Looking back on this video a year on: If we started this cash holding strategy when this video was published (when S&P 500 was at 4247 ) we'd need the S&P 500 to drop down to 3,397 (a further 12%) before we bought in.
Alright, but what if I don't hold onto cash, but, if the market takes a fat dive like 50%+, I take the biggest loan I can afford and invest it immediately ? The consequence being that I do not have any money left to invest the following months and years as I'm paying back the mortgage instead. Would that be just as stupid, or does it make sense ? Are there studies for this scenario ?
Oh, the money I have lost while trying to protect myself from losses. I think it's greater than what I lost in 2008. Lost opportunity. Ouch. Great video.
Personally I've screwed around all my life made very little money, bought a home paid for it, and I still don't do anything, but I get big fat checks in the bank all the time, every month. Plus all the stimulus. Life is a piece of cake. Age 63.
@@poepoe2828 cash good for deflation, gold&silver for inflation.. media saying we going to hyperinflation. That means get ready for deflation. We are at the end of this society as we know it. Good luck
Not looking forward to the day when 11:40 is upon us. Every crash in hindsight is a buying opportunity, that's what I'll keep repeating to myself!! Thanks James, watched this twice to make sure I got all the info, very informative
Proudest investing of my life was the beginning of covid. I bought in the entire ride down. It could not have gone better, but I was surrounded by doubt for sure
Great analysis! I always come back here to watch this whenever I catch myself having thoughts on trying to time the markets. The data speaks for itself, it pays to be objective and staying invested at all times. Investing in great companies or buying them at fair prices despite markets hitting all time highs beats staying out and trying to wait for that crash. 👍🏻👍🏻
My current strategy: continue to DCA into current positions at a "moderate" rate but also putting aside some cash I can lump sum buy in the next market downturn. Also, this cash bucket is separate from my emergency fund and other funds which I'm putting aside to jump into more real estate in the next housing market crash
Yes, I believe there's an angle you haven't considered, which is that, even though crashes of 20% or more may occur only 40% of the time (at best) after a market high, the total gains you might achieve by waiting for those crashes (which have been much greater than 20%) may actually exceed the total gains achieved by a strategy of dollar-cost averaging at market highs. That said, the thing you got most right (IMO) is the assumption that most people don't have the stomach to buy during a crash, and that's the best reason the average investor should avoid the wait-for-a-crash strategy.
All the data used in this video is available in the description. Many thanks to my mate Anthony who coding everything up in Python. Did the result surprise you?
Many of us have sold. Selling is not all-or-nothing - but many of us have sold a fair chunk while keeping some market exposure. Having some 'dry powder' is a great feeling. When/if the market tanks, you have protected a portion of your nest egg. And you have a chance to buy at lower prices. Right now the market P/E is historically very high, around 30, while the average is around 16. So the likelihood of big upward moves in the market are less likely. This not a bad time to take some money off the table. It's not an all-or-nothing choice, but having cash is good when the market is toppy.
This is why 60% of my stocks pay a hefty dividend - my theory is that it'll be much easier for me psychologically to stay in the market if and when a big crash comes and if the bear market continues, DRIPing those dividends into buying more shares at a cheaper price feels good. Most of my non dividend paying stocks are growth stocks that I have very high conviction in for the long term. Keeping 15% cash also helps me sleep well at night when I see major red days. I used to wake up every morning with my heart in my throat afraid of seeing red, with 15% cash I get a diabolical smile.
These are all legitimate reasons for 1) Dividend investing and 2) holding cash. If you can reasonably say that this strategy is going to help you stay the course over a Total Return DCA strategy then it makes sense.
Not really, l already made my money... Now, l am watching how history going to repeat itself when the market crash and wipe the smile of the greedy late comers
This resonates with me. I have only been investing for 6 months and have about 10% of my savings in index funds. I am slowly drip feeding money into my investments as I’m still a little nervous to yolo most of it in. For me I am happy if I can beat inflation and the dire interest banks are offering! Keep up the great content 👏
Hi Mark, good stuff. Like you say, important to remember what your goals are and not get caught up in the “beat the markets” hype. As long as your achieving your goals who cares what your performance is! Thanks for the support!
Im planning on buying a house during the next 2 years, and save as much as possible meanwhile. Just sold all my stocks and bonds and im 100% cash now. I cant help thinking about the oppertunity cost. on the other hand with interest rates near zero for over a decade, i expect theres a very big bouble waiting to pop. But man it feels tempting to go aggressive on stocks and reap the rewards from all the money printing..
We are living through very unusual times. I'm not impressed by past performance data. I smell a Black Swan scenario approaching. I am comfortable being in cash for the next few months.
@@joetyler835 I will begin to creep back in after October if the market hasn't had a major correction. I'll be amazed if that happens, but this entire bull run has been crazy. So who knows.
@@haze1123 I've been DCAing since early this year because I'm expecting a crash myself since January. But seven months in nothing yet. Gonna continue to DCA.
@@joetyler835 I am right there with you. But you are braver (and probably smarter) than I am. I'm not going to do anything until Oct. The market thinks COVID is over. But it's not. A new mutation is popping up every 6 weeks. Flu season may be scary. If there are more lockdowns, that might be the trigger for the market to retreat.
@@haze1123 Same here. I have a lump sum that i need to get invested. I’m looking for either a sharp correction to dump money in or a bear market to dollar cost average my money in the market. Either way I don’t want to wait too long because I do understand that time in the market is more important than timing. The current market circumstances are making this difficult.
I turned 80% of my equity into cash in March and yes, I'm one of those now sitting on cash and viewing the lost opportunities since then. Known as someone who is 'logical', the mental problem I have is trying to understand the 'Why' in why markets are so high at this time. If we take the position of the market at the end of 2019, when everything was 'normal' and what I mean by this, Covid 19 hadn't hit yet, people were going back and forth in work, people were having surgery, aircraft were still flying in the sky, people were going on holidays, basically, they were spending and saving their money as they would 'normally', how come when almost everyone is now not spending their money as they would normally, are markets sky high? My logical thinking tells me that instead of people's money being spent getting to and from work, on business and/or holiday flights, spending their money in the high street and on-line, etc, etc, it's clear that people's spending has almost entirely gone on-line, with some of that money now being invested in the stock market. Your video is excellent and your research sound and so what I've decided to do is re-enter this high market in sizeable increments, but I'll continue to be wary, because when everyone returns to their work and they begin spending their money as they 'normally' used to do (albeit, I believe some buying habits will have changed for life), there has just got to be some directional change in the markets. Nevertheless, I do have you to thank for completely changing my mindset in investing my personal pension, where instead of investing in a myriad of expensive 'managed' funds, I'm now investing almost everything in one index fund for the long term. I have chosen the Vanguard FTSE Developed World ex.UK Equity Index Acc to do just that. Thanks again for your excellent, informative and 'logical' videos - they all make good sense to me.
