Well, the next crash can't happen until the FOMO crowd buys stocks, now can it?

If you want to invest in the stock market, don't try to time it.

> Well, the next crash can't happen until the FOMO crowd buys stocks, now can it?

In other words, the bull market can't end until the last skeptic buys in.

If it makes you feel more comfortable, you don't have to go "all in"; it is never a bad idea to keep some cash on hand (for emergencies, etc). When the inevitable "crash" does happen, you'll be well positioned to buy some discounted shares of good businesses.

How do you know that the next crash doesn't wipe out cash savings in some way or another?

The only way cash savings can be wiped out is rampant inflation, currency devaluation, or the currency being no longer accepted. Generally "crash" refers to the stock market prices dropping. Stock market prices don't have anything to do with any of the above three, so you can be pretty sure that the next stock market crash won't wipe out cash savings. If anything, crashes tend to produce recessions, which can produce deflation, which makes cash worth more. (But, deflation is really bad, so central banks do everything they can to prevent it.)

> The only way cash savings can be wiped out is rampant inflation, currency devaluation, or the currency being no longer accepted.

Also bail-ins. Any significant amount of cash in a bank account is a sitting target if real trouble starts. This is more likely in smaller countries like Greece.

Yes. This. Greece was the test for the latest wealth-transfer mechanism. Why wait for unreliable governments to bail you out when you can just confiscate deposits?

Let's revisit this thread in few years.

We’re in guns and ammo territory then.

The bigger risk is having a large long term cash position. Large amounts of cash should have a purpose within a year or 2.

That's a bit like asking, how do you know we won't have another world war? If there was a way to know the future, we'd all be doing ___.

this is why just about everyone suggests an appropriately diversified portfolio - stocks, bonds, cash, natural resources, hard assets, etc.

Considering you should hold your index stocks for at least 10 years, you need to be able to muscle through lean times, even buying more if you can.

No retail investor can reliably profit from stock market timing. Just keep buying the index and enjoy the dip when it comes. That means the world is on sale.

I assume you are in US? But can international investor invest in index funds? If yes, what vehicle to use?

For example, my friend has investment company in British Virgin Islands, if he puts money in US index fund he ends up losing 15-20% to withholding taxes.

What are other people doing then?

Retail investors in most industrialized countries have access to index funds; Check with your local brokerage. You may or may not want to invest in US index funds and it may make sense to place a sensible portion of your portfolio in an index composed of businesses in your country (to avoid currency fluctuations). US (or other foreign) index funds may be available in your country via some sort of depository receipt arrangement.

US investors also have to pay about that much tax on any realized gains, unless they hold the funds in a tax-free retirement account.

Not entirely true since many index funds pay qualified dividends.

Is that dividend tax?

The market is at about the same level as Jan 2018.

We could just as easily be up or down 20% a year from now.

If your timing is bad, the returns from an index fund are terrible. The best advice is not just to hold for a long period (25+ years) but also not to go all in or all out.

Returns are only bad on index funds if you pull out. Historically you're getting 7% over 10 years with virtually no fees. Managed funds rarely beat 7% and have fees which reduce any gains you may have made. Better to self manage and get that consistent growth.

* this is assuming the past continues to be a predictor of the future

I think you forgot to account for dividends, and hence the total return.

That's right, I did not account for dividends.

The S&P is currently yielding under 2%.

you are in for a nice surprise next year my friend

I think I remember seeing similar comments in 2015, 2016, 2017, and 2018...

Snark aside, if your timeline is more than 10-15 years, why should you worry at all about recessions next year? On a long enough timeline, a recession is just a great buying opportunity.

Because that recession might turn into another Nikkei

Did you miss 2001-2008? Or are you being purposefully deceptive.

>> if your timeline is more than 10-15 years, why should you worry at all about recessions next year? On a long enough timeline, a recession is just a great buying opportunity.

> Did you miss 2001-2008? Or are you being purposefully deceptive.

This looks more like you being intentionally dishonest. I took DJIA figures from http://www.fedprimerate.com/dow-jones-industrial-average-his...:

    January  2000: 11,722.98
    December 2001: 10,021.57
    March    2003:  7,673.99
    October  2006: 11,850.21 (beating the high of 1/2000)
    October  2007: 14,164.53
    March    2009:  6,507.04
    December 2010: 11,577.51
    January  2015: 17,164.95

Here we have a 15-year period which starts at the high price before the period you "called out". What are we supposed to view the low points as, if not great buying opportunities?

(Also, it's pretty apparent that 2001-2008 doesn't make sense conceptually as a single period.)

Not sure, what to take away from this list of numbers. From 2000 to 2010 I see a lost decade, with the index back where it started. You added the note "beating the high of ...". why not add two years afterwards "beating the low of ...", etc.

I added the note to October 2006 because that was the only reason I included it in the list at all. It wasn't a high point or a low point, just the middle of a long rise. March 2009 is a low point.

Bezos appears to believe the market has peaked and has sold $3b in Amazon over the last week.

He sells stock every year.

He still has over $100 billion in stock.

Are you certain it's nothing to do with the divorce or Blue Origin, etc?

What time and day?

can you elaborate? thanks.

The bull market has been long. The crash is inevitable to be within a year or two. Of course various doomsayers have been vocal for a long time, but things eventually must come down.

When people like Ray Dalio are vocal about it there is something to it.

So? What if the market does crash? Just buy more index funds during the crash because after the crash the recovery is inevitable. If you are young (most HN commenters are), you can afford to wait for the recovery.

> after the crash the recovery is inevitable

It hasn't been inevitable in Japan after the early 1990s crash.

I was replying on the question what is coming next year. What you are saying is completely correct as well.

What’s different this time? In other words, how do you know the crash is inevitable within a year or two?

- There is a well-known business cycle that goes from boom to bust in about 7 - 10 years on average.

- Unemployment is at multi-decade lows; if you look at FRED graphs the unemployment hits a low right before the recession. Of course, nobody knows how low it will go, but it can't go much lower than it is now.

- Bond yields have inverted, which has been a reliable recession-in-one-year signal.

- The trade war can't improve corporate earnings.

- Maybe the trade war triggers something bad in the US and/or Chinese economy and we have another 1997.

- Any one-time earnings juice from the tax cuts is over, so the year over year comparisons are harder.

- The markets flipped out in Dec after the Fed raised rates (I think that's what it was) and dropped 20% in a week or two. The Fed made some conciliatory statements and the party was back on. The RMB appreciates by only a few percent, but over some psychological threshold of 7 RMB to 1 USD and the market flips out, dropping 3%. It feels to me like everyone is trying to pretend that the party is just getting started, but if you keep drinking, sooner or later you pass out. It's been 10 years, it's getting pretty late, people have to stop and go home sooner or later. Sooner or later something random is going to happen like in Dec and everyone is going to flip out. But this time they'll stay passed out for a while.

>unemployment hits a low right before the recession

You have your causal link the wrong way around

I want to see your do calculus for that one

Recessions make people lose their jobs

There are lots of indicators of worldwide trade slowing down. In the tech world there has been a rush of IPOs, signalling that the private funds are running dry, and so on. Companies like Ray Dalios Bridgewater track these things better then anyone. When he says that their projections point to it then there is little doubt.

If you're so sure there will be a crash within 12-24 months, are you short in the market? Short with leverage?

That’s the best thing I’ve read on the internet this year. I hope you’re at least as naive in age as your comment implies