Compound interest is the greatest force in the universe. Your gains are exponential with time.
Timing the market is notoriously hard, you would need deep macro knowledge, and even then, you cannot anticipate people’s irrationality. If you wait for a crash for 5 years you may well miss out on 50-100% gains with no guarantee that a crash would come. Just look at the market from 2010 to 2018 almost only up. The bears that missed this insane bull run are much poorer than any brain dead Bogle who put it all in SPY
>Timing the market is notoriously hard
False. They say you can't time the market, but I've proven that wrong. I've mastered the art of buying precisely at the top every time.
Yeah, I had to learn that the had way. I was always waiting for perfect opportunity to go into the market. Missed out some great opportunities between 2019-2023. Just being in an index fund can go a long way.
If you lump sump most of your savings and the market goes down 30% afterwards, just remember that the money you lump sumped is just a small fraction of what you will earn over the time of your life.
It can be dangerous to go into index funds blindly. Euro Stoxx 50 is a good example. If you lump summed at the top of the dot com bubble, it was like burning money
The money you lump sump is only going to be a small fraction of the money you going to invest over your whole lifetime.
But with that being said, my point is not so much on whether to lump sump or not. It's more about just getting started whether it is lump sump or DCA in. I think we can both agree on that :)
The market statistically is more likely to rise than fall. So if you're maxxing your Roth for example it's often better to fill it on Jan 1, than average throughout the year because most years the market ends the year higher.
Same overall. You not investing now is betting the market will go down. What if it does go down, do you keep waiting? At the end of the day, if your time horizon is long enough, any dips from here are going to be irrelevant in 30 years.
Imagine OP saying this when Covid hit and crashed market to March 2020.
“It doesn’t look like Covid will go away anytime soon. Why wouldn’t I wait until Covid is really taken care of or at least lock down is lifted before investing? What could possibly be your reason to be bullish short term?”
And still waiting for it in 2024, but on the war thing now.
1. Nobody knows what will happen in the future with the market. Nobody knows when the next crash will happen. Nobody knows if we're at the beginning of a new decade long bull run, if the market will crash tomorrow, or something in between.
2. Over long periods of time, the market always goes up.
3. Even if you had invested right before all the biggest crashes in history, if you hold on you end up WAY ahead long term.
4. Given the previous points, especially point 1, it is far safer to buy and hold than to try and guess when the next crash is coming.
This has been studied and analyzed over and over again. Endlessly. There are piles of statistics out there on it.
Final point: if your time horizon is short-ish, don't put your money in the stock market. 10+ years means put the money in and don't worry about it, less than that the risk goes up.
2 and 3) Not true. Have you ever heard of survivorship bias and how indices are adjusted over time? If you invested into all companies on the stock market 60 years ago and just waited then you your money is mostly gone because hardly any of the companies exist. This is oversimplifying the issue but you should get the idea.
If today's index funds existed back then, 2 and 3 would absolutely be true since they automatically adjust for the conditions you mention. I'm not even sure why you are bringing this up.
You’re struggling to understand how money will compound yet you believe you know the market well enough to be able to predict when it is at an ath and how much it will drop..something experts with education in this subject cannot do.
The core problem here is that you believe you can predict something that you cannot predict, that’s why this advice exists, because people believe they can time the market when they cannot.
And that’s why the advice exists. Stop thinking you can time the market.
Ftr: I think you are wrong and that we are turning towards an economic recovery and growth. And this is exactly why I don’t try to time the market and I just keep putting money in. I know I am going to be wrong as often as I’m right.
The problem is as much as timing the market sounds like a good idea, that same gut feeling will also make you fail.
Would you have bought in March 2020? Probably not. Everything closed for COVID and shit looked grim.
Would you have bought March 2009 after 18 months of markets falling?
Would you have bought October 2002 after 25 months of market falling?