Hi Pim, ok good to hear about you getting your pension sorted. The stock market is not the economy as it is right now, as strange as that sounds, the price of a stock is what you pay for potential future earnings, and these could be earning 5 or 10 years down the line. So the stock market is forward looking and how far forward it looks varies. Right now it’s extremely forward looking and it’s predicting strong growth from here. But that it already priced in, and if that does not materialise in the real economy then there may be drops. Is this money you need in the short term?
@@JamesShack Hi James. Thank you for your reply, which I really appreciate. To answer your question, the money is not needed in the short term, but I may begin draw-down in about seven years. We have no loans/mortgages. I've calculated that I only need a 4% net return on the SIPP each year. This has been calculated on the basis of adding 1) another final salary CETV in about five years time, 2) a possible future inheritance and 3) having a full state pension. I guess I could take the safer option at this time and go with a 20% equity and 80% bond mix and see how that goes over the next 12-18-months. Thank you once again for your superb videos - please keep them coming!
@@christopherchadwick2389 Yes indeed. Maybe it’s just my echo-chamber, and the fact I read so many comments and maybe these commentators are of a specific mindset, but all I see is pessimism and a lock of confidence in the market. I don’t see the type of irrational euphoria you might expect with the price levels we’re at right now.
I have thought the same. I am no expert at all, but I am sure all the money that has been pumped into the economy during covid, has been spent on investing in companies and stocks. Therefore pushing prices up way beyond Pre covid levels. Happy for anyone to reply and tell me I am wrong 👍
time in market vs timing the market - the age old question. Problem is we always think we are cleverer than we really are. Miss the top 10 days on the SNP 500 over 30 years and there returns plummet.
I always see people say this.. But don't the best 10 days usually come after the worst days. Call me crazy, but I do believe there are times where you should be cautious and play the waiting game if the stock market is well above historic averages.
@@JamesShack I googled it once. I was curious about a statement that the SNP index outperforming managed funds and why. They stats showed the effect of missing the best 4/10/20 days relative to the index average return of 8 percent. The average managed funds in same SNP 500 performed at about 7 percent.
If you're knocking on the door of retirement with the S&P500 P/E Ratio ar 45.21, being cautious at this stage in the cycle is no bad thing. I'm happy to hold a good slug of cash.
Absolutely, if your about to retire you should be starting to build up a cash buffer, between 2-5 years worth of income. But this not specifically because markets are high, you should be doing this in an environment so you can wait out the next crash. Gotta do whatever feels right at the end of the day!
@@JamesShack I get a monthly social security disability check. My mortgage payments will resume in November. I've been on COVID mortgage forbearance. I plan to sell some stock next March. I have $1,900,000 in retirement investments. No children and never married: this is a significant advantage I've had over most people.
Great video. I tried to time the market last year because I knew stocks were going to tank because of the lockdowns. I took a chunk of money and threw it into my Roth. Unfortunately, I put it in too soon (February). I should have just kept dollar-cost averaging. On the bright side, I didn't panic like many others and pull out of my stocks. I just "stayed the course" and didn't look at my portfolio for a while. At least I recouped all my losses, and then some!
Great job on the video. I’ve seen a thousand videos around the markets crashing but nothing from this perspective. I just sold my home and now I’m going rent and sit on my profit until the right time comes.
James appreciate this a lot. The data was interesting but your personal reflection of the emotional decision making was much appreciated. I’ve been waiting for a crash the last few months before buying in but I am also guilty of not buying at the bottom last year. I’ve been wracking my head and very self critical. You nailed it when you said your as likely not to buy in at the boot on if your mindset is to stay out at the top. Good luck with the channel.
I have only just found your content, and this is great. This comes back to what Warren Buffett always says - 'Its a case of time in the market and not a case of timing the market'
You are so right about the emotional aspect. This is why I'm trying to stop looking at the economy and not be an active trader. Your analysis is great but it's good to remember the wider circumstances around the stock market, like right now inflation is the concern. If interest rates go up a lot then there is likely to be a lot less interest in stocks and so a large sell off.
Yes indeed. Although it’s not if interest rates go up, it’s if they go up faster or further than the market is already anticipating. Almost everyone is expecting inflation and interest rates to rise, and that expectation is already broadly priced into market prices. But if things go up faster than expected then we may see a drop. Of course they could also go up slower than expected too..
I'm very sceptical of all those investment experts on youtube. But you are different, I really enjoy your videos and welcome that you don't hard sell. I can tell that you are educated and have studied stats (during your students) since I'm an engineering graduate (who also studied advanced maths). Im watching your videos because I just made a packet with rolls Royce shares and now need to think about my next step ready for retirement
Since the current fiat/debt based monetary system creates boom and bust cycles, I believe it's useful to factor in where we currently stand (early or late in a cycle). I would argue, that we're late in that game for stocks, bonds and crypto.
Id say we are early in the crash. You don't notice it because the government is feeding cash into America's biggest Corporations. What happenes when that stops and nobody can afford what they sell? The demand disappears but the supply is still there and we have a deflationary economy? The greatest depression...
I'm a 71yo US investor. I am pretty well behaved as far as not selling (except to tax loss harvest) when the market goes down. I move that sold money to a different equity (funds and etfs) pretty fast. In other words, not trying to time the market. My downside is that I don't buy even more when the market is down. I was at a 60% equity and the rest in bonds and cash, but I moved that to 70% equities at the beginning of the year. I reduced my cash from 5 years living expenses down to 3 years, with dividends keeping the account topped off. My settlement account is now pretty much empty, as it has for nearly 6 months. No dry powder. No more when to buy decisions or angst. It is all in there already. No buying the dips. New subscriber.
Cheers Dave. Good luck with the strategy it sounds like you've got it reasoned out. Do you think you interest in managing your portfolio has increased or declined with age?
@@JamesShack My interest has most definitely increased with age. I was never in the financial business during my working career. I use DIY spreadsheets to track my spending, investments and my tax situation in real time. I manage it all. I use Morningstar as my main data source. I keep a personal blog where I express my feelings and possible purchases or sales. I go back to them to see if I am on track or have changed my mind along the way. I've been doing this for over 15 years. Behavioral finance is a favorite interest. I know that I can be my own worst enemy. Greetings from western New York State.
Interesting viewing as of now. There were several screaming red flags of an overvalued market like you said, (not least 10 years of practically free money/borrowing, and then stimulus). Yes people may have eaked out a greedy 5 or 10% more riding that last kick of the scorpion-like tail in a crazy 10 year bull run, and here we are at the end of June 2022, after a 20% ++ correction/bear market from the peaks of this video, and still more downside likely to come. Not a big deal for the long term investor or the drip feeder. I didn't know enough about what I was really doing and instead just sat on the sidelines at 'peak hype,' sharpening the axe. Still lost to inflation but not a big correction/crash... Kind of net win? Ready to start going in soon though. Fan of your channel 👍
I invest each month regardless of what the market does. When there is a decent correction I put in a small lump sum in addition. If the market crashes, I put in as much as I can afford. I also never sell, be it stocks or property. Long term it always goes up and your dividend grows with the value. Property also increases in value and the debt attached to it depreciates with inflation.
