facebookIf you're expecting a crash in stock market, how would you stagger your warchest investment plan? - Seedly

If you're expecting a crash in stock market, how would you stagger your warchest investment plan?

Assuming you have set aside 10k of warchest funds, would you invest 1/3 for every 5% drop?

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Collin Seow CFTe, CPM

10 Feb 2020

Founder at The Systematic Trader

The average correction for the S&P 500 since World War II lasts four months and sees equities slide 13 percent before bottoming, if it is a bear markets average a loss of 30.4 percent and last 13 months

So if you are expecting to buy on crisis, I will wait for market to correct about 20%( definition of bear market), wait for a further 3months( after bear market, market takes time to build confidence, sideway trend).

Then I will buy 50% of my warchest, I will then add in 30% then 20% over next 6 months. The 30% and 20% could be higher in price then the 50% entry price.

What I will not do is to average down. Based on history,keep in mind stock market down up over time due to inflation. Hope it help :) :)

The average correction for the S&P 500 since World War II lasts four months and sees equities slide 13 percent before bottoming if it is a bear markets average a loss of 30.4 percent and lasts 13 months; it takes stocks nearly 22 months.

So if you are expecting to buy on the crisis, I will wait for the market to correct about 20%( definition of a bear market), wait for a further 3months( after a bear market, the market takes time to build confidence, sideway trend).

Then I will buy 50% of my war chest, I will then add in 30% then 20% over the next 6 months. 30% and 20% could be higher in price than the 50% entry price.

What I will not do is to average down. Based on history, keep in mind the stock market down up over time due to inflation. Hope it help :) :)​​​

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If you start with an ultra-longterm buy&hold passive indexing ETF strategy, you'll disregard any crash (almost). if the crash has arrived you woul like to throw more cash in for buying more ETFs, but You can never predict when the crash comes or leaves

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