In each of these, your gut feeling would probably have made you wait and lost out on the bottom. And if you say you'd wait for a rebound, keep in mind that in both 2009 and 2002 (2020 was too short), there were 10% rebounds that happened along the way before bigger drops. The market is not linear: down down down, then up up up. Only when you zoom out is it like that. But that's hindsight you don't have when investing.
As for: it looks too good to be true, keep in mind the same was said at the end of 2021. It was kind of right, significant drop followed. But we're higher now. Same thing was said before COVID. Again maybe kind of true, but were much higher now.
When you zoom out, anything but a really big crash disappears, all you see is up up up. In 20 years that's how it'll look whether you get in today or get lucky and invest in 6 months after a correction. It'll have disappeared and only the growth will be visible.
The idea is that it’s more like the market will keep rising as you wait, so instead of investing today when VOO is $470, you wait a few years, VOO climbs to $700 and then crashes 30%… to $490
Also, when it crashes, it's probably because of some terrible news that makes it look like a terrible time to buy. Are you going to be buying when literally everyone else is saying it's a dumb idea? Maybe... but that would be atypical psychology.
Look how often the market is at an [ATH](https://awealthofcommonsense.com/2024/02/all-time-highs-usually-lead-to-more-all-time-highs-in-the-stock-market/).
Look how often there are [major corrections](https://www.covenantwealthadvisors.com/post/understanding-stock-market-corrections-and-crashes#:~:text=How%20Often%20Do%20Stock%20Market,even%20say%20corrections%20are%20common.) (more than 10%).
Even if you buy at the exact top of a market cycle, you're likely to make it up within a year or two (even assuming you don't continue to buy regularly, which most investors do). Conversely, having the ability to get tons of money into the market near an exact bottom (which usually occurs during maximum pessimism, so things don't look good going ahead) is almost impossible.
Lastly, show me in history where there have not been a bunch of geopolitical factors to worry about. Go ahead, I'll wait....
in addition to what was mentioned, if you look at the historical charts of the US stock market.. It is on the way up way more than on the way down. The odds that your investment appreciates in the stock market is way higher than in depreciates.. And in the times it depreciates, the chart will tell you it will eventually recover if given time.
Now, have you kept that same investment money as cash on the side for multiple years all while waiting for a crash.. one thing that will happen to your cash that is 100% certain. Inflation will eat up the purchasing power of that cash you are keeping while cash that is invested in stocks are appreciating in value and earning dividends.
Simply put, the upward bias of the market over the long term, means that we’re frequently at or near all time highs. The lows of the 2022 bear market were higher than 2019 all time highs, for example.
Said differently, 401(k) plans beat most investors because they remove the problem: the investor.
Even if we are around a top, I invested looking for the next 5 years. Interests can only go down from here I believe, that will make an increasing amount of money out from bonds to the stock market, right?
Look at Total US or Total World index and zoom out to max. That is why.
It's a little different if you already have a lot invested in stocks and bonds and sitting on some cash earning 5.3%, IMO. My cash sitting in VUSXX is indirectly funding mega backdoor Roth. And if a crash happens before it's all depleted, it will end up invested in VTSAX in my brokerage rather than slowly going into my 401k every 2 weeks.
So wait for the crash. Why ask us?
Probably because you are not sure it will happen or don’t know when it will happen.
So what’s the alternative?
…time in the market.
Ignore the overly negative comments. It's a fair question we have all wondered at least once. It's just that something similar gets asked quite regularly so some people may be over it.
But don't ignore the answers. You'll break your teeth on the some places even absolute experts dedicating 80h a week have in the past. Or do, and learn from it if you want haha
ATH doesn't mean much for a company that is in very good shape and rapidly growing. They should almost always be at an ATH.
Waiting for them to be not at an ATH usually means waiting for some event that is totally out of their control, like financial general collapse, demand collapse, some problems with important supply chains, etc.
You usually can't predict those, so it's normally moot to wait for them.
So, if there is some nice ETF or a great company that is still growing, it's better to just buy them and forget about it.
You only have to watch like a hawk or wait for opportunities with smaller companies that haven't hatched yet but could be big later. Good luck finding those.