Just moved £5k cash in my ISA and £25k in my SIPP into trackers after watching this. Cash had been there for a year. Lost about 10% plus by my delay I have a 10 year + timeframe so very happy to base my decision on you analysis. Thank you.
Everyone who invests needs to watch this. I have fallen into this trap on multiple occasions across multiple asset classes. This is insane how correct this is. Immediate subscribe.
Wow! Great content! And thank you for taking the time to undertake a research like this. It makes me and I believe many others to be confident *being* in the markets instead of actively trying to play it, in hindsight the markets *were* playing us! It has always been time *in* the markets that makes or breaks the deal, not timing it.
My experience of the markets is exactly as you called it. Put simply you can never time the market exactly, the market will go down for a lot longer than you think and vice versa, with the current bull market. You have to be super lucky to time the market bottom!
Well researched and sound conclusions - I’m still holding a decent amount of cash though 😂. It’s more to avoid the mental anguish of losing 20% in the event of a crash, than being greedy...
Haha each to their own. If you’re in 50% cash 50% stocks (as an example), because you’re nervous about the downside have you considered a 50% stocks 50% bonds portfolio?
Great video. 36 months is along time to be on the sidelines. You mentioned dividends at 2% to 4% but also in the case of the S&P 500 it’s important to think about what the annual gains would be. What if they are at an average 8% per year? In this scenario we would find ourselves back to square one if and when the correction happens. Maybe keeping a predetermined amount of dry powder on hand for the more volatile stocks or just to have so we can dollar cost average down on our favorite stocks in our portfolios.
Yes good point Guy. To be honest, the only reason i can get behind for keeping cash on the side is because it helps you to mentally embrace crashes more easily... however you may just blow your dry powder too soon and still end up feeling crap about it anyway!
Thanks James this was a really interesting video. I'm curious how these odds and month durations differ when you look to say MSCI World or FTSE All World and you tweak the percentages from 20 to say 5,10,15 %. I suppose the odds from changing to a wider index probably don't change things too much, but the lower percentages will. Oh and I've done similar with a limit order myself, but sort of the other way around, I kept inching it up a bit until it went through, I'd have been better making it less ambitious the first time!
Hi Robert, I did it with -10% and that was: Average Day 58.26% and 19mths ATH 59% and 24mths So after missed dividends you’re looking at a 60% chance of a 6% gain. And a 40% chance of a much bigger loss. It’s like picking up pennies in front of a steamroller. Other markets will largely be the same. The biggest difference will be due to dividends. UK stock prices have barely moved in comparison with the US. But they pay much higher dividends so a cash and wait strategy will be even less effective in the UK.
I'm collecting great dividends and almost doubled my investments in 3 years. Just think of all the government money that 's going into the economy. Stocks are going to be more profitable that ever while cash is being devalued.
@@ArcanePath360 Stocks are backed up by earnings, earnings are backed up by all the extra money that people have that is being pumped into the economy by the Fed.
@@QBRX When stocks are massively over valued, and money is pumped into the price, eventually there is a correction. It's all speculation at the end of the day. Money on a screen is basically pretend money. It's value that is important.
@@ArcanePath360 There will always be ups and downs. Only some stocks are massively over valued, not the whole market. Look for value stocks not growth stocks, they are built on a dream.
I’m sitting on my cash 💰, but I’m 60 and can’t loose it now, yes when I was in my 20’s I was a risk taker and ending up loosing my home with 3 kids under 3 on a business deal, but loads of time to bounce back, hence the Aston Martin in my drive 😎 great video!
Buffet holding 145B in cash Burry in cash think I'll wait. A better question is when market at these conditions what is the problem of buying in a market 40 % less
The way institutional investors managing billions of $ invest is not normal. You should not follow what they do. There are reasons why they don't invest like normal retail investors.
@@JamesShack Thanks, but retail investors are the ones holding the bag on market crashes. I prefer only a limited amount in value stocks at this time. Even if I miss out on the final run. All market parameters are flashing red.
imo, there will always be a correction, so instead of using a percent correction figure, just follow the MACD. Buy back in when the trend is upwards and swing trade it. Cannot fight the trend.
Consider a 5% average annual gain in the long term. Let p be the probability of the drawdown and G the gain from Investing at those lower prices. It is convenient to wait when the number of Years in your investment horizon is less than G*p/(5-5p). In the case of a 20% drawdown we have a gain of 25% and a drawdown probability of 2/5. Hence it is convenient to wait only if you plan to disinvest before 2.5 years
Brilliant video James, this channel is by far the most informative and realistic finance channel I’ve found. I’m currently changing my portfolio from what I used to think was a global portfolio to what I now know is actually a (much better) diversified and cheap global market weighted portfolio. Even when jumping between funds with the minimum time out of the market it’s hard to resist the urge to time the change.
Cheers pal! Yes it is, but it gets easier the more you have in the markets. When your contributions make up such a small % of your overall portfolio you just Chuck it straight in. Time out of the market is a risk, so committing to a new fund/strategy as soon as possible is important! Best of luck with it all!
Appreciate for shooting a video on such topic with lot of hard work which I can sense.. Although this is my first video of yours and I would love to watch more... Bless you pal
Sound advice I think. A bit misleading about dividends - dividends aren't an added extra, they are reflected in price fall on exdividend dates and net effect is zero according to most studies
Hi James, one other argument that helps support your cause is that inflation will continue to drive up higher prices. Stocks are assets, which is inflation protected as companies raise the price of their goods & services, while cash is trash and will not go up. This generation seems to have forgotten about inflation considering the low rates, but even 3% a year can be significant when compounded over 10 years. Now imagine if it ever got even higher than 3%..
I laughed when I watched this video, because this is me 100%. 2019 I made a great return trading my own stocks. Got out last In Feb of 2020, got ALL in cash and looked like a genius through the great crash.... Then I lived exactly what this video says... and I'm still all in cash. Never pulled the trigger. Missed out on 1 of the best V recoveries of all time... However there are some huge storm clouds on the horizon with the commercial real estate bubble and home prices ready to crash after covid, not to mention the huge inflation bubble about to hit... I'm good right now in Cash...
Hi James,thanks ,thoughtful videos . Curious-do these apply to global Investors,is there a video for those who made money only in their late 40s, and look to begin investing in early 50s. Thanks.
