Let's say we're expecting a market correction in the next few years. What do you do? - Seedly
 

Investments

Asked by Anonymous

Asked on 13 Sep 2018

Let's say we're expecting a market correction in the next few years. What do you do?

a) Continue DCA-ing into your ETF

b) Rush into SSB subscription

c) Rush into ABF Singapore Bond Index Fund and hope it wakes up

d) Rush into Nikko AM Corporate Bond ETF and hope it wakes up

e) Start hoarding money in DBS multiplier (2%) and wait for Great Stock Sale

f) None of the above - Why?

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Asheesh Chanda
Asheesh Chanda, Founder at Kristal.AI
Level 6. Master
Updated on 30 Oct 2019

You should start with a balanced portfolio where you hold some low-risk Bond ETFs along with some Equity ETFs and Gold. In the case of Equity Market corrections you can change % allocation to more in eq by redeeming some Bond ETFs. As an example, at Kristal.AI we manage this via certain Kristals like All weather Unlevered/Balanced or even Steady Growth etc by proactively rebalancing as our Investment Committee takes the consensus view to rotate the asset allocation. So you can either allocate dynamically yourself or rely on Kristal.AI to do so. Do note investments via us are free for up to 50K USD.

Learn more from us here: http://bit.ly/36ci0yF

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Hi Anon,

B, C, D suggest a lack of investment experience. It is hoping to time the market.

More often, big mistakes are made as shown in the image below

Experienced investors hold cash or low-risk assets when they can't find opportunities to get invested into. The rest stays invested with no expectation of when is a market crash. Not rush in and out at opportune times.

E) "Great Stock Sale" sounds nice until you are actually in it. In that period post-2008, the news was always pessimistic and economies were still fragile. If you imagine a "green light" in a market crash to invest, then beware, it does it not exist.

Hence, A) is by far your best option.

The reason is that it is easy to come up with a plan now to regularly get invested than during an actual market crash.

I've got this post that helps you understand market crashes and strategies to prepare for it better. Hope it helps https://www.theastuteparent.com/2019/09/prepare-for-the-market-crash/

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Jonathan Chia Guangrong
Jonathan Chia Guangrong, Fund Manager at JCG Fund
Level 8. Wizard
Answered on 15 Sep 2018

F. Just continue selling puts as usual but reduced exposure and amount at risk. If things get caught out, well I've got a discount on a great stock. Where then I can decide to hold it and wait for recovery or do some magic with it and earn along the way

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Gabriel Lee
Gabriel Lee
Level 8. Wizard
Answered on 14 Sep 2018

Will do A, continue DCA-ing into ETF via Stashaway. Parked my spare cash with CIMB's FD for 12 months to earn 1.84% interest p.a.

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Dwivid Sharma
Dwivid Sharma
Level 5. Genius
Answered on 14 Sep 2018

I am not going to invest to hold nowadays. I am waiting for a strong positive signals that show that this is a strong support for market.

Once I got that level, I am going to invest 20% of my wealth, in all your options​​​

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Nicholes Wong
Nicholes Wong
Level 8. Wizard
Answered on 14 Sep 2018

A and build abit of warchest

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Luke Ho
Luke Ho, Venture Capitalist at CFX
Level 7. Grand Master
Answered on 14 Sep 2018

I recently made a video about this. You can view it at

https://www.moneymaverickofficial.com/, it only takes a minute.

But honestly, I wouldn't take too many defensive actions unless you have a clear understanding of what kind of crash it is and how to prevent it (like the Big Short of 2008). That way even if you have to wait out a few years of good returns before preventing your market crash, you stiil come out on top.

Ultimately, time in the market is better than timing the market. ​​​

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  1. Continue DCA. Stay calm. Dont panic.

  2. Keep some cash as a war chest.​​​

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