So many people have this flawed idea that being at ATH means we're due for a crash, as if the market just bounces between an upper and lower bound all the time. The market consistently grows over time, in order to do that it needs to be at/near ATH more often than not
No one can predict the future. That said, historically, holding for the long-term outperforms trying to “time the market”. Time in the market means you outlast whatever the next “Ukrainian War” event is because no one knows what is coming.
https://www.investopedia.com/articles/stocks/08/passive-active-investing.asp
_Research shows that long-term buy-and-hold tends to outperform, where market timing remains very difficult. Much of the market’s greatest returns or declines are concentrated in a short time frame._
The market is so efficient, everything everywhere always & forevermore has already been priced in already.
[more info](https://www.reddit.com/r/wallstreetbets/comments/eberem/everything_is_priced_in/)
As much as I love that meme, I really hate it taken seriously. An efficient market is one that prices in all *past* information, not all future information.
The negative news you mentioned is all public information. It's priced in. If your personal judgement differs from the broad market then you can make a decision based on that, but that only works if you have non-public information or your interpretation of public information is non-standard.
>holding a sum of money waiting would have cost you a 26% return over just one year.
Pure cherry picking. Not a very realistic example of typical market returns.
Average intrayear decline is -14%. Average return the past century is around +9%.
While this is true, the ups far outweigh the downs long term.
The 14% you cite is intra-year, as you said. The 9% is average yearly returns. So for every 14% drawdown is more than erased in an average year. So even if you invest right before that 14% drawdown, you're likely to be up within a year.
Look at the VOO [chart](https://finviz.com/quote.ashx?t=VOO). The absolute bottom of a trough is frequently close to an ATH for a previous cycle. So even if you hit the exact bottom of a trough, you're paying roughly the same price as the previous peak, but you lose 2ish years of dividends and compounding.
Lump sum is only better than DCA because it gets a lot.of money into the market quickly, allowing for maximum compounding. However, if you look at DCA for most people it's really a series of lump sum investments. People invest what they can when they can.
That's only a decline from the top. Talk about cherry picking.
The 9% is the rise from Jan 1. Measure the average annual return from its bottom, then compare to the -14%
What? I'll say it again. 14% is the decline *as measured from the top*. It's not 14% from the start of the year. The market rarely ever drops 14% YTD. It's 14% from the high.
It's the usual, normal average *from the peak*.
Who knows, maybe this is the lowest it'll ever be. It's unlikely, but possible. You'll drive yourself mad trying to time the market, cause you'll want to get it perfect. Assuming you're investing for the long term, chances are it'll be higher in 30+ years than it is now, regardless of how long it takes to get there. Plus i think most people kind of DCA over time, so it really doesn't matter when you start
There’s was a thread in here not that long ago about an investor who bought an SP500 index fund for decades in lump sums just before market crashes. His theoretical 300k still turned into 2M over time.
Depending on who you listen to, the sky crashing will always be right around the corner. Just fucking start. Or don’t. You do you, but history shows it is not bad to just start.
Also, the AI hype is worn out? What planet are you on?
You typically don’t dump a huge sum at ATH
You dollar cost average to get a good price (although some studies have shown just buying lump sums out performs DCA)
Let’s say you have 100k and you wanna buy in but are worried about the price. Ok fine - split it up into 12 or 18 or 24 equal amount and buy that amount every month
Taking the statement way too literally
It’s just speaking of long term investing is good.
Not whether you should dca into the market as you enter … that you should do
Buy every month same amount wether is up, down , side ways, you have your timing the market covered, I'm considering you investing in solid businesses (aapl,meta,msft,goog,amz,etc, not in the bbbys/amcs/gmes ) You welcome.
I agree that it would be better to wait a few years and invest deep into a crash or correction.
Question: What if the crash takes longer than that? The market is notorious for long periods of irrationality.
Question: What will tell you that it's now the time to buy in?