Super interesting topic and brilliant video (I have just subscribed). Thank you. I think the big question is whether markets fundamentally is as they have been the last 60 years or so, or are we in some extraordinary unprecedented situation not seen before. The crash in 2008 was obviously big but perhaps a much worse (total meltdown) was avoided after all. Does that mean the total meltdown has been postponed for years supported by cheap money (if markets where ok the rate should have climbed at some point?). This position is basically that we can only learn from history (data) to some extent but should be aware of the possibility of a "black swan". You would think that there has to be some (material) value behind the price setting in the long run.
We like to think we are unique individuals... until we figure out that the vast majority of people behave the same way in situations. You nailed all of the emotional responses most people experience/operate from while investing.
Thanks for the video. Really love how you use data driven approach to debunk the failing strategy of holding cash while waiting for market to fall. I think having data is really helpful and can absolve a lot of fear for an average investor.
I think that certain parts of the market are due for a re-rating but certainly not all of it. Outside of US large cap lots of companies are still beaten to hell. Europe, UK rest of the world’s valuations are not excessive.
Never get fixated on a particular price, a pullback to the 20 ma is a reasonable dip to buy, it is always something like a 40-60% retrace of the run-up. If you are an investor then just dollar cost average by buying incrementally.
I relate to every single thing said in the psychology part of the video. In addition, when the drop happens the whole media will only show bad news and it is the end of the world, which definitely affects your mindset in the short term. Long term is a different story. Very useful content mate, best wishes from Brazil.
Well let me know "When the drop happens and The whole Media only shows bad news and says it's the end of the world." Because when that happens, that's the day I'M BUYING STOCKS!! 😂😂
Hi James love your videos and the tremendous effort you put in. I think you are the person that has made me realise that it is not all about beating the market. Thank you!
James - you are a *phenomenal* teacher and doing a sterling job of educating the masses on financial matters. You instil confidence, and help keep people on the straight and narrow with their investments. Thank you so much for these videos.
Great video. My Dad always said, it is not timing the market, but time IN the market. You buy good quality stocks that you are confident in, of course they need to pay dividends, and you relax. If you think you know what is going to happen in the market day to day you are fooling yourself.
Grounding lessons here James, goes to show the importance of perspective, but also emotional management. Any armchair broker can speculate, but never commit. Steady as she goes :)
Another master class 😊 I have to agree with you James, I have stopped second guessing the markets as I just can’t. So I just invest as and when I can irrespective of the how it’s positioned. The only thing that would make me cautious about investing is if the market is in a state of freefall which there have been a few periods between February and now. Other than that I just invest and don’t worry about market moments. Another concern is if someone invests at a market high and immediately the market crashes as as as I’ve experienced in my investment in February. The time it takes for that drop to recover seems endless.🙏
Looking back on this video a year on: If we started this cash holding strategy when this video was published (when S&P 500 was at 4247 ) we'd need the S&P 500 to drop down to 3,397 (a further 12%) before we bought in.
So with all the QE that's gone on in the last year, surely it's cash that has lost its value?
Alright, but what if I don't hold onto cash, but, if the market takes a fat dive like 50%+, I take the biggest loan I can afford and invest it immediately ? The consequence being that I do not have any money left to invest the following months and years as I'm paying back the mortgage instead. Would that be just as stupid, or does it make sense ? Are there studies for this scenario ?
"TIME IN the market is better than trying TO TIME the market"
A saying that has done the rounds loads, but never understood until the video. Cheers.
To be honest Peter I’d never looked at the data until this video either. Even I thought those numbers would be higher!
Oh, the money I have lost while trying to protect myself from losses. I think it's greater than what I lost in 2008. Lost opportunity. Ouch. Great video.
Great to hear from someone who's been there and experienced it. Let's hope others can learn from your experiences!
Personally I've screwed around all my life made very little money, bought a home paid for it, and I still don't do anything, but I get big fat checks in the bank all the time, every month. Plus all the stimulus. Life is a piece of cake. Age 63.
@@cynthiaayers7696 you selling training xd
Time in the market beats timing the market. DCA and stay the course.
Lets go!
DCA?
@@ArcanePath360 DCA= Dollar cost average $ in regularly.
@@jenniferwise8515 Ah I see, thanks
So pound cost averaging in the UK
Just started following your channel. You talk a lot of sense in a very pleasant manner. Thank you.
Welcome!
You've mentioned a great point. Its extremely difficult when its your money at stake. Its very hard to be objective.
It is indeed!
Especially when you are older and retired.
Just invest like 70% and keep 20-30% cash instead of full cash
Exactly what I’m doing
Cash is garbage if you dont hold gold or silver you will loose!
@@poepoe2828 cash good for deflation, gold&silver for inflation.. media saying we going to hyperinflation.
That means get ready for deflation.
We are at the end of this society as we know it. Good luck
@@albatrutho.3365 sounds familiar. Oh
@@albatrutho.3365 Okay Doomer
(secretly agrees)
Not looking forward to the day when 11:40 is upon us. Every crash in hindsight is a buying opportunity, that's what I'll keep repeating to myself!! Thanks James, watched this twice to make sure I got all the info, very informative
Proudest investing of my life was the beginning of covid. I bought in the entire ride down. It could not have gone better, but I was surrounded by doubt for sure
James you are the best financial advsior on youtube by far. thank you for your videos
We haven't had a real market in 12 years since QE1,2,3,4-ever.
This
Or since Nixon took (defacto) the whole world off the gold standard; which meant meant money could be printed without restraint?
Great analysis! I always come back here to watch this whenever I catch myself having thoughts on trying to time the markets. The data speaks for itself, it pays to be objective and staying invested at all times. Investing in great companies or buying them at fair prices despite markets hitting all time highs beats staying out and trying to wait for that crash. 👍🏻👍🏻
My current strategy: continue to DCA into current positions at a "moderate" rate but also putting aside some cash I can lump sum buy in the next market downturn. Also, this cash bucket is separate from my emergency fund and other funds which I'm putting aside to jump into more real estate in the next housing market crash
Yeah, have a list ready of the best stocks in each sector you want to own at a crash sale.
Buy and hold.
Yes, I believe there's an angle you haven't considered, which is that, even though crashes of 20% or more may occur only 40% of the time (at best) after a market high, the total gains you might achieve by waiting for those crashes (which have been much greater than 20%) may actually exceed the total gains achieved by a strategy of dollar-cost averaging at market highs.
That said, the thing you got most right (IMO) is the assumption that most people don't have the stomach to buy during a crash, and that's the best reason the average investor should avoid the wait-for-a-crash strategy.
All the data used in this video is available in the description. Many thanks to my mate Anthony who coding everything up in Python. Did the result surprise you?
Many of us have sold. Selling is not all-or-nothing - but many of us have sold a fair chunk while keeping some market exposure. Having some 'dry powder' is a great feeling. When/if the market tanks, you have protected a portion of your nest egg. And you have a chance to buy at lower prices. Right now the market P/E is historically very high, around 30, while the average is around 16. So the likelihood of big upward moves in the market are less likely.
