what does that say about the future of the SP500/VT/QQQ that went ~30% this year, whereas the US GDP expansion might be <5%… ? 
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why take the risk of an ETF that has USD-CHF FX exposure apart from a ± zero performance vs just leave the CHF cash on your account (which is 100% safe, no FX risk, no bond market risk)?
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Sticking to IPS
- 30% cash / 70% equity (thereof 80% World and 20% Swiss)
- Wait for the crash and then increase equity-ratio → Defining ratio post-crash and exact mechanism = WIP (and giving me a headache)
honestly - this is one of the main question i’v been asking myself… how many of us did already experience (i mean not during their lifetime, but with their investments) a bear market like 2000 oder 2008. I guess this might be a hard time for a lot of “passive” investor.
Passive investing has been made easy the last 10 years - markets were only going up. Nethertheless - time in the market is more important (and often more successfull) than timing the market - but some of us might have a hard time keeping to their plan.
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To paraphrase John Bogle: I don’t look for the diamonds, I buy the whole mountain.
Yes.
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It may sound stupid but I wanted a bit of risk for a bit of return. Not to mention that nowadays quite a few banks charge you for >100k cash in their accounts.
I guess many of us will find our risk tolerance in the next crisis, since many (myself included) weren’t investing in 2008 (and the recent corona-crash had a quick enough recovery to have lower psychological effects than seing your net worth drop slowly, then start to recover, only to drop some more).
My default would be a solid and conservative allocation that I can hold through most times. It can be only stocks and bonds or incorporate gold, cash, real estate and even cryptos. I’ll not link again to the Golden Butterfly here but finding a way to adapt it for swiss investors would be a start. No guarantee it will hold through the next crash since we have no idea what the characteristics of the next crash would be.
Regarding stop-losses: they pretty much guarantee that you’ll loose money, but they protect your downside. High volatility may be a problem, and you’d need to also decide when to enter the market again. That wouldn’t be my pick but knowing they’re there may help sleep at night.
Death cross alert: I know of no automatic such alert. I guess some newsletters/subscriptions would offer that service. There’s no guarantee a death-cross would signal a crash and stocks could recover right after with a huge melt-up. Some strategies seem to sucessfully leverage in and out of the 200 moving average, it may be worth investigating if/how you could adapt it for a non-leveraged strategy. My guess is you’d sacrifice upside for some kind of potential downside protection.
Safer strategy: that would be my take. 40/60 is solid enough and up there in terms of risk adjusted returns (with returns in USD, so it would need further investigation/tinkering): http://www.lazyportfolioetf.com/balanced-lazy-portfolios-all-country-world (scroll down to the bottom).
Value instead of tech: I haven’t studied factors but my guess is that most stocks would drop quite a bit in a global crash, though some would recover quicker than others. If it’s the fall that bothers you, I’m not sure I’d go that way.
Keeping cash on the side: my take from the discussions I’ve seen around about the nineties is that it’s very difficult to time a market crash properly and get out of the market in advance without risking it being too early. You’d then face the awful dilemna of staying on the sidelines while stocks keep going up, potentially never daring to enter only to finally give in and do so just before the real crash. I’d not go with this option.
Opening a crypto wallet: in my humble opinion, cryptos have a high likelihood of being at the root of the next crash. There’s no guarantee that they’d hold better than other assets.
The corona-quick-crash had me very bothered with people telling that to market time efficiently, one needs to be right twice (the underlyings I have felt were that one should time the top and bottom near perfectly - which you don’t have to - and that getting back in at an adequate time was the hard part - it’s the easier one in my untested opinion). The market timing experiment I’ve launched on the forum, with which I believe you are familiar, was meant to give myself some basis to enter these discussions once the next crash would come around. I like variations of it more than stop-losses, though it requires a more active eye on the markets.