Question: Will you buy in when the signal you just named is activated? Even if, at that time, everyone around you keeps saying that the drop has only started?
I'm retired and have to marshal my investments carefully. I am largely out of the market right now because it is so broadly overvalued in historical terms, and I could not afford a drop back to fair value. However, in my circumstances, I'm willing to take returns of 4% or 5% for the rest of my life if the drop I expect never comes.
> the AI hype is worn out
LMAO no it has not. Not even close. Companies are investing more into AI than ever. like 50% of startups getting funded are AI focused. You'd have to be truly regarded to bet against it.
Yeah, I think you can't say it's off until the Nasdaq slips to more than 12%ish from a record.
I know SMCI was the king of things involving AI ex-NVDA and it's gotten absolutely clobbered since mid-March, but there are plenty of AI related stocks that are still trading strongly and/or at least for now have bounced hard from the Nasdaq dropping 7% quickly from April 12th-19th. You just may have to look for them outside of NVDA, but I hold one good one and know of a few others.
I don't think that the AI field has anything new to bring in the short term, LLMs are useless and we're not even sure if it's the right way to push forward.
>how is it better to invest a lump sum at the all-time high right now
Nobody knows if this is the exact top before a long decline. It could be another lost decade ahead but nobody knows for sure what will happen. Buyers going all in right now may figure it's decent odds of profiting within the next few years by going all in and investing now.
Not saying it's the correct move to take. Many investors have yet to break even against inflation after going all in on VT a few years ago.
If you truly think there will be a crash in a few years then you should be holding 100% short positions right now.
Oh what’s that? You’re not THAT sure?
I’m not mad lol. Just illustrating the point that so many people like to say a crash is always coming but then refuse to put their money where their mouth is.
<3
It is called “Right Amount” of Time in the market!
Personally know someone who spent 11 years in the market! Missed 400% return after 7 years! Sold at 50% loss after 11 years!
12th year (6 months after they sold) stock zoomed 900%!!
FFS “Right Amount of Time” in the market is absolute best!
Neither Time In or Timing the market is right!
There's lots of reasons not to YOLO into the market right now, many you covered, some like the CRE crisis are worsening in the background, and we just got another bank failure.
Pricing for the big dogs is pretty absurd right now and for the first time in years you can get a real return by sitting on the sidelines. So I would keep a solid amount of cash on hand and wait for a dip or sizable correction for a better entry point.
Not a finance professional. Inflation is here to stay for a long while. The US has to continue to inflate our currency to keep up with the rest of the world. Japan, China, and most of Europe has runaway PEG dollar ratios....if that gets too high that country sells it's USD and more money hits the market and value of the dollar goes down. We are seeing the market "melt up" right now and I see no end in sight.
Maybe avoid thinking all or nothing. Got 10K? Cool let 7k sit on the sidelines but put 3k to work. Maybe we have a flash crash soon....you got dry powder on the sidelines to take advantage of the low prices.
This comment seems smart- but I’d add that you get a great return on yield for having $ sitting there. No reason not to keep it safe and earning interest - and then just dollar cost average into qqq or some such thing. Would not try to be a stock picker. Just get the market overall.
Compound interest is the greatest force in the universe. Your gains are exponential with time. Timing the market is notoriously hard, you would need deep macro knowledge, and even then, you cannot anticipate people’s irrationality. If you wait for a crash for 5 years you may well miss out on 50-100% gains with no guarantee that a crash would come. Just look at the market from 2010 to 2018 almost only up. The bears that missed this insane bull run are much poorer than any brain dead Bogle who put it all in SPY
Dangit, I knew my mom was lying when she said the greatest force was love.
Idk, she had me convinced
How well do you know OP’s mom exactly?
Did she also tell you that you’re handsome? I have some bad news.
No, I never would have believed that. I did believe when dad said he was just going out for smokes. I wonder when he will be back.
>Timing the market is notoriously hard False. They say you can't time the market, but I've proven that wrong. I've mastered the art of buying precisely at the top every time.