This not a bad time to take some money off the table. It's not an all-or-nothing choice, but having cash is good when the market is toppy.
@@Greg_Chase I think this is a very fair comment. If it helps you embrace the dips/correction then it’s totally reasonable.
It would be nice to calculate also the historical rate of p% drawdowns for other (possibly many) p's
what about shorting the market
This is so true! Stopped 2nd guessing the market since
Love your honesty at the end, very refreshing. Really enjoy watching your content, a credit to your profession.
Thanks Patrick, that means a lot!
This is why 60% of my stocks pay a hefty dividend - my theory is that it'll be much easier for me psychologically to stay in the market if and when a big crash comes and if the bear market continues, DRIPing those dividends into buying more shares at a cheaper price feels good. Most of my non dividend paying stocks are growth stocks that I have very high conviction in for the long term. Keeping 15% cash also helps me sleep well at night when I see major red days. I used to wake up every morning with my heart in my throat afraid of seeing red, with 15% cash I get a diabolical smile.
These are all legitimate reasons for 1) Dividend investing and 2) holding cash. If you can reasonably say that this strategy is going to help you stay the course over a Total Return DCA strategy then it makes sense.
Hello to my strategic twin - I find the gains remarkably consistent thru the ups and downs of prices.
Going to hold my nerve James, and stick with investing regularly on a monthly basis, the inner chimp is being held at bay!
Good stuff!
U are amazing, who knew there were REAL financial experts on TH-cam lol
I learned if you wait for a crash to invest, you'll likely never invest.
are u sure ? let's see...2002,2008,2011,2015,2016,2018,2020...
Crash is not just once a year. In 2020, there were 3 major sell offs and I know this from learning the hard way.
@@mikeylovespizza4012 i want o be wealthy pic 5 stocks that will be big in next 10-20 years
Not really, l already made my money... Now, l am watching how history going to repeat itself when the market crash and wipe the smile of the greedy late comers
@@nickyyap1663 lol there is more people like you waiting to happen hahha
This resonates with me. I have only been investing for 6 months and have about 10% of my savings in index funds. I am slowly drip feeding money into my investments as I’m still a little nervous to yolo most of it in. For me I am happy if I can beat inflation and the dire interest banks are offering!
Keep up the great content 👏
Hi Mark, good stuff. Like you say, important to remember what your goals are and not get caught up in the “beat the markets” hype. As long as your achieving your goals who cares what your performance is!
Thanks for the support!
Im planning on buying a house during the next 2 years, and save as much as possible meanwhile. Just sold all my stocks and bonds and im 100% cash now. I cant help thinking about the oppertunity cost. on the other hand with interest rates near zero for over a decade, i expect theres a very big bouble waiting to pop. But man it feels tempting to go aggressive on stocks and reap the rewards from all the money printing..
Two years our from a house purchase you should keep it all in cash or near cash. Just too close !
Lol crypto and cash are a joke.
If u dont own gold or silver you will loose!
@@poepoe2828 lose*
@@dhammer6715 yeah phones say what they want now a days.
@@poepoe2828 The recent plunge (I'm guessing its over) in gold was not especially pleasant. It was more severe for the miners than the metal.
This is very valuable thanks!
We are living through very unusual times. I'm not impressed by past performance data. I smell a Black Swan scenario approaching. I am comfortable being in cash for the next few months.
So if it doesn't crash you're in?
@@joetyler835 I will begin to creep back in after October if the market hasn't had a major correction. I'll be amazed if that happens, but this entire bull run has been crazy. So who knows.
@@haze1123 I've been DCAing since early this year because I'm expecting a crash myself since January. But seven months in nothing yet. Gonna continue to DCA.
@@joetyler835 I am right there with you. But you are braver (and probably smarter) than I am. I'm not going to do anything until Oct. The market thinks COVID is over. But it's not. A new mutation is popping up every 6 weeks. Flu season may be scary. If there are more lockdowns, that might be the trigger for the market to retreat.
@@haze1123 Same here. I have a lump sum that i need to get invested. I’m looking for either a sharp correction to dump money in or a bear market to dollar cost average my money in the market. Either way I don’t want to wait too long because I do understand that time in the market is more important than timing. The current market circumstances are making this difficult.
Also a ex finacial planner & understand your own decisions, thanks for the honesty
I turned 80% of my equity into cash in March and yes, I'm one of those now sitting on cash and viewing the lost opportunities since then. Known as someone who is 'logical', the mental problem I have is trying to understand the 'Why' in why markets are so high at this time. If we take the position of the market at the end of 2019, when everything was 'normal' and what I mean by this, Covid 19 hadn't hit yet, people were going back and forth in work, people were having surgery, aircraft were still flying in the sky, people were going on holidays, basically, they were spending and saving their money as they would 'normally', how come when almost everyone is now not spending their money as they would normally, are markets sky high? My logical thinking tells me that instead of people's money being spent getting to and from work, on business and/or holiday flights, spending their money in the high street and on-line, etc, etc, it's clear that people's spending has almost entirely gone on-line, with some of that money now being invested in the stock market. Your video is excellent and your research sound and so what I've decided to do is re-enter this high market in sizeable increments, but I'll continue to be wary, because when everyone returns to their work and they begin spending their money as they 'normally' used to do (albeit, I believe some buying habits will have changed for life), there has just got to be some directional change in the markets. Nevertheless, I do have you to thank for completely changing my mindset in investing my personal pension, where instead of investing in a myriad of expensive 'managed' funds, I'm now investing almost everything in one index fund for the long term. I have chosen the Vanguard FTSE Developed World ex.UK Equity Index Acc to do just that. Thanks again for your excellent, informative and 'logical' videos - they all make good sense to me.
Hi Pim, ok good to hear about you getting your pension sorted. The stock market is not the economy as it is right now, as strange as that sounds, the price of a stock is what you pay for potential future earnings, and these could be earning 5 or 10 years down the line.
So the stock market is forward looking and how far forward it looks varies. Right now it’s extremely forward looking and it’s predicting strong growth from here. But that it already priced in, and if that does not materialise in the real economy then there may be drops.
Is this money you need in the short term?
@@JamesShack Hi James. Thank you for your reply, which I really appreciate. To answer your question, the money is not needed in the short term, but I may begin draw-down in about seven years. We have no loans/mortgages. I've calculated that I only need a 4% net return on the SIPP each year. This has been calculated on the basis of adding 1) another final salary CETV in about five years time, 2) a possible future inheritance and 3) having a full state pension. I guess I could take the safer option at this time and go with a 20% equity and 80% bond mix and see how that goes over the next 12-18-months. Thank you once again for your superb videos - please keep them coming!
@@JamesShack Your belief in the efficient market hypothesis is touching. Don't we have to take account of some "irrational exuberance" here?
