What are you going to do when the market crashes

BalHouseBuyer · 27-12-2017 5:05pm #1

I may be ridiculed for this, but the stock market is going to crash in the second half of 2018.

The market has been performing amazingly for the last 7 years or so.With index funds being at record highs. The fact that the dow jones is 10K above its previous peak before the last crash should be worrying for people.

Many companies are overvalued

Snap 18B valuation on 400M revenue with a 500M loss

Facebook 400B market cap - Revenue 27B

Plenty of other companies such as Amazon, Tesla, and Twitter. They have high market caps, with nothing really to back it up. The only companies that will probably survive a crash are Amazon and FB but with a more realistic valuation.

I currently hold no shares, having sold them off during the year to buy property. I will buy back when the time is right.

So start cashing out now is my advice.

traveller0101 · 29-12-2017 5:19pm

What's the catalyst going to be?

amacca · 29-12-2017 10:30pm

I was thinking there won't be any one major event signalling the end of the bull run, no emperor has no clothes moment etc just a continuous slide back to more realistic valuations etc....maybe it'll come apparent that Trumps interventions won't bring about more profitable us business in the long run

but then what do I know?

Dardania · 29-12-2017 10:39pm

I guess I'll hold and ride through - no need to crystallise losses unless I badly need access to money. Dividends should still pay.

I may keep some cash on hand to buy speculatively...inflation is low enough...

I reckon the bitcoin bubble will coincide with whatever the catalyst is

diomed · 29-12-2017 10:58pm

It won't take much to start a panic.
Share prices are crazy high.

Cute Hoor · 30-12-2017 1:14am

amacca wrote: »

maybe it'll come apparent that Trumps interventions won't bring about more profitable us business in the long run

Daimler expects that the Trump tax changes will increase it's net income for 2017 by 1.7bn euros
BMW said it expects re-measurement of deferred taxes as a result of US tax reform to have a positive impact on deferred taxes in 2017 and therefore on group net profit in the region of 950 million euros to 1.550 billion euros.

Not sure who is going to pay for all these corporate profits.

Deub · 30-12-2017 11:21am

I will buy plenty of Lyxor ETF BX4

syntheticjunk · 30-12-2017 11:38am

When market crashes - I'll short the hell out of it

As volatility at all times low - buy OTM leaps puts.

TiGeR KiNgS · 31-12-2017 11:58pm

BalHouseBuyer wrote: »

I may be ridiculed for this, but the stock market is going to crash in the second half of 2018.

The market has been performing amazingly for the last 7 years or so.With index funds being at record highs. The fact that the dow jones is 10K above its previous peak before the last crash should be worrying for people.

Many companies are overvalued

Snap 18B valuation on 400M revenue with a 500M loss

Facebook 400B market cap - Revenue 27B

Plenty of other companies such as Amazon, Tesla, and Twitter. They have high market caps, with nothing really to back it up. The only companies that will probably survive a crash are Amazon and FB but with a more realistic valuation.

I currently hold no shares, having sold them off during the year to buy property. I will buy back when the time is right.

So start cashing out now is my advice.

Why don't you short those companies if you are so sure ?

Diarmuid · 01-01-2018 12:12pm

BalHouseBuyer wrote: »

What are you going to do when the market crashes

Buy more stock.

1world1people · 01-01-2018 12:28pm

There is no real investment allternative to stocks until intrest rates rise significantly. I expect 2 to 3 5-10 % pullbacks, but no crash in 2018. Good buying oppertunities. The US tax breaks will add more liquidity all round, Oil and ebergy prices are ramping up too. 2018 will be a year of spending and investment and if it goes too far.., a bubble may becomr apparant in 2019. By then another 4-5 fed rate increases will be priced into the markets and the values may have drifted down a bit. If there is a danger, its an unforseen geoploitical event, war escallation, natural disaster, mass virus or alien revelations or something eqallly wierd.