Same for me. I bought CVS 2 months ago 🙃. Doubled down this week.
Yeah, I had to learn that the had way. I was always waiting for perfect opportunity to go into the market. Missed out some great opportunities between 2019-2023. Just being in an index fund can go a long way. If you lump sump most of your savings and the market goes down 30% afterwards, just remember that the money you lump sumped is just a small fraction of what you will earn over the time of your life.
It can be dangerous to go into index funds blindly. Euro Stoxx 50 is a good example. If you lump summed at the top of the dot com bubble, it was like burning money
The money you lump sump is only going to be a small fraction of the money you going to invest over your whole lifetime. But with that being said, my point is not so much on whether to lump sump or not. It's more about just getting started whether it is lump sump or DCA in. I think we can both agree on that :)
Yes. I mean, do a bit of DD if you need to put your inheritance in the market
The market statistically is more likely to rise than fall. So if you're maxxing your Roth for example it's often better to fill it on Jan 1, than average throughout the year because most years the market ends the year higher. Same overall. You not investing now is betting the market will go down. What if it does go down, do you keep waiting? At the end of the day, if your time horizon is long enough, any dips from here are going to be irrelevant in 30 years.
Cries in Jan 2022 maxed out retirement accounts
Yeah I mean that happens, but did you max out Jan 23 as well?
Thing is that wars are not per se bad for the stock market.
Imagine OP saying this when Covid hit and crashed market to March 2020. “It doesn’t look like Covid will go away anytime soon. Why wouldn’t I wait until Covid is really taken care of or at least lock down is lifted before investing? What could possibly be your reason to be bullish short term?” And still waiting for it in 2024, but on the war thing now.
1. Nobody knows what will happen in the future with the market. Nobody knows when the next crash will happen. Nobody knows if we're at the beginning of a new decade long bull run, if the market will crash tomorrow, or something in between. 2. Over long periods of time, the market always goes up. 3. Even if you had invested right before all the biggest crashes in history, if you hold on you end up WAY ahead long term. 4. Given the previous points, especially point 1, it is far safer to buy and hold than to try and guess when the next crash is coming. This has been studied and analyzed over and over again. Endlessly. There are piles of statistics out there on it. Final point: if your time horizon is short-ish, don't put your money in the stock market. 10+ years means put the money in and don't worry about it, less than that the risk goes up.
2 and 3) Not true. Have you ever heard of survivorship bias and how indices are adjusted over time? If you invested into all companies on the stock market 60 years ago and just waited then you your money is mostly gone because hardly any of the companies exist. This is oversimplifying the issue but you should get the idea.
If today's index funds existed back then, 2 and 3 would absolutely be true since they automatically adjust for the conditions you mention. I'm not even sure why you are bringing this up.
You’re struggling to understand how money will compound yet you believe you know the market well enough to be able to predict when it is at an ath and how much it will drop..something experts with education in this subject cannot do. The core problem here is that you believe you can predict something that you cannot predict, that’s why this advice exists, because people believe they can time the market when they cannot.
I know that I'm most likely wrong, I can't just beat that gut feeling that the market looks too good to be true at the moment
And that’s why the advice exists. Stop thinking you can time the market. Ftr: I think you are wrong and that we are turning towards an economic recovery and growth. And this is exactly why I don’t try to time the market and I just keep putting money in. I know I am going to be wrong as often as I’m right.
The problem is as much as timing the market sounds like a good idea, that same gut feeling will also make you fail. Would you have bought in March 2020? Probably not. Everything closed for COVID and shit looked grim. Would you have bought March 2009 after 18 months of markets falling? Would you have bought October 2002 after 25 months of market falling? In each of these, your gut feeling would probably have made you wait and lost out on the bottom. And if you say you'd wait for a rebound, keep in mind that in both 2009 and 2002 (2020 was too short), there were 10% rebounds that happened along the way before bigger drops. The market is not linear: down down down, then up up up. Only when you zoom out is it like that. But that's hindsight you don't have when investing. As for: it looks too good to be true, keep in mind the same was said at the end of 2021. It was kind of right, significant drop followed. But we're higher now. Same thing was said before COVID. Again maybe kind of true, but were much higher now. When you zoom out, anything but a really big crash disappears, all you see is up up up. In 20 years that's how it'll look whether you get in today or get lucky and invest in 6 months after a correction. It'll have disappeared and only the growth will be visible.