@@christopherchadwick2389 Yes indeed. Maybe it’s just my echo-chamber, and the fact I read so many comments and maybe these commentators are of a specific mindset, but all I see is pessimism and a lock of confidence in the market. I don’t see the type of irrational euphoria you might expect with the price levels we’re at right now.
I have thought the same.
I am no expert at all, but I am sure all the money that has been pumped into the economy during covid, has been spent on investing in companies and stocks. Therefore pushing prices up way beyond Pre covid levels.
Happy for anyone to reply and tell me I am wrong 👍
Great video!!!
Great video - and as I watch this in May ‘22 the NASDAQ is sitting at 25% down from November 21’s highs. Time to buy in everyone!!
time in market vs timing the market - the age old question. Problem is we always think we are cleverer than we really are. Miss the top 10 days on the SNP 500 over 30 years and there returns plummet.
Yes, where did you read that? That’s a classic anti-timing the market stat.
How about if you missed the worst 10 days 🙂
I always see people say this.. But don't the best 10 days usually come after the worst days. Call me crazy, but I do believe there are times where you should be cautious and play the waiting game if the stock market is well above historic averages.
@@JamesShack I googled it once. I was curious about a statement that the SNP index outperforming managed funds and why. They stats showed the effect of missing the best 4/10/20 days relative to the index average return of 8 percent. The average managed funds in same SNP 500 performed at about 7 percent.
If you're knocking on the door of retirement with the S&P500 P/E Ratio ar 45.21, being cautious at this stage in the cycle is no bad thing. I'm happy to hold a good slug of cash.
Absolutely, if your about to retire you should be starting to build up a cash buffer, between 2-5 years worth of income. But this not specifically because markets are high, you should be doing this in an environment so you can wait out the next crash. Gotta do whatever feels right at the end of the day!
@@JamesShack I'm age 60 and retired. My asset allocation is 96% stock index funds & 4% fixed income. Don't fight the Fed.
@@larryjones9773 Hey Larry. How do you go about managing cash flow? Do you have a cash buffer you take from?
@@JamesShack I get a monthly social security disability check. My mortgage payments will resume in November. I've been on COVID mortgage forbearance. I plan to sell some stock next March. I have $1,900,000 in retirement investments. No children and never married: this is a significant advantage I've had over most people.
@@larryjones9773 what age did you start investing?
Great video. I tried to time the market last year because I knew stocks were going to tank because of the lockdowns. I took a chunk of money and threw it into my Roth. Unfortunately, I put it in too soon (February). I should have just kept dollar-cost averaging. On the bright side, I didn't panic like many others and pull out of my stocks. I just "stayed the course" and didn't look at my portfolio for a while. At least I recouped all my losses, and then some!
Great job on the video. I’ve seen a thousand videos around the markets crashing but nothing from this perspective. I just sold my home and now I’m going rent and sit on my profit until the right time comes.
James appreciate this a lot. The data was interesting but your personal reflection of the emotional decision making was much appreciated. I’ve been waiting for a crash the last few months before buying in but I am also guilty of not buying at the bottom last year. I’ve been wracking my head and very self critical. You nailed it when you said your as likely not to buy in at the boot on if your mindset is to stay out at the top. Good luck with the channel.
Cheers Sean!
James' point at the twelve minute mark is spot on!
I have only just found your content, and this is great. This comes back to what Warren Buffett always says - 'Its a case of time in the market and not a case of timing the market'
You are so right about the emotional aspect. This is why I'm trying to stop looking at the economy and not be an active trader.
Your analysis is great but it's good to remember the wider circumstances around the stock market, like right now inflation is the concern. If interest rates go up a lot then there is likely to be a lot less interest in stocks and so a large sell off.
Yes indeed. Although it’s not if interest rates go up, it’s if they go up faster or further than the market is already anticipating. Almost everyone is expecting inflation and interest rates to rise, and that expectation is already broadly priced into market prices. But if things go up faster than expected then we may see a drop. Of course they could also go up slower than expected too..
🤷🏼♂️
Very well said...especially the section around psychology!
I'm very sceptical of all those investment experts on youtube. But you are different, I really enjoy your videos and welcome that you don't hard sell. I can tell that you are educated and have studied stats (during your students) since I'm an engineering graduate (who also studied advanced maths). Im watching your videos because I just made a packet with rolls Royce shares and now need to think about my next step ready for retirement
Since the current fiat/debt based monetary system creates boom and bust cycles, I believe it's useful to factor in where we currently stand (early or late in a cycle). I would argue, that we're late in that game for stocks, bonds and crypto.
Id say we are early in the crash. You don't notice it because the government is feeding cash into America's biggest Corporations. What happenes when that stops and nobody can afford what they sell? The demand disappears but the supply is still there and we have a deflationary economy? The greatest depression...
I'm a 71yo US investor. I am pretty well behaved as far as not selling (except to tax loss harvest) when the market goes down. I move that sold money to a different equity (funds and etfs) pretty fast. In other words, not trying to time the market.
My downside is that I don't buy even more when the market is down.
I was at a 60% equity and the rest in bonds and cash, but I moved that to 70% equities at the beginning of the year. I reduced my cash from 5 years living expenses down to 3 years, with dividends keeping the account topped off.
My settlement account is now pretty much empty, as it has for nearly 6 months. No dry powder. No more when to buy decisions or angst. It is all in there already.
No buying the dips. New subscriber.
Cheers Dave. Good luck with the strategy it sounds like you've got it reasoned out. Do you think you interest in managing your portfolio has increased or declined with age?
@@JamesShack My interest has most definitely increased with age. I was never in the financial business during my working career. I use DIY spreadsheets to track my spending, investments and my tax situation in real time. I manage it all.
I use Morningstar as my main data source.
I keep a personal blog where I express my feelings and possible purchases or sales. I go back to them to see if I am on track or have changed my mind along the way. I've been doing this for over 15 years.
Behavioral finance is a favorite interest. I know that I can be my own worst enemy. Greetings from western New York State.
The key is to be in cash equivalents, gold, bonds, commodities or whatever is popping while you wait for the turn.
or crypto ;] (or i guess :'/)
This is a topic that has been discussed by Ben Felix. Nevertheless, it is useful to hear it over and over again. Well done...
Interesting viewing as of now. There were several screaming red flags of an overvalued market like you said, (not least 10 years of practically free money/borrowing, and then stimulus). Yes people may have eaked out a greedy 5 or 10% more riding that last kick of the scorpion-like tail in a crazy 10 year bull run, and here we are at the end of June 2022, after a 20% ++ correction/bear market from the peaks of this video, and still more downside likely to come. Not a big deal for the long term investor or the drip feeder.
I didn't know enough about what I was really doing and instead just sat on the sidelines at 'peak hype,' sharpening the axe. Still lost to inflation but not a big correction/crash... Kind of net win? Ready to start going in soon though. Fan of your channel 👍
I invest each month regardless of what the market does. When there is a decent correction I put in a small lump sum in addition. If the market crashes, I put in as much as I can afford. I also never sell, be it stocks or property. Long term it always goes up and your dividend grows with the value. Property also increases in value and the debt attached to it depreciates with inflation.
you mean index fund ?
