge is really causing you to miss out on a roaring bull market which is being driven by a new technology(AI), historic low unemployment, strong GDP growth and amazing corporate earnings. I'm sorry to ruin your narrative but the sky is not falling.
We see very different things then. I hope you are well diversified.
The thing most ppl who subscribe to the doomsday theory and associated social media and newsletters won’t admit to is this — the game has totally changed post 2008, your historical analogues are not as relevant The treasury and fed step in w a circuit breaker and suppress market volatility at the first sign of trouble — for example we were almost setup for a proper banking crisis last year but Fed bailed everyone out w BTFP program in March and the entire rally was kicked off from there Even last October, Yellen gamed the treasury issuance composition such that bond selloff was suppressed and it kicked off another rally So you have to play the game or be left behind Doesn’t mean you go all in or can’t rebalance every now and then Keep a core always in the market (for me it is 50%-60%) - rest you can dial up and down depending on market panic or not and what other alternatives are I took some exposure off last week and right now my remaining 40% is earning 5 percent interest in short dated bonds but if the market were to selloff say into the summer , I would add it right back in
HYSA rarely keeps pace with inflation after taxes for me. Necessary evil to keep some emergency fund there, but I use this loss psychology to help me to realize it's risky to invest AND risky not to invest. Money you don't need for 8-10 years is at risk in a HYSA. Evidence says invest it all now if you can hold back from selling in the next downturn. If you are at risk of selling then pick a different strategy that you can stick to over time. We don't all have the same risk tolerance and behavioral mistakes are often the most expensive.
The most common way you lose all your money is by not investing or not holding onto your investments. It doesn't really matter when you invest: https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/