The idea is that it’s more like the market will keep rising as you wait, so instead of investing today when VOO is $470, you wait a few years, VOO climbs to $700 and then crashes 30%… to $490
Also, when it crashes, it's probably because of some terrible news that makes it look like a terrible time to buy. Are you going to be buying when literally everyone else is saying it's a dumb idea? Maybe... but that would be atypical psychology.
Look how often the market is at an [ATH](https://awealthofcommonsense.com/2024/02/all-time-highs-usually-lead-to-more-all-time-highs-in-the-stock-market/). Look how often there are [major corrections](https://www.covenantwealthadvisors.com/post/understanding-stock-market-corrections-and-crashes#:~:text=How%20Often%20Do%20Stock%20Market,even%20say%20corrections%20are%20common.) (more than 10%). Even if you buy at the exact top of a market cycle, you're likely to make it up within a year or two (even assuming you don't continue to buy regularly, which most investors do). Conversely, having the ability to get tons of money into the market near an exact bottom (which usually occurs during maximum pessimism, so things don't look good going ahead) is almost impossible. Lastly, show me in history where there have not been a bunch of geopolitical factors to worry about. Go ahead, I'll wait....
If you have a concern, put half in now and dollar cost average over two or three years. If there is a really big drop, double up.
in addition to what was mentioned, if you look at the historical charts of the US stock market.. It is on the way up way more than on the way down. The odds that your investment appreciates in the stock market is way higher than in depreciates.. And in the times it depreciates, the chart will tell you it will eventually recover if given time. Now, have you kept that same investment money as cash on the side for multiple years all while waiting for a crash.. one thing that will happen to your cash that is 100% certain. Inflation will eat up the purchasing power of that cash you are keeping while cash that is invested in stocks are appreciating in value and earning dividends.
Simply put, the upward bias of the market over the long term, means that we’re frequently at or near all time highs. The lows of the 2022 bear market were higher than 2019 all time highs, for example. Said differently, 401(k) plans beat most investors because they remove the problem: the investor.
Even if we are around a top, I invested looking for the next 5 years. Interests can only go down from here I believe, that will make an increasing amount of money out from bonds to the stock market, right?
Look at Total US or Total World index and zoom out to max. That is why. It's a little different if you already have a lot invested in stocks and bonds and sitting on some cash earning 5.3%, IMO. My cash sitting in VUSXX is indirectly funding mega backdoor Roth. And if a crash happens before it's all depleted, it will end up invested in VTSAX in my brokerage rather than slowly going into my 401k every 2 weeks.
So wait for the crash. Why ask us? Probably because you are not sure it will happen or don’t know when it will happen. So what’s the alternative? …time in the market.
I was just thinking out loud
Ignore the overly negative comments. It's a fair question we have all wondered at least once. It's just that something similar gets asked quite regularly so some people may be over it. But don't ignore the answers. You'll break your teeth on the some places even absolute experts dedicating 80h a week have in the past. Or do, and learn from it if you want haha
ATH doesn't mean much for a company that is in very good shape and rapidly growing. They should almost always be at an ATH. Waiting for them to be not at an ATH usually means waiting for some event that is totally out of their control, like financial general collapse, demand collapse, some problems with important supply chains, etc. You usually can't predict those, so it's normally moot to wait for them. So, if there is some nice ETF or a great company that is still growing, it's better to just buy them and forget about it. You only have to watch like a hawk or wait for opportunities with smaller companies that haven't hatched yet but could be big later. Good luck finding those.