@@CHRIS198490 yes
@@user-gz6tx6yp3v 40 years and you will be wealthy
@@CHRIS198490 So I can enjoy my retirement in my 80's? 😂 I hope 20 years time I can retire comfortable.
@@user-gz6tx6yp3v better than uk pension lol
Just moved £5k cash in my ISA and £25k in my SIPP into trackers after watching this. Cash had been there for a year. Lost about 10% plus by my delay I have a 10 year + timeframe so very happy to base my decision on you analysis. Thank you.
Everyone who invests needs to watch this. I have fallen into this trap on multiple occasions across multiple asset classes. This is insane how correct this is. Immediate subscribe.
Haha cheers Samer. I know it because i feel it too!
Today it's not about return ON capital. Today it is about return OF capital.
Working out when or how much to sell is even harder!
It's easy if you think about it in terms of relative growth potential
Thank you for this! With your short video, you changed my whole investment style for the better, I think! Thanks once again!
You're welcome!
Subscribed
I really appreciate your honesty. What you said was on the real of how things truly go down. I needed that reminder.
🙌
Wow! Great content! And thank you for taking the time to undertake a research like this. It makes me and I believe many others to be confident *being* in the markets instead of actively trying to play it, in hindsight the markets *were* playing us! It has always been time *in* the markets that makes or breaks the deal, not timing it.
Well said John.
My experience of the markets is exactly as you called it. Put simply you can never time the market exactly, the market will go down for a lot longer than you think and vice versa, with the current bull market. You have to be super lucky to time the market bottom!
Well researched and sound conclusions - I’m still holding a decent amount of cash though 😂. It’s more to avoid the mental anguish of losing 20% in the event of a crash, than being greedy...
Haha each to their own. If you’re in 50% cash 50% stocks (as an example), because you’re nervous about the downside have you considered a 50% stocks 50% bonds portfolio?
Bond yields are at a 300 or 400 year low so they are risky. What if interest rates rose? Bond prices would fall.
@@george6977 I agree. Since they don't really pay anything you might as well be in cash. (instead of bonds)
@@george6977 as has happened
Great video. 36 months is along time to be on the sidelines. You mentioned dividends at 2% to 4% but also in the case of the S&P 500 it’s important to think about what the annual gains would be. What if they are at an average 8% per year? In this scenario we would find ourselves back to square one if and when the correction happens. Maybe keeping a predetermined amount of dry powder on hand for the more volatile stocks or just to have so we can dollar cost average down on our favorite stocks in our portfolios.
Yes good point Guy. To be honest, the only reason i can get behind for keeping cash on the side is because it helps you to mentally embrace crashes more easily... however you may just blow your dry powder too soon and still end up feeling crap about it anyway!
Thanks James this was a really interesting video. I'm curious how these odds and month durations differ when you look to say MSCI World or FTSE All World and you tweak the percentages from 20 to say 5,10,15 %. I suppose the odds from changing to a wider index probably don't change things too much, but the lower percentages will.
Oh and I've done similar with a limit order myself, but sort of the other way around, I kept inching it up a bit until it went through, I'd have been better making it less ambitious the first time!
Hi Robert, I did it with -10% and that was:
Average Day 58.26% and 19mths
ATH 59% and 24mths
So after missed dividends you’re looking at a 60% chance of a 6% gain. And a 40% chance of a much bigger loss. It’s like picking up pennies in front of a steamroller.
Other markets will largely be the same. The biggest difference will be due to dividends. UK stock prices have barely moved in comparison with the US. But they pay much higher dividends so a cash and wait strategy will be even less effective in the UK.
@@JamesShack thanks James that's very interesting.
Exactly, dividends keep you thinking rationally.
This is exactly what I'm doing, holding cash in savings waiting till shit calms down, waiting for a good fire sale.
I'm collecting great dividends and almost doubled my investments in 3 years. Just think of all the government money that 's going into the economy. Stocks are going to be more profitable that ever while cash is being devalued.
@@QBRX It's causing a bubble that cannot be sustained. It isn't backed up by anything real.
@@ArcanePath360 Stocks are backed up by earnings, earnings are backed up by all the extra money that people have that is being pumped into the economy by the Fed.
@@QBRX When stocks are massively over valued, and money is pumped into the price, eventually there is a correction. It's all speculation at the end of the day. Money on a screen is basically pretend money. It's value that is important.
@@ArcanePath360 There will always be ups and downs. Only some stocks are massively over valued, not the whole market. Look for value stocks not growth stocks, they are built on a dream.
This is great analysis. I for sure was surprised at the result. Thanks for the brilliant content. 💪
I’m sitting on my cash 💰, but I’m 60 and can’t loose it now, yes when I was in my 20’s I was a risk taker and ending up loosing my home with 3 kids under 3 on a business deal, but loads of time to bounce back, hence the Aston Martin in my drive 😎 great video!
Cheers Chris. I imagine you've planning out what you need in retirement? Just watch out for inflation!
Buffet holding 145B in cash Burry in cash think I'll wait. A better question is when market at these conditions what is the problem of buying in a market 40 % less
The way institutional investors managing billions of $ invest is not normal. You should not follow what they do. There are reasons why they don't invest like normal retail investors.
@@JamesShack Thanks, but retail investors are the ones holding the bag on market crashes. I prefer only a limited amount in value stocks at this time. Even if I miss out on the final run. All market parameters are flashing red.
Brilliant video that succinctly sums up the investment psychology.
Glad you enjoyed it!
imo, there will always be a correction, so instead of using a percent correction figure, just follow the MACD. Buy back in when the trend is upwards and swing trade it. Cannot fight the trend.
12,26,9 MACD is useless. No better than flipping a coin for a buy or sell signal.
Consider a 5% average annual gain in the long term. Let p be the probability of the drawdown and G the gain from Investing at those lower prices. It is convenient to wait when the number of Years in your investment horizon is less than G*p/(5-5p). In the case of a 20% drawdown we have a gain of 25% and a drawdown probability of 2/5. Hence it is convenient to wait only if you plan to disinvest before 2.5 years
That’s a very interesting angle. I’ll try using data like this when doing videos on divestment/drawdown strategies.
Brilliant video James, this channel is by far the most informative and realistic finance channel I’ve found. I’m currently changing my portfolio from what I used to think was a global portfolio to what I now know is actually a (much better) diversified and cheap global market weighted portfolio. Even when jumping between funds with the minimum time out of the market it’s hard to resist the urge to time the change.
Cheers pal! Yes it is, but it gets easier the more you have in the markets. When your contributions make up such a small % of your overall portfolio you just Chuck it straight in. Time out of the market is a risk, so committing to a new fund/strategy as soon as possible is important! Best of luck with it all!
