I follow the traditional advice of doing nothing and not trying to time the market.
You're going to be contributing to this for years and years, so where the market was at when you invested your first dollar will be meaningless.
Stay invested in equities. Keep some cash on hand as an emergency fund in case you lose your job, but just don't sell your stocks when the market is down. Stay diversified and stay in the market.
Agree 100%. Always worth noting that you should have an asset allocation based on your risk profile. If you need the money to pay for your kids college and it is less than 5 years away, don't have it in stocks!
Beyond that, equity allocation makes sense. You want to walk the line between not being able to sleep at night because the market is cratering and not being able to sleep at night in 30 years because you don't have enough money saved to retire the way you want to.
Disclaimer: I like this stuff, but I am not a financial advisor.
We've had 10 years of prosperity which should have been ample time to secure an emergency fund to weather the storm.
Recession indicators have been in play for about 2 years. If nothing else, be much more aware of your high downside risk - and at least scenario model if we go down to multi-decade lows. Specifically in any items with negative EPShare, or not necessities. We're in the cycle now that hits equities -> mid-consumer spending -> business spending -> consumer spending -> real estate. Don't consider the specifics of this message, but the generalities and apply to life
Prepare for years of lower rates of return; If you own property, you will be able to re-fi in a few years to some very low rates. Cash is king for fire sales - lots of people will be going super broke the next 5 years. House prices will de-value enough, so don't buy property for the next 1-3 years. Stock market can revert to 50% of current values.
Edit: used this technique to purchase my first house, firesale. Will do it again this round, along with other lessons learned ;)
Edit 2: Listen to your own companies investor calls (if large enough) - you can predict upcoming layoffs. If you need a new job, do it now before wages stagnate or deflate some. Place yourself in a line of business that is close to a revenue stream of the business, they're rarely cut.
I don't follow. Are you saying don't buy until till the drop or, don't buy when it drops?
https://wolfstreet.com/2019/08/01/housing-bubbles-chicago-da...
This seems like overly simple advice but it's the best advice you can listen to if you think there is a storm coming. Cutting spending and allocating that money to cash reserves while keeping your usual investment strategy (401k / Roth IRA / etc) is the most effective thing you can do.
I have a six figure US stock position and I'm not going to change anything I do as long as I remain employed. Save for retirement/long term in the stock market, save for big ticket items in cash (I have a new car fund, for example). If I lose my job I'll have to stop contributions until I get another job. If I remain unemployed longer term I'd have to tighten my belt on frivolous purchases.
Investing every two weeks into my standard allocation that I've decided on, rebalancing when necessary. Anything beyond that is speculation. Especially the concept of an inevitable storm coming. When, how, and where that happens is not something too many people know.
Our entire civilization is held up on the promise that financial market indices go up over time, except for temporary recessionary periods. We just accept that retirees cashing out at the wrong time will be victims of 'collateral damage' during these 'market corrections'.
Everything from job growth, to the pension funds that you contribute to, to the municipal bonds governments issue to fund projects, rests on this one core assumption.
After dividends, you broke even after inflation (-0.096% return) if you dumped your life savings into the Nikkei in Jan 1990 and never invested another dime.
But if you kept investing incrementally over the years, like most people do, then annual returns went to 2.5% after inflation in 1995-2000, to 6.5% in 2005 and 9.4% in 2010.
Loosening monetary policy to fight deflationary pressure in the '90s also didn't seem to work because interest rates were already near zero. I think the US is different because the benchmark Fed rate is 2.25% now after many years of near-zero rates. So there's room to cut rates if needed.
[0]: https://en.wikipedia.org/wiki/Harrod%E2%80%93Domar_model
My take is that this trade war is irrationally based on animosity (even if the sentiment behind it is rational) so my hypothesis is when the tariffs are finally enacted you'll start to see a bigger shift as fund managers figure out that yes, the trade war is here.
I used to have a mutual fund through my bank, where I'd set a monthly amount and they'd automatically deposit that into the fund from my chequing account. I decided to try something different since the reporting tools available through the online banking system were very basic.