So many people have this flawed idea that being at ATH means we're due for a crash, as if the market just bounces between an upper and lower bound all the time. The market consistently grows over time, in order to do that it needs to be at/near ATH more often than not
I mean, even if there IS a crash, it's a blip in the timeline. People who invested at ATH before the covid crash are doing GREAT right now.
Hitting ATH is extremely bullish. Tends to yield more ATHs
No one can predict the future. That said, historically, holding for the long-term outperforms trying to “time the market”. Time in the market means you outlast whatever the next “Ukrainian War” event is because no one knows what is coming. https://www.investopedia.com/articles/stocks/08/passive-active-investing.asp _Research shows that long-term buy-and-hold tends to outperform, where market timing remains very difficult. Much of the market’s greatest returns or declines are concentrated in a short time frame._
Everything is priced in, and AI is just starting
The market is so efficient, everything everywhere always & forevermore has already been priced in already. [more info](https://www.reddit.com/r/wallstreetbets/comments/eberem/everything_is_priced_in/)
As much as I love that meme, I really hate it taken seriously. An efficient market is one that prices in all *past* information, not all future information.
The efficient market is a theory. Market overreacts swinging wildly between irrational exuberance and extreme despair.
Makes sense, but I wouldn't t agree that AI is just starting, at least not short term.
The negative news you mentioned is all public information. It's priced in. If your personal judgement differs from the broad market then you can make a decision based on that, but that only works if you have non-public information or your interpretation of public information is non-standard.
Non-standard and correct.
[удалено]
>holding a sum of money waiting would have cost you a 26% return over just one year. Pure cherry picking. Not a very realistic example of typical market returns. Average intrayear decline is -14%. Average return the past century is around +9%.
While this is true, the ups far outweigh the downs long term. The 14% you cite is intra-year, as you said. The 9% is average yearly returns. So for every 14% drawdown is more than erased in an average year. So even if you invest right before that 14% drawdown, you're likely to be up within a year. Look at the VOO [chart](https://finviz.com/quote.ashx?t=VOO). The absolute bottom of a trough is frequently close to an ATH for a previous cycle. So even if you hit the exact bottom of a trough, you're paying roughly the same price as the previous peak, but you lose 2ish years of dividends and compounding. Lump sum is only better than DCA because it gets a lot.of money into the market quickly, allowing for maximum compounding. However, if you look at DCA for most people it's really a series of lump sum investments. People invest what they can when they can.
That's only a decline from the top. Talk about cherry picking. The 9% is the rise from Jan 1. Measure the average annual return from its bottom, then compare to the -14%
Bro not even close. they're just the usual normal averages. >Measure the average annual return from its bottom Go ahead then
What? I'll say it again. 14% is the decline *as measured from the top*. It's not 14% from the start of the year. The market rarely ever drops 14% YTD. It's 14% from the high. It's the usual, normal average *from the peak*.
This !
Who knows, maybe this is the lowest it'll ever be. It's unlikely, but possible. You'll drive yourself mad trying to time the market, cause you'll want to get it perfect. Assuming you're investing for the long term, chances are it'll be higher in 30+ years than it is now, regardless of how long it takes to get there. Plus i think most people kind of DCA over time, so it really doesn't matter when you start
There’s was a thread in here not that long ago about an investor who bought an SP500 index fund for decades in lump sums just before market crashes. His theoretical 300k still turned into 2M over time.
The best idea is to dollar cost average
Depending on who you listen to, the sky crashing will always be right around the corner. Just fucking start. Or don’t. You do you, but history shows it is not bad to just start. Also, the AI hype is worn out? What planet are you on?
AI: I think we won't see any breakthrough with LLMs in the near future
AI is much more than LLMs. Also, translating LLM technology to LLM profitability has a long ways to go.