Dardania · 01-01-2018 5:33pm

Is anyone thinking about reducing exposure to indebted companies? I figure they're the ones that are going to get whacked when the bear comes - all this cheap credit might get it's interest rates increased, putting a severe strain on marginal companies.

TripleAce · 01-01-2018 6:03pm

would really love if this finally happen, a 25-30% correction would be great and is almost overdue!

OwlsZat · 02-01-2018 9:01pm

traveller0101 wrote: »

What's the catalyst going to be?

The inevitable climb in interest rates? Could be a while off yet. Provided the supposed personal debt bubble isn't too serious.

thereality · 03-01-2018 8:02pm

Warren Buffetts opinion is that at current interest rates, stocks are not over priced. But if the FED hikes the rates sharply for the next few years, stocks will be a lot less attractive. You don't want to take on a ton of extra risk to earn the same dividend as a T-bill, if you are investing in the market as interest rates are super low.

4068ac1elhodqr · 03-01-2018 8:10pm

Don't forget all the jobs about to go missing with the rise of automation.

Not just robotics, but quantum-level self-learning AI.
AlphaGo recently thought itself how to play chess in just 4hrs,
then went and beat a few world chess grandmasters.

(Correcting) Stocks won't only have to pay more for pensions, but early pensions and maybe UBI on top.

Deub · 03-01-2018 8:23pm

Porter Clean Bike wrote: »

Don't forget all the jobs about to go missing with the rise of automation.

Not just robotics, but quantum-level self-learning AI.
AlphaGo recently thought itself how to play chess in just 4hrs,
then went and beat a few world chess grandmasters.

(Correcting) Stocks won't only have to pay more for pensions, but early pensions and maybe UBI on top.

The same could have been said 100 years ago when tractors, cars were invented. Yes, it removed jobs but created new ones (you need people to sell, fix, improve them). There was also new markets created (internet for instance).

So yes automation, AI will remove some jobs but don't forget that they are only useful if they make money. So it will require people spending and therefore having a job.

4068ac1elhodqr · 03-01-2018 8:34pm

Deub wrote: »

The same could have been said 100 years ago when tractors, cars were invented. Yes, it removed jobs but created new ones (you need people to sell, fix, improve them). There was also new markets created (internet for instance).

So yes automation, AI will remove some jobs but don't forget that they are only useful if they make money. So it will require people spending and therefore having a job.

To an extent, but true-AI (not yet achieved, but not very far away), will be able to do almost everything and anything better. The self-learning and perhaps even self-replicating/maintaining aspect could make humans largely indisposed. Stephen Hawkins may not be able to logically compete with quantum level universal cloud consciousness.

On the up-side, human leisure time will increase vastly thanks to UBI payments (assuming inflation remains steady). After initial correction from 120%+ it's hard to know what will happen to markets after that as we head into the 4th ind' rev.

keane2097 · 03-01-2018 10:49pm

AI is obviously going to make corporations more profitable, not less. Otherwise they won't use it.

lucky john · 04-01-2018 10:26am

thereality wrote: »

Warren Buffetts opinion is that at current interest rates, stocks are not over priced. But if the FED hikes the rates sharply for the next few years, stocks will be a lot less attractive. You don't want to take on a ton of extra risk to earn the same dividend as a T-bill, if you are investing in the market as interest rates are super low.

What WB is saying and then doing is completely different. With current interest rates so low he has 100 billion in cash sitting out the market. he has sold down shares that are not part of his core long term holdings and added nothing of note.

Inevitably there is a bear market on the way but no way of knowing when that will be. It will come down to the CB's and how they react. For now they seem intent on pumping unlimited amounts of cash into the system and some C Banks are directly buying equities.

Poor_old_gill · 04-01-2018 10:40am

What will I do?

Firstly- tell everyone things can only get better and invest in stuff then- safe in the knowledge that I'll be right
Secondly- when things get better- I'll start telling everyone that the next crash is only around the corner and should come along in the next year/2 years- safe in the knowledge that I'll be right

jon1981 · 04-01-2018 11:00am

Poor_old_gill wrote: »

What will I do?

