The big crash is coming, what’s next?

“An investment in knowledge pays the best interest.” – Benjamin Franklin

There are two types of investors in this world, pessimistic and optimistic investors, no matter which type of investor you belong to, we all know the market is volatile.

Experts anticipate another big crash is coming. As investors, we hope to sell everything before the crash now and buy back just before the recovery. Timing the market is just too tempting.

No one can time the market

 CXO Advisory tracked the success rate of how well financial analysts/economists predicted the market. They assessed 6,627 forecasts by 68 leading financial experts over an eight calendar-year period from 2005-2012.  By simply guessed stocks would make money every year over the same eight years, you would have been right 87.5 percent of the time ( almost 4 out 5 trading days see stock price increase). But none of them came close.

If you have heard or going to hear the following forecast,

We’re heading For Another 1929 and this time will be worse.

The coming crash is going to be bigger than the March crash.

Dark Times Are Ahead of us. Anticipate bigger crash in 3 months.

Don’t panic, crashes come and go and I will be happy seeing crashes during the wealth accumulation phase. Intermittent stock corrections give me the opportunity to buy more. I should be happy to buy my desired ETFs at a lower price today than yesterday, shouldn’t I?

Crashes come and go

Buying your ETFs yesterday, today and tomorrow does not eliminate your risk of getting them before the crash. Even if you postpone your purchase for another one month, 3 months or 1 year, you face the same risk of seeing your portfolio drop significantly in the near future.

The best time to plant a tree was 10 years ago and the next best time is today, don’t wait and see, you will be wasting away your life waiting for a good time!

Sell everything and Buy again

Staying the course is the best option for long term investors. It is certainly very rewarding if you can sell everything at the peak ( highest point) during the market volatility and buy back everything after the crash just before it rebounds.

The truth is you need to be correct two times and not once to do this. Besides guessing correctly when the market bottoms, you have to time correctly when the market booms again the next cycle.

Even a trained financial analyst or economist only get it right less than 50% of the time, what makes you think you can time the market correctly two consecutive times!

Predicting market is just a financial circus

As a small kid, I enjoyed watching the circus especially the acts that were risky and entertaining. Knife throwing with eyes blindfolded was one of my favorites especially if it involved one of the audience.

To make any circus act appealing to the audience, you need to combine two elements in your act- making the audience part of the show and fun/ entertainment ( plus-minus dangerous act).

The market forecast is always entertaining for investors. Making the prediction of a major market correction attracts the attention of investors around the world. Since investors put their money in the market ( making the audience part of the show), telling investors how the market’s going to move in the next few days makes an eye-catching headline!

Predicting the market’s direction is just a financial news circus to attract viewers. Pay less attention to financial news and put more effort into your financial goal.

Stick to your plan and stay the course! Warren Buffett once said that it is wise for investors to be “fearful when others are greedy, and greedy when others are fearful.” For me, I am not fearful nor greedy, I invest monthly regardless of the market direction!

Conclusion

Don’t worry about how the market moves, you couldn’t control nor predict the direction. If you start to worry about something you couldn’t control, you are doomed to be anxious.

If you are depressed, you are living in the past.

If you are anxious, you are living in the future.

If you are at peace, you are living in the presence.

Lao Tze