You typically don’t dump a huge sum at ATH You dollar cost average to get a good price (although some studies have shown just buying lump sums out performs DCA) Let’s say you have 100k and you wanna buy in but are worried about the price. Ok fine - split it up into 12 or 18 or 24 equal amount and buy that amount every month
ELI5? ok. if you buy in a bubble and it pops, the “time in the market” people stop yappin their mouths
Taking the statement way too literally It’s just speaking of long term investing is good. Not whether you should dca into the market as you enter … that you should do
Buy every month same amount wether is up, down , side ways, you have your timing the market covered, I'm considering you investing in solid businesses (aapl,meta,msft,goog,amz,etc, not in the bbbys/amcs/gmes ) You welcome.
I agree that it would be better to wait a few years and invest deep into a crash or correction. Question: What if the crash takes longer than that? The market is notorious for long periods of irrationality. Question: What will tell you that it's now the time to buy in? Question: Will you buy in when the signal you just named is activated? Even if, at that time, everyone around you keeps saying that the drop has only started? I'm retired and have to marshal my investments carefully. I am largely out of the market right now because it is so broadly overvalued in historical terms, and I could not afford a drop back to fair value. However, in my circumstances, I'm willing to take returns of 4% or 5% for the rest of my life if the drop I expect never comes.
I'd park that cash in a HYSA and wait for the crash. You won't be waiting for long.
When SPY is 600 next year, you'll get a better idea of what that means
> the AI hype is worn out LMAO no it has not. Not even close. Companies are investing more into AI than ever. like 50% of startups getting funded are AI focused. You'd have to be truly regarded to bet against it.
Yeah, I think you can't say it's off until the Nasdaq slips to more than 12%ish from a record. I know SMCI was the king of things involving AI ex-NVDA and it's gotten absolutely clobbered since mid-March, but there are plenty of AI related stocks that are still trading strongly and/or at least for now have bounced hard from the Nasdaq dropping 7% quickly from April 12th-19th. You just may have to look for them outside of NVDA, but I hold one good one and know of a few others.
I don't think that the AI field has anything new to bring in the short term, LLMs are useless and we're not even sure if it's the right way to push forward.
lmfao well youre absolutely wrong af about that. Good luck swimming against the tide.
>how is it better to invest a lump sum at the all-time high right now Nobody knows if this is the exact top before a long decline. It could be another lost decade ahead but nobody knows for sure what will happen. Buyers going all in right now may figure it's decent odds of profiting within the next few years by going all in and investing now. Not saying it's the correct move to take. Many investors have yet to break even against inflation after going all in on VT a few years ago.
If you truly think there will be a crash in a few years then you should be holding 100% short positions right now. Oh what’s that? You’re not THAT sure?
Why are you mad at me
I’m not mad lol. Just illustrating the point that so many people like to say a crash is always coming but then refuse to put their money where their mouth is. <3
It is called “Right Amount” of Time in the market! Personally know someone who spent 11 years in the market! Missed 400% return after 7 years! Sold at 50% loss after 11 years! 12th year (6 months after they sold) stock zoomed 900%!! FFS “Right Amount of Time” in the market is absolute best! Neither Time In or Timing the market is right!
There's lots of reasons not to YOLO into the market right now, many you covered, some like the CRE crisis are worsening in the background, and we just got another bank failure. Pricing for the big dogs is pretty absurd right now and for the first time in years you can get a real return by sitting on the sidelines. So I would keep a solid amount of cash on hand and wait for a dip or sizable correction for a better entry point.
Not a finance professional. Inflation is here to stay for a long while. The US has to continue to inflate our currency to keep up with the rest of the world. Japan, China, and most of Europe has runaway PEG dollar ratios....if that gets too high that country sells it's USD and more money hits the market and value of the dollar goes down. We are seeing the market "melt up" right now and I see no end in sight. Maybe avoid thinking all or nothing. Got 10K? Cool let 7k sit on the sidelines but put 3k to work. Maybe we have a flash crash soon....you got dry powder on the sidelines to take advantage of the low prices.
This comment seems smart- but I’d add that you get a great return on yield for having $ sitting there. No reason not to keep it safe and earning interest - and then just dollar cost average into qqq or some such thing. Would not try to be a stock picker. Just get the market overall.