Firstly- tell everyone things can only get better and invest in stuff then- safe in the knowledge that I'll be right
Secondly- when things get better- I'll start telling everyone that the next crash is only around the corner and should come along in the next year/2 years- safe in the knowledge that I'll be right

David McWilliams.... is that you?

Poor_old_gill · 04-01-2018 11:02am

jon1981 wrote: »

David McWilliams.... is that you?

No, I'm just someone who understand the cyclical nature of markets & economies

neris · 04-01-2018 11:03am

lucky john wrote: »

With current interest rates so low he has 100 billion in cash sitting out the market.

And when things go belly up he'll be in using that 100 billion just like last time buying bargains

jon1981 · 04-01-2018 11:08am

Poor_old_gill wrote: »

No, I'm just someone who understand the cyclical nature of markets & economies

But that's really 101 stuff...

The skill is calling when.

Poor_old_gill · 04-01-2018 11:44am

jon1981 wrote: »

But that's really 101 stuff...

The skill is calling when.

I know that! I was just essentially summing up the know-it-all approach of most people in, what I thought was, a humourous manner!

I'll have to try harder- us Economists aint known for our banter!!!

jon1981 · 04-01-2018 11:53am

Apologies, I need to upgrade my sarcasm radar :pac:

jimmycrackcorm · 04-01-2018 11:57am

My very large MNC is telling us employees that the Trump tax plan will make a huge difference to profitability this year and going forward. So I can't see a crash coming this year when such an impact is related widely amongst US companies.

Wanderer78 · 04-01-2018 12:52pm

jimmycrackcorm wrote:

My very large MNC is telling us employees that the Trump tax plan will make a huge difference to profitability this year and going forward. So I can't see a crash coming this year when such an impact is related widely amongst US companies.

But what if there's a shock or multiple shocks from other sectors from other countries?

4068ac1elhodqr · 04-01-2018 1:39pm

jimmycrackcorm wrote: »

My very large MNC is telling us employees that the Trump tax plan will make a huge difference to profitability this year and going forward. So I can't see a crash coming this year when such an impact is related widely amongst US companies.

Never mind market booms (or crashes) (in terms of locality and local effects) impacting Ireland. Once the EU enforces harmonisation here, there will be plenty of other more sunny small islands to choose from.

Like the US MNC commonly known as Apple, that may have moved some of their tax base to Jersey, once the tax screws here were tightened ever so slightly?
Then there's the BVI (British Virgin Islands), Dutch Antilles, Cayman, Bermuda or more local alternatives of Guernsey, Swiss, Isle of Man, Malta. etc etc.
Perfectly legal to put you tax base e.g. in the middle of the Caribbean (hence most large corporate may do this) morally, not so much.

Wanderer78 · 04-01-2018 2:05pm

Porter Clean Bike wrote: »

Never mind market booms (or crashes) (in terms of locality and local effects) impacting Ireland. Once the EU enforces harmonisation here, there will be plenty of other more sunny small islands to choose from.

Like the US MNC commonly known as Apple, that may have moved some of their tax base to Jersey, once the tax screws here were tightened ever so slightly?
Then there's the BVI (British Virgin Islands), Dutch Antilles, Cayman, Bermuda or more local alternatives of Guernsey, Swiss, Isle of Man, Malta. etc etc.
Perfectly legal to put you tax base e.g. in the middle of the Caribbean (hence most large corporate may do this) morally, not so much.

maybe the idea of creating a sovereign wealth fund, and taking the difference of this tax increase in share options, isnt a bad idea after all!

1world1people · 06-01-2018 7:50am

TripleAce wrote: »

would really love if this finally happen, a 25-30% correction would be great and is almost overdue!

