If anything, I’d do exactly the opposite:
Increase to the maximum contribution.
(Well… if I weren’t at the maximum yearly contribution anyway, that is)
There’s been so much talk of a recession already… is there anyone that hasn’t heard of it already? A minor recession has been so much anticipated that it’s probably priced in already. One could even ask: Aren’t we experiencing, sort of, one already? One where activity and output in non-monetary or “real” terms is declining already - and it’s just masked by inflation, so doesn’t show as nominal decline.
And the correction… it has happened already, hasn’t it?
I couldn’t invest last year because I hadn’t the money for, but if I could, I would invest. From january 2023, I can invest monthly and I will continue to invest each month on my paid day
I wouldn’t be surprised if stock markets begin to increase right when/after the numbers show that we (or the US). “really, officially now” have hit a recession. Somewhat counterintuitively? Maybe. But stock markets often either lag or anticipate the macroeconomic climate.
What I would rather worry about is a financial crises in the wake of the paradigm shift from more than a decade of zero-interest low-inflation to substantial increases and a share rise of inflation.
Have the markets and banks really digested that successfully and have we seen all of it after SVB and CS?
I would pause 3a contributions if I didn’t have enough accessible assets in taxable to cover the personal ill effects a recession can have on me (loss of job, loss of property value and so on).
I would not change anything in regards to my contributions based on the expected performance of my invested assets.
In my opinion, the secure way to face a recession is to let go of leverage, secure our financial position (have enough assets available to carry us if personal trouble arises), be good at work (to encourage our company to keep us), diversify our skillset and keep investing the assets that aren’t required for short term trouble handling. We don’t know if/for how long the stock market would go down and we don’t know when nor how quickly it would rebounce. Keeping investing ensures we will be investing all the way down and all the way up, scoring a good investment chunk at the lower prices.
I expect a flat and volatile market dragging on rather than a quick drop but a quick or prolonged drop is obviously not off the table and we should be ready for it.
What might surprise the markets isn’t that we are/will be facing a recession but the reaction of central banks to it.
The betters (data from CME FedWatch tool) have priced in 4 ! FED rate cuts this year, basically 25 basis points every meeting starting July, despite Jerome Powell stating they don’t expect to cut rates this year.
There are still way too many signs of market participants holding on to how things behaved in previous conditions and probably underplaying the difference having high inflation on top of a recession makes. I wouldn’t be surprised if we face market surprises going forward.
I concur. Some correction has happened already - but doubt remains is whether that has priced us down to a “sensible” level already.
It indeed feels that many market participants are anticipating rate cuts that frankly don’t seem realistic (especially when taking into account Powell’s stance). And the way stock prices have held up rather well, compared to the last financial crisis, could mean there’s ugly surprises in store.
There’s potential further turmoil (liquidity/trust crises) in the financial sector.
There’s also inflation and interest rates that could catch markets by surprise.
I’d put both way above inflation in my list of justified fears.
It’s funny to see how everyone always starts off by saying:
“Oh, it’s a no brainer to become a millionaire investing! Just do it consistently for 30 years! So easy”
Then reality happens and you start questioning the plan, reduce your monthly contribution (when it is probably the best time to invest) or even stop all together.
Everyone should have written a Investor Statement and just stuck with it.
The best strategy is just staying invested and doing it for the long term.
You are just bored. Get a hobby and don’t change your investment strategy every couple of months
If you’re a long-term buy & hold investor, it really doesn’t matter if were heading into a recession or not. It’s all just paper losses / returns anyway.
Short-term traders however might care about upcoming recessions. But they’ve got a minor issue: They don’t know the future.
As Terry Smith would quip: “Do nothing. That’s the hard part”.
I would have a small reservation when it comes to making a big lump-sum investment (so would Terry).
But otherwise that’s so spot-on. Consistency pays off in many other ways in life, too.
Thanks for sharing everyone. I do appreciate the reminder that everyone has their own expectations on how the market will react/perform, but none of us can see the future.
I guess I will keep buying as usual for my long term investments and 3a.
I do have some smaller 1.5-3y investments that I‘m playing with. I guess I just got tempted when I saw how the ones I’ve purchased at a discounted rate are performing quite well now. But time will tell if they go down again within the next months. Even SCHD that I expected to maintain value isn’t doing what it’s supposed to do .
As a relatively new investor, I‘m just happy to discover that I‘m not a panic seller when markets are down (thank you emergency fund!). But I do enjoy setting target price alerts on IBKR so I know when something’s selling at a good price, for me.
I have mentioned it before: I think the century of US dominance (and therefore broadmarket global ETFs) is coming to an end. The chances that the S&P500 has bottomed last fall is very high but it will not have the same future returns for a very long time - effective and nominal. I still hold some broad market ETFs (that is 65% US equities), but just as a reference to the rest of my portfolio and that is performing rather better. (Same is true for pure swiss index investors, especially the SMI).
I know all the early FIRE pioneers favoured passive investing and this is the consensus here. But I’d suggest that every body who really needs to live of their investments (like me) takes a long and honest look at the charts. There are many opportunities out there but maybe at diffrenets places than before.
There is some truth in your words. As a Swiss investor you always lost on FX in the last decades… and i don’t see this changing anyone soon. If i have some time, i might explain in details why from my point of view a strong Swiss-Bias is not too bad a choice for a CH-Investor… as long as you are mitigating the weights of the big-3 in the Swiss-Index.
But yes - some caution is not the worst advice right now.
Possibly. Their politics and societal polarisation are a real sh*tshow. But the U.S. has access to relatively cheap energy - and can hardly be beaten worldwide for access to capital. Combine that with relatively low wages in much of the services sector, high salaries in the tech sector and English as their (de facto) national language, it’s still an attractive place to invest.
I would - at least since the Ukraine war and Russia sanctions - worry more about (most of) Europe, where energy prices and regulation have made conducting many businesses more expensive than before.
After spending 3.5 years on Bogleheads I got convinced that the US stock market is superior to the rest of the world. I‘m adding a Swiss home bias and end up with 80% US/CH. The other 10%/10% are Developed World exUS/CH and Emerging Markets.
Young demographic beats old demographic, new technology beats beats old technology, young leadership beats old leadership. So I expect a global technology ETF like the WTC to outperform the S&P500 and I expect countries like India and Singapor to outperform the global market longterm.
By reading and partipating to this forum, you confirm you have read and agree with the disclaimer presented on http://www.mustachianpost.com/
En lisant et participant à ce forum, tu confirmes avoir lu et être d'accord avec l'avis de dégagement de responsabilité présenté sur http://www.mustachianpost.com/fr/
Durch das Lesen und die Teilnahme an diesem Forum bestätigst du, dass du den auf http://www.mustachianpost.com/de/ dargestellten Haftungsausschluss gelesen hast und damit einverstanden bist.
.