In short, and as an unexperimented investor who likes reading around:
With a decent chunk of assets, my take would be to use a low volativity portfolio. Less to gain but less to loose and a good history of behaving decently (risk spread among asset classes).
In my own position, with less assets, that I might furthermore need in a crash (but am willing to risk as part of my risk assessment), I’m comfortable with a market timing strategy, which should be studied personally and the person using should feel comfortable with.
My main take being that crashes may occur suddenly, or be delayed, and there’s no sure way to tell before being in the midst of it so our portfolios/strategies should always be ready for such a situation and not be designed for bull markets only.
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That is exactly the case!
I started investing in 2006. With expensive, actively managed funds; TER of around 1.5%.
Then, the crisis hit in 2008. I got a letter from the bank, telling me about the “unprecedented events” (beispiellos) and whatnot. Seeing my investments being halved was scary enough, but then there were all the news around me: This bank is bust, that bank is bust. A friend of mine had invested in a savings account with an Icelandic bank and they went belly up. There were rumors that UBS was about to crash, too.
Yet I continued with my investments. Yes, deep within me I was asking myself if I was not being plain stupid, after all. But that’s normal. Only a fool is under the illusion of having it all figured out, in my opinion.
All in all, for me, it was a very precious experience.
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someone please tell me what an IPS is? 
easier said that done - think about the lost decade. It could very well play out again.
Sure the covid crash was a fun way to stock up on cheap equities. But what if the 2008-2013 period plays out again (especially knowing your invested amounts from the other thread 
)?
Thanks for the link. 40/60 looks good on paper, if only Bonds were yielding anything positive… I can just reduce my exposure to 40% stocks and leave the rest in CHF cash.
I know some people who mortgaged their house and everything they could in 2008 to buy low - and then had another dip in 2009, but eventually they could stop working 5-10 years later. I’m not saying it’s a strategy to follow, but buying (much) low(er than ATH) was never a bad idea. If it falls, we buy more. The problem is if one runs out of money too early - and it keep falling.
^ this is what I thought as well. 
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Investment Policy Statement. Your personal statement about your strategy and how you do your investments.
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https://www.bogleheads.org/wiki/Investment_policy_statement
Prepare for it in a way that works for you. Just for you. Discuss it here, see what others think and do. But never forget: It must work you.
I don’t think that adapting my general strategy every year or even more frequently makes sense. Yes, Evergrande might collapse. China might attack Taiwan. Russia might attack Ukraine. The list of possible crash causes is long. Always has been long. Always will be long. Then, when the crash comes, nobody saw it coming. Maybe @Wolverine is right and crypto currencies will be its cause. Maybe not.
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I believe bargains happen when most people are out of cash and/or taste for buying them, which is part of what makes it psychologically tiring to endure the crash (watching out that it’s not our blood that’s in the streets). Part of my preparations would be to lower the other risks in my life to make sure I can profit when stocks are cheap and am not pointing at the charity soup when others take advantage of the bargains.
Thanks @Neville for sharing your experience.
Adding to what @Burningstone wrote about IPS, one of the main advantage of having a written one is that you can get back to it when times get tough, remember why you are investing and have the roadmap through this situation stated plainly in front of you. I like to incorporate my “why” (positive effects I expect investing to have on my life) to mine.
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In addition I’d say the most important thing is to stick to your IPS, especially when it gets tough.
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True that.
Cautionary tale coming.
I traded through 2008 in Central Europe. I was having my first paying 5x8 corporate job and some too much time on my hands, so I said why not take a look into active trading. Started with 1 stock only: the Big Bank of the country. BB’s stock was 8000 a pop, “soon to be 10k”. I bought in (50% capital), reached 9k (-> happy camper, I’m making money) and then it started falling like crazy. Sure we heard the news from America - that’s waay to far from here, I thought.
