Share market goes belly up - what would you do

What an amazing ride.... share market just keeps giving
Wish I had jumped in

When it tanks what will you do??

I guess debt will come into play

Some will ride it but some may come undone???? any idea on stats... margin calls
Is there some sort of average on recovery

 

I reckon it will be 2021 till we see the next crash or big fall.

My concern is what will follow almost Zero interest rates.
Are there any other precedents than Japan?
If not .... bugga

 

Hopefully I’ll have a big pile of cash to buy buy buy. But since we don’t know when the ‘crash’ will come I can’t sit around and let my money do nothing so I’ll keep carrying on buying until then.

 

Looking a bit frothy.

pay down debt. Have cash handy then buy up

 

Haven't bought anything since late 2018...prior to that, dove in pretty heavily. Will be difficult mindset wise for sure but hopefully I'll be strong enough to stock up (pardon the pun) when armageddon occurs.

 

This could have implications for everyone if and when it does happen but from what i have seen several times over the past 35 years the debt -wary survive ..

I will not go back that far,but start when the Asian Financial hit in 1998 ,the debt-laden who overcapitalised found themselves heavily exposed and were blown out of the water ,and this is only my opinion but the turn-around can be several years ..

The GFC was the same ,the degree of darkness warning started in 2007 then the depths of the GFC same thing happened as 1998 the barometer blew up again and several years of up down and in-between..

Now we are in 2000,and from what i read within this site for the past few years with so many excellent charts opinions from more switched -on people then myself ,a few wouldn't budge thinking that the paid advice that was given was wait for a lower price ,for those that went that way and waited that might not have been the right decision ..

''IF'' the market blows up again which it will ,and as the way social media works then it will be no different from every other time ,you either don't read any media print or anything from political and intellectual elite and economists and all the other pressing issues facing the world and this is from someone who during the CFC lost over 60 percent but i never sold one unit..

 

Same as I did during the GFC when it dropped 40+%:-

NOTHING.

Yeah, it has been a great ride. For us, total returns of:

• 3.73% for the first two weeks of 2020
• 25.26% for calendar year 2019

I wished property did that .

 

And when it does tank, which it will at some point, what will you do? Jump in boots and all? You have expressed a level hindsight regret with a focus is on price fluctuation. So will that encourage you or not?

I've been through a couple of them and it was stressful for me. However, it was a matter of overcoming it to keep buying and not selling.

 

I think I will pull the trigger, just been watching on the sidelines.

 

A lot of people say that BUT most never do.

 

Probably due to the almost ingrained perception the share market consists of nothing but prices. It does largely as it is a market place. Somehow it is overlooked behind those prices are companies. Profitable ones at that. And profitable ones give you a cut of the profit in terms of income which are called dividends.

Let us float all RESI's and see what will happen. I wouldn't be surprised if the cash flow generating aspect of them would quickly be forgotten. Disclaimer: I don't have any interest in property as an investment.

 

Us humans are funny animals. As an example:

Most of us will walk past a shop and see an item, say a shirt they really, really like, priced at $40. They ”um and ah” about the purchase but. in the end, they decide not to buy (for whatever reason).​

Next day, they go past the same shop and there is a sale on. That very same shirt is priced at “two for $40”. They buy at least two.​

Most of us don’t apply the same thinking to shares, especially when the market drops 50% “overnight” .

 

+1

So often when asked about a market crash many will enthusiastically answer that they’ll be in there buying with ears pinned back. In the initial stages of a crash this will likely be the case. But as the market continues fall after fall after fall ... and months or even years of this continue don’t underestimate how difficult it can be to avoid losing your nerve. Being inexperienced I did a crap job of dealing with the 87 crash which was my first but the experience was hugely beneficial for me in negative markets since then.

Here I go again probably to the annoyance of some. During these nerve racking periods the more one can learn to ignore PRICE and focus on INCOME the greater the chance the ride will be much less stressful. And this is where well chosen LICs can come into their own in smoothing income through such periods. Constant focus on the capital value of the portfolio during such times can be a recipe for disaster!

 

It's interesting you bring this up because I've been discussing this with a few of my wealth creation friends and basically I've already planned that if/when there's a sizeable correction, I'll put in 1mil and not touch it for 3 years at least. Even if the mil gets drawdown to 700k, I'll just leave it.

History has shown time and time again without fail, when market sentiment goes nuts and waaay over reacts causing major corrections, it will almost certainly go back the other way in time.

 

I'm dumb-lucky i don't mix with many people that are wealthy ,but when you look at the dividends factor within those down trends the div's did not vary much over all those free falls ,entry price wise yes but the div's just like before just keep pumping ,that is for the ones still listed and sometimes when there is nothing to do,do nothing it's worked very well so far what makes you successful can also destroy you in a matter of weeks.

 

being patient can be a good thing .....property or shares

 

it can and it has it just depends on the cycle and when and where

also there are those that are active investors ie developing, renovating etc so they can also generate income not waiting on growth

i think big switch on forum investors from property to shares, the attraction the yields and passive

 

As highlighted by @SatayKing the trouble is that shares are listed so capital value is changing by the second. Even worse selling is just a click away! Don’t underestimate the dangers of these attributes, many need more than patience to deal with these issues.

 

Market cycles are the same but interest rates have underpinned previous market crashes.

The reserve bank sets the price of money, and from that the returns follow.
It may not happen at once but yields will eventually adjust and prices will follow.

Japan Tokyo Stock Exchange: Dividend Yield

In Japan, like everywhere else returns follow the interest rates and average index yield was under 1% 1988 to 1997. Only a few years above 2% and now 1.8%.
ASX200 avg is 4%.
So i expect the yields across the board to follow the central bank rates.

The new normal will be "I can borrow at 2.5% and get a return of 3.5%. That's a 40% margin! Booya!"
Will that happen in orderly fashion?
That's the part that never changes. As soon as a new reality sets in there will likely be a rush and another melt down to get out asap.
And with interest rates at almost zero there will be no support for prices to return to current values.

The banks will obviously be hit the most and will need to write up a lot more loans to keep up profit levels. Most likely take 10+ yrs.
They are a protected species and who knows what any govm will do to protect them at taxpayer's expense next round.

The gov will likely try to stop a complete meltdown and cause a 20yr stagnation of prices and long term pain for those already in the market.

For the new market entrants starting from scratch its an opportunity.