It may be a mistake to be waiting for the big 'crash'. I think the world markets are adjusting to a 'New Norm'. The world economies are rebalencing. In 10 years or so, it is generally accepted that China will be the dominant world economy. Currencies are also adjusting, the Yuan will become dominant. Bitcoin is here to stay, but like the Internet, will struggle amid user knowledge and uncertainty and lack or regulation for years until a settled balance comes. Its clear however that the increasing number of Globalised firms and individuals will see see Crypto-currancies as a viable alternative to sovereign currencies or commodities. I expect a few to become dominant and set the path.

In the past generation we have gone through an Electronic revolution that will be equivalent in the eyes of History to the Industrial revolution. We are now moving to a currency and Energy revolution that an increasingly Globalised world will struggle to keep pace with and will open opportunities for Global players to excel. These Global players are more powerful than most sovereign nations at this stage and have taken over the technology pace setting. In the seventies, the space race was played out between Russia and the US. No nation will ever set the standard for technology advancement again. Gltobal players dictate the markets and as long as innovations are occurring, themarkets will deliver.

Its clear to me though that the markets are live and tearing ahead and conventional historic trends are becoming decreasingly important.

Embrace risk to your own tastes, hold 15-20% in cash for buying opportunities, hedge sensibly. This bull is going nowhere soon.

One suggestion, future proof your portfolio. Dump stocks from companies that will suffer through technology advancements.

1world1people · 06-01-2018 7:59am

keane2097 wrote: »

AI is obviously going to make corporations more profitable, not less. Otherwise they won't use it.

It depends on how it is used. AI is not a common technology, it is a concept and will be applied as widely as the concept of an App. Each company will develop their own version of it, different platforms for developing it will be used, each new set of graduates will come up with new ways, what we see as AI now will be redundant in 2-3 years. AI being applied to new technology will be outdated soon. A bit like operating systems and PCs. Like softwares, it will also become overused and some of it will be useless.

AI is in its infancy and will become an ever more sophisticated product, but look for companies with an excellent history of producing innovative operating systems or products to take the lead here. but many will fail and fall along the way.

keane2097 · 06-01-2018 1:06pm

1world1people wrote: »

It depends on how it is used. AI is not a common technology, it is a concept and will be applied as widely as the concept of an App. Each company will develop their own version of it, different platforms for developing it will be used, each new set of graduates will come up with new ways, what we see as AI now will be redundant in 2-3 years. AI being applied to new technology will be outdated soon. A bit like operating systems and PCs. Like softwares, it will also become overused and some of it will be useless.

AI is in its infancy and will become an ever more sophisticated product, but look for companies with an excellent history of producing innovative operating systems or products to take the lead here. but many will fail and fall along the way.

I know what AI is, cheers.

1world1people · 20-01-2018 3:05am

keane2097 wrote: »

I know what AI is, cheers.

I had to look it up, thought it was a cab company at first...

OwlsZat · 23-02-2018 1:29pm

How does mortgage approval work with economic downturns. If you are approved before a crash, can that theoretical approval be reneged or would it be?

Bobeagleburger · 23-02-2018 3:04pm

OwlsZat wrote: »

How does mortgage approval work with economic downturns. If you are approved before a crash, can that theoretical approval be reneged or would it be?

Mortgage approvals only last a few months anyway don't they?

OwlsZat · 23-02-2018 3:38pm

RoboKlopp wrote: »

Mortgage approvals only last a few months anyway don't they?

6 months +
Question was more so within these periods can agreed approval be reneged due to economic downturn.

1world1people · 24-02-2018 5:47pm

one thing to consider on a mortgage approval, apparently if there is an Online gambling account(paddypower etc), there is little chance of getting approval.

Thargor · 24-02-2018 11:05pm

1world1people wrote: »

one thing to consider on a mortgage approval, apparently if there is an Online gambling account(paddypower etc), there is little chance of getting approval.

Is that actually true or just an urban legend?

Bobeagleburger · 25-02-2018 12:04am

Thargor wrote: »

Is that actually true or just an urban legend?

It's true.

Understandably so if there's substantial amounts coming out every month

BrokenArrows · 25-02-2018 10:26am

1world1people wrote: »

one thing to consider on a mortgage approval, apparently if there is an Online gambling account(paddypower etc), there is little chance of getting approval.

