Stock Market PEAKED


(Martin) #1

Wondering what everyones opinion is about the current level the stock markets are sitting at?

Markets roughly correct/crash every 8 to 10 years & the last crash was the massive crash of 2008 are we heading towards another correction or a crash?

If so what would be the best stocks to have funds being paid into monthly what sector?

And is it really a good thing to have funds in the S&P or tracking the FTSE100 etc maybe individual companies will be best.

What’s are the opinions.


(Emma) #2

That’s a little ray of sunshine for a Monday afternoon :grin:

Taking the law of averages it will fall at some stage and then it’ll rise at some stage. Not going to get overly concerned about it


(Kenny Grant) #3

IMO Yes. We’re heading towards an economic crash, trade war, and then global war. It won’t be pretty.

Might take a long while for any of that though, maybe months, maybe a few years, and of course it is very hard to predict such things, or we’d all be rich. Quite possible I’m horribly wrong and we’ll see a boom that lasts another decade :rofl::man_shrugging:

What we can say for sure is companies are going into administration, debt is at all time highs, asset prices are hitting all time highs, unrest is growing, economies have not yet recovered from the last crash, competitive devaluation has been used extensively, and stimulus is only this year being withdrawn.

Why do I feel so gloomy? We find ourselves living in the confluence of several powerful economic changes:

  • The information revolution, similar in scope to the Industrial revolution in the 1800s, this is just beginning IMO, and has decades yet to run
  • Widespread unrest due to the entire industries destroyed, created and renewed by the above
  • The procyclical economic policy after the last crash (austerity was widely deployed) has created a lot of losers and caused massive unrest (see Greece, Italy)
  • The rise of populism and fascism linked to the above unrest blaming problems on others
  • Trade war between the world’s great powers as the balance shifts towards China, India
  • Trade war is often a precursor to real war (as seen from Hong Kong)

If you’re feeling gloomy perhaps save up some cash as well as investing in shares and property, so that you’re able to act if things do crash, and remember to buy, not sell, if things go down a lot.


(Vladislav Kozub) #4

I’ll just leave my old response on a similar topic here to avoid copy-pasting :eyes:


(Kenny Grant) #5

If the market is doubtful and expecting a crash or a recession, it is already priced in, hence the crash is less likely to happen. The reasons for recessions and market collapses are due to no one expecting anything and someone digging out something that sets everything on fire.

This is an interesting viewpoint. Personally I don’t believe the market is that efficient. Recessions do happen, markets do crash, and people simply panic in that situation. In 2008 the market was not rational, and IMO the market is not at present rational as it has priced in growth which may well not happen… Also, in 2008 there was an extended period of trepidation and several warnings months before the crash, some say it started in 2007.

I have mixed feelings about the maxim - ‘Time in the market beats timing the market’ - there is an essential truth there, but there are a few problems for a normal investor:

  • Most people are too emotionally involved to leave things alone and find this very very hard
  • The vagaries of markets affect people in very concrete ways and can ruin their life - for example buying an annuity just after the 2008 crash - no matter how sanguine you are this can impact you without proper planning which sometimes involves moving out of investments and in a broad sense timing the market
  • People see that they could have made an awful lot more if they did time the market, even in a very broad way

I think it does no harm to keep some cash if you wish to be ready to invest, as long as you stay diversified, in fact it’s a mistake to just throw everything into shares (IMO), and hope for the best, as at times they do very badly, and at times we are unable to wait out the market and could lose out horribly in a crash (funds suddenly required for life events, births, marriages, retirement, deaths).


(Martin) #6

Oh i don’t feel gloomy, I will still invest, just wondering what people’s opinions are.

As I think due to the markets being high & not just high but all time highs, it could be better to stay away from certain markets and just invest directly into the companies and when markets decline put in lump sum of cash.


(Vladislav Kozub) #7

Has it ever been rational though? If it was, then robo-investors would have dominated it :thinking:

But I do agree on the other points about time in the market.

This is the case for sure! I have made this mistake so many times in less than a year, by investing cash as soon as it arrived. And then days later there were such good opportunities… :sweat_smile:


(Harry) #8

So I guess there is a lot to try and tackle here.

Stock markets in general are at highs in historical terms but there are also companies making more money than ever, the valuations of some aren’t outrageous - even Apple and Alphabet for example don’t have stupid PE ratios. So a lot of markets highs are driven by fundamentals. Companies like Amazon and Netflix are priced very highly for growth so they look like outliers, but we’re talking about correction, not recession or crash.

Interest rates are rising generally around the world which will probably pull investors back from risky assets, such as emerging markets or heavy growth stocks, so that is one downward pressure. The dollar is also high and looks like increasing in the short term, and a lot of emerging market governments have high levels of debt denominated in dollars, so if the dollar gets pricier compared to their own currency the cost of replacing this debt gets higher. So there is a downward pressure on EM markets. This poses a dilemma in some cases as the S&P500 is quite pricey as a whole, and EM markets therefore look like good value but the political and government risk is higher and you can’t ignore the debt levels!

So maybe un-loved developed market equity eg UK and Europe. Oh no - Brexit (hate that word), Italexit (hate that word even more), and general sluggishness of Euro markets is a bit of a disincentive.

Markets cycles are just that - cyclical. Things go round but at different speeds and I wouldn’t use the “oh it’s been 8-10 years, you know what that means” argument. However, we have had a great run the last 10 years because we started from low prices and quantitative easing artificially kept interest rates low, forcing investors into equities. Also, Apple, Facebook, Alphabet, Amazon are all great companies.

Will prices get corrected, yeah probably. Crash? Don’t know. Causes - political maybe (Eurozone or something-something-China), maybe oil (political still?) or maybe dollar related.