Dropped to 6k in a week. Everyone was selling. I thought well, I’m now down 30%, I’m not selling at a loss, the stock will go back to 10k eventually, bargain, let’s top up. (+20% capital)
Dropped to 4k in another week. My seniors who lived through 2000 reminded me that it can still drop another 50% from here. I thought they were stupid. I was at 50%+ loss on my initial package, but the upside potential was already 100%+, it’s impossible to fall more. Let’s top up. +15% capital put in. I’ve re-read “the sacred stop-loss” articles 5 times a day.
Next week it dropped to 2600. I was cursing and angry. I used some stop losses along the way, so all in all I was about 60% down. I didn’t want to go in with my last 15% as 4k to 2k is another 50% loss on an already 50% lost position. I could somehow see that now that it’s not unreal to go that deep.
The next week it dropped to (and finally bottomed at) 1800. I’ve gone all-in with the 15% capital that was left and in about a year I made up my losses back to zero and then some (that’s more than 100% profit, go me!). Then I had to sell cause I was needing the money for a down-payment on a property.
Said stock has peaked this year at 19.000. (Cpt Hindsight could’ve made a 10-bagger in 12 years). Alas, I came off the market with a bunch of newbie experience and with about zero profits.
I want to do it better this time around.
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Don’t put all your eggs in one basket 
this was an extremly risky investment.
I can highly recommend the book “The most important thing” by Howard Marks. It contains the best description I’ve ever read about investment risk (I did a bachelor in economics and I’m a CFA chartholder, so I read quite a bit about risks )
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2022 is on the mind of everyone.
If you are uncomfortable means that your asset allocation is already too aggressive. As other mentioned, a big drop will eat you inside-out. Even though it may recover you will feel sick and worried. Passive investment meant to be less stressful.
My view for 2022:
- Scale back a little equity allocation (if a drop happens you will be happy. If not you would have just left some money on the table)
- Cash out or scale back RE funds if you have
- Invest some money to China (both MSCI China and CIS 300) —> tilt - no big exposure.
- scale back some exposure to small cap tech. Valuations are very high
- continue to invest in VT as usual
- with the cash buffer, ready to invest in UPRO (3x S&P500) after a big drop
- keep my tilt to EU / EM stocks - i set up this in 2020, valuation gap vs US is still real but I don’t want to tilt even more as US stocks tend to rebound faster than EU so in case of a crash I don’t want to hold a big bag of EU stocks
- research some individual stocks - should a crash happen could be good opps to buy
- I may throw another 1-2k USD to crypto but really avoid big stakes. I am in small cap crypto for 10-100x dream, like lottery. I don’t want to throw money at BTC/ETH (I don’t conceive how a single Bitcoin is worth 50k USD. For me it has zero value)
- I may consider AVC (additional voluntary contributions) for Pension in 2022 to reduce tax rate
That’s about it!
Through any drop (and recovery), if you just continue DCA-ing (or even getting in more than usual) + accounting for dividends, you are way better off than just looking at the price development chart.
I believe none of us buys once at beginning of investing life and then never again.
Hopefully most of us are in it for the long term (longer than 5-10 years).
Thanks for sharing.
I believe you will agree - even without that hindsight - that going all in (and continue to do so) on only 1 stock was not the best or most rational decision, no matter the economic circumstances.
It wouldn’t be even if it turned out great.
This way at least you got the lesson and I hope you didn’t continue that route.
Love it!
“Good times teach only bad lessons”
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This was one of the most mind blowing things for me:
“High quality assets can be risky, and low quality assets can be safe. It’s just a matter of price paid for them…”
Same strategy as always. Invest every month what I’m able to save till the day I can quit.
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Of course it was stupid.
But that one stock could’ve been the SPX if index investing would’ve existed back then so widely adopted as it is now.
The morale of the story for me is that if the market doesn’t agree with you, you need to close your positions and step back for a while.
Buying and holding the baby Jesus out of a bear market might be a good thing for the long run, or you might run out of money when it keeps falling for years to come (think Japan, or Poland or anything smaller).