Not true. Mine account was linked to loads of online gambling sites and I didn't have a problem.

They will take it into account like any other expense.

dubrov · 25-02-2018 12:02pm

Approval can be reneged upon right up until the final mortgage contracts are signed.

Everything is just an indicative agreement up until then

1world1people · 26-02-2018 7:49pm

BrokenArrows wrote: »

Not true. Mine account was linked to loads of online gambling sites and I didn't have a problem.

They will take it into account like any other expense.

https://www.independent.ie/business/personal-finance/property-mortgages/red-flags-and-hidden-costs-needtoknow-tips-for-the-firsttime-buyer-applying-for-a-mortgage-36109230.html

I think you need to be careful what advice you give. People applying for a mortgage, especially first time buyers, need to jump through every hoop to make sure they have the best chance. You will not find it ANYWHERE that an online gambling account is OK to have in terms of a credit check. Of course its relative to your wealth and other financial realities, but to say its no problem is, quite frankly, a display of ignorance.

Bobeagleburger · 26-02-2018 11:58pm

BrokenArrows wrote: »

Not true. Mine account was linked to loads of online gambling sites and I didn't have a problem.

They will take it into account like any other expense.

Poor advice.

keane2097 · 27-02-2018 8:20am

I wasn't even asked about six figures worth of transactions to/from various gambling companies by AIB when getting mortgage approval last year. All the transactions were through AIB accounts.

Your mileage may vary but I strongly suspect that in most cases people blaming €20 to paddy power for being denied a mortgage have other issues with their application.

dickface · 27-02-2018 8:36am

https://www.irishtimes.com/business/personal-finance/the-five-financial-mistakes-you-don-t-want-to-make-in-your-30s-1.3406170

Get a house and don’t worry about a pension for now’ was the advice for a 30-something

Great advice in this piece overall:)

Dardania · 27-02-2018 8:59am

dickface wrote: »

https://www.irishtimes.com/business/personal-finance/the-five-financial-mistakes-you-don-t-want-to-make-in-your-30s-1.3406170

Get a house and don’t worry about a pension for now’ was the advice for a 30-something

Great advice in this piece overall:)

Interesting they used a 5% withdrawal rate for the pension

erudec · 11-04-2018 8:04pm

dubrov wrote: »

Approval can be reneged upon right up until the final mortgage contracts are signed.

Everything is just an indicative agreement up until then

What exactly does it mean to say "documents are signed"? There's a months long waiting list at the land registry so you could be in the house four months before the bank has received the deeds. Does that mean that they could renege after you'd made three payments but the bank hadn't got the deeds?

I would hope not. I think such a decision would be overturned.

ZeroThreat · 12-04-2018 11:53pm

BalHouseBuyer wrote: »

I may be ridiculed for this, but the stock market is going to crash in the second half of 2018.

The market has been performing amazingly for the last 7 years or so.With index funds being at record highs. The fact that the dow jones is 10K above its previous peak before the last crash should be worrying for people.

Many companies are overvalued

Snap 18B valuation on 400M revenue with a 500M loss

Facebook 400B market cap - Revenue 27B

Plenty of other companies such as Amazon, Tesla, and Twitter. They have high market caps, with nothing really to back it up. The only companies that will probably survive a crash are Amazon and FB but with a more realistic valuation.

I currently hold no shares, having sold them off during the year to buy property. I will buy back when the time is right.

So start cashing out now is my advice.

best reinvest in the cryptocurrency market, Bitcoin is probably due another bullrun this year, but don't hold too long

Karpaty · 13-04-2018 6:41pm

Thargor wrote: »

Is that actually true or just an urban legend?

Only applies if your bank statements show deposits made into those gambling accounts. Even small deposits will trigger questions. I'd recommend using pre-paid debit/credit cards, such as Revolut or PaddyPower's own debit card if you like an occasional Cheltenham/World Cup punt, but thinking buying

What are you going to do when the market crashes

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