@@JamesShack Cheers for the motivation James! I've just logged in and submitted the last two market orders needed to finish the switch.
Congrats on the 10k James. Well researched and explained videos keep up the good work 👍👍👍
Cheers Toby, good luck with the channel.
Appreciate for shooting a video on such topic with lot of hard work which I can sense.. Although this is my first video of yours and I would love to watch more... Bless you pal
Thank you! I hope you find the rest just as useful!
Wow I am absolutely amazed by the quality of your content! I really strive to deliver good quality and visuals but this is just amazing! Keep it up!!
I'm impressed that you managed to film this at night in June. I absolutely cannot speak that coherently past 8PM
Haha, me neither. You should see the outtakes, took about 2 hours to film this!
@@JamesShack Do you prepare a script?
@@pauleohl yep 2000-3000 words each time!
Sound advice I think. A bit misleading about dividends - dividends aren't an added extra, they are reflected in price fall on exdividend dates and net effect is zero according to most studies
Another great & informative video, thanks 👍😀
Glad you enjoyed it
Amazing vídeo James! Curious about what platform you use to do these back tests and arrive at these probabilities. Would you mind sharing your source?
My mate did it in Python bit before that I just did it myself in excel.
You are right in every way
Cheers Bruno!
Great vid. Well done. My advisor says go in. Stay in. Resist emotionally driven moves at all apparent cost. Make the Plan and stick to it. Also.
Hi James, one other argument that helps support your cause is that inflation will continue to drive up higher prices. Stocks are assets, which is inflation protected as companies raise the price of their goods & services, while cash is trash and will not go up. This generation seems to have forgotten about inflation considering the low rates, but even 3% a year can be significant when compounded over 10 years. Now imagine if it ever got even higher than 3%..
Great content and great video .. Yes Dollar cost averaging is the best way to go forward with peace of mind ..
I laughed when I watched this video, because this is me 100%. 2019 I made a great return trading my own stocks. Got out last In Feb of 2020, got ALL in cash and looked like a genius through the great crash....
Then I lived exactly what this video says... and I'm still all in cash. Never pulled the trigger. Missed out on 1 of the best V recoveries of all time...
However there are some huge storm clouds on the horizon with the commercial real estate bubble and home prices ready to crash after covid, not to mention the huge inflation bubble about to hit...
I'm good right now in Cash...
Haha, do you feel like a bit of a doom monger ? Willing something bad to happen?
Hi James,thanks ,thoughtful videos . Curious-do these apply to global Investors,is there a video for those who made money only in their late 40s, and look to begin investing in early 50s. Thanks.
Brilliant video!
Great video. Would you consider making a video on portfolio diversification e.g. optimal exposure to emerging markets or to small-cap stocks etc?
Yes sure!
Super interesting topic and brilliant video (I have just subscribed). Thank you. I think the big question is whether markets fundamentally is as they have been the last 60 years or so, or are we in some extraordinary unprecedented situation not seen before. The crash in 2008 was obviously big but perhaps a much worse (total meltdown) was avoided after all. Does that mean the total meltdown has been postponed for years supported by cheap money (if markets where ok the rate should have climbed at some point?). This position is basically that we can only learn from history (data) to some extent but should be aware of the possibility of a "black swan". You would think that there has to be some (material) value behind the price setting in the long run.
Great video, especially the last part on psychology. I've never considered that.
It's the biggest part of investing!
Your right this was a personal opinion on the Market after all your just a youtuber .
We like to think we are unique individuals... until we figure out that the vast majority of people behave the same way in situations. You nailed all of the emotional responses most people experience/operate from while investing.
Haha yes, I read 1000 of comments a day. Everyone seems to think they have a unique view or are immune to these mistakes... they will learn in time!
Thanks for the video. Really love how you use data driven approach to debunk the failing strategy of holding cash while waiting for market to fall. I think having data is really helpful and can absolve a lot of fear for an average investor.
Thanks Rufus, I'm definitely going to do that a lot more moving forward,
I appreciate the openness about personal behavioural experiences. If a financial planner has these emotional decisions, what about us?
I’m glad to have found your site. I’m looking forward to learning from you.
👍🏽
Great video and insights. Thank you!
You’re welcome!
When the crash is this big and overdue and impending it makes sense to wait.
I think that certain parts of the market are due for a re-rating but certainly not all of it. Outside of US large cap lots of companies are still beaten to hell. Europe, UK rest of the world’s valuations are not excessive.
Yeah, but you can say this anytime.
@@honzastrnad No you can't lol
Great info and very well presented!
I'm glad it helped!
Never get fixated on a particular price, a pullback to the 20 ma is a reasonable dip to buy, it is always something like a 40-60% retrace of the run-up. If you are an investor then just dollar cost average by buying incrementally.
I relate to every single thing said in the psychology part of the video. In addition, when the drop happens the whole media will only show bad news and it is the end of the world, which definitely affects your mindset in the short term. Long term is a different story. Very useful content mate, best wishes from Brazil.
Thanks mate. Yes the news really does not help, but only bad news sells!
Well let me know "When the drop happens and The whole Media only shows bad news and says it's the end of the world." Because when that happens, that's the day I'M BUYING STOCKS!! 😂😂
Hi James love your videos and the tremendous effort you put in. I think you are the person that has made me realise that it is not all about beating the market. Thank you!
Glad to be of service!
Subscribed, been watching a few videos in the backlog... really enjoying your channel, great advice 👍
Cheers, and welcome !
Absolutely fantastic video. Top marks!
Thanks mate, means a lot!
James - you are a *phenomenal* teacher and doing a sterling job of educating the masses on financial matters. You instil confidence, and help keep people on the straight and narrow with their investments. Thank you so much for these videos.
No problem Tom, I’m glad you’ve found the content helpful!
Great video. My Dad always said, it is not timing the market, but time IN the market. You buy good quality stocks that you are confident in, of course they need to pay dividends, and you relax. If you think you know what is going to happen in the market day to day you are fooling yourself.
Thank you for your thorough and easy to understand analysis. Keep up the good work!
You’re welcome Rich!
Grounding lessons here James, goes to show the importance of perspective, but also emotional management. Any armchair broker can speculate, but never commit. Steady as she goes :)
Well said!
Another master class 😊 I have to agree with you James, I have stopped second guessing the markets as I just can’t. So I just invest as and when I can irrespective of the how it’s positioned. The only thing that would make me cautious about investing is if the market is in a state of freefall which there have been a few periods between February and now. Other than that I just invest and don’t worry about market moments. Another concern is if someone invests at a market high and immediately the market crashes as as as I’ve experienced in my investment in February. The time it takes for that drop to recover seems endless.🙏
It can be tough that’s for sure, and very few of us have actually ridden out a proper bare market, so we have that to come!
It's simple - SELL when I SELL, BUY when I BUY, END OF!