It’s important to remember that the stock market != the economy. You know who would be the first to say that? Warren Buffet.
Warren Buffet is actually a big believer in not making macro economic predictions. It just so happens that if you pick stocks like he does (based on fundamentals and a certain proprietary “discount”) you’ll probably avoid having your investments tagged in a recession.
Stocks in the Great Recession took a nose dive because of a market downturn, not the other way around. It is very possible (and much more common) for stocks to dip significantly and for the broader market economy to shrug its shoulders and say, “meh”.
We have familiarity bias though, so we think that the next one will look like the last one. Pro tip: it won’t.
By the way, if you buy a stock and then short sell an index, you can be guaranteed to make money in a market downturn so long as the stock you picked does better than the index. But good luck picking a stock that consistently outperforms the market! Warren Buffet can do that, though.
I have a 401k, it's got more in it than the median 60 year old in the united states, and I'm 20 years from that.
And I am terrified of how little I know about how it exists or survives.
I read these articles and get a sense of overwhelming urgency that, without any explicit indication, I should do something with my nest egg to make it safer to survive a crash.
And then I keep reading, "don't touch it" when I go to read about what I should do.
So I sit here, not doing anything at all about it, crippled with dread.
What's the best strategy for someone like me, who has absolutely no idea how their retirement account exists?
Stocks/Bonds are money converted into "abstract human output". You are taking a bet that the group of humans that work at the companies that you've invested in will continue to become more advanced and efficient as to "generate value".
The stock market is "sentiment". It is collective group think as to what those companies are up to.
This is why you see people say "don't touch it". If you don't need the money now, the advances in "value creation" will possibly give you more money in the future.
I think the number one disservice that "stocks/investing" do is pretend it's not "gambling". Sure, you can minimize risk, and choose instruments that are 99% sound (gov bonds) but it's still _a gamble._
You are scared because you don't understand your risk exposure. (also, black swan events could change the exposure, but they are exactly that -- black swans)
You can:
- Decide to stop playing the game, convert your stocks/bonds into money which gives you absolute units and pegs your risk to inflation/deflation/government default.
- You can continue playing the game, and decide what your risk tolerances are, and adjust your strategy accordingly. This should give you a little bit more peace of mind.
If you want reasonably accessible exposure to these concepts, Khan Academy videos are free, you don't have to sign up to watch, and can fill in some gaps:
Educate yourself. You don't need to know the intricacies of how markets operate, but a little financial understanding is, I believe, a must for everyone.
Also, be aware that even when you do educate yourself and you do everything you think is in your power to 'safe guard' your nest egg, that there are are still a billion and one ways that it can all be wiped out tomorrow.
Micro managing you're finances if you don't know what you're doing is a fantastic way to wipe it out. As the good old saying goes, “The market can stay irrational longer than you can stay solvent.”
The permanent portfolio was constructed by Harry Browne to be what he believed would be a safe and profitable portfolio in any economic climate. Using a variation of efficient market indexing, Browne stated that a portfolio equally split between growth stocks, precious metals, government bonds and Treasury bills would be an ideal investment mixture for investors seeking safety and growth.
Learn about it. I would recommend A Random Walk Down Wall Street [1] and The Boglehead's Guide to Investing [2]. They will give you a good primer, but in essence the best thing you can do it nothing at all. As you get older you'll want to make sure bonds take up a larger percentage of your portfolio, but really you're fine. The old sayings is "time in the market, not timing the market".
While sitting on cash isn't necessarily a bad idea -- when the market crashes you then buy a bunch of index funds, having a 401k is a very safe investment. Think of it this way, the only way you're losing that money is if the market crashes, permanently, and if it crashes permanently, then that money isn't worth shit anyway.
Educate yourself. I like A Random Walk Down Wall Street, Are You A Stock Or A Bond, and Your Money Or Your Life.
Asset allocation is one of the few levers to control risk that you have. The more you have in safe assets (bonds and cash) the less likely to lose money in a downturn. Nothing's free, however, and that stability will cost you long term growth. Only you can figure out what level of risk you can love with (are you ok losing 10% during a downturn? 25%? 50%?). An advisor can help but you need to look in your heart of hearts and determine the number.
If you don't want to educate yourself or need a helping hand, get a fee based financial planner. Last I looked (years ago) was a couple thousand bucks to have a financial assessment. Ouch. But cheap compared to the 1% of assets the other kind of financial planners take annually. More on that here:
Too many people that try to take control of such investments fall prey to basic errors. They see a crash happening so pull their money out to safer investments, but it's already mostly too late so they have locked in losses. Then they see the market rally, so they re-invest their money in the market, but they already missed the start of the rally so have missed much of the potential gains.
You’re fine. If a crash happens tomorrow, in 20 years time it will have completely recovered. Read about investment horizons. Over that timescale, you’re not at the mercy of market cycles. Once you get a bit closer to retirement, that’s when you want to start minimising risks. 5-10 years out, you would start looking at fixed income assets and stuff like that. You don’t want to delay your retirement because your 401k had a single bad year. Until then, go nuts with high growth funds. It doesn’t matter if you have a -10% year if your investment is growing strongly on average over 20 years, you just don’t want that year to be the one where you’re looking to start cashing out.
If you're 20 years from needing it you don't need to worry about protecting it from a crash since you have time to wait for the market to recover. If you could perfectly predict the seemingly-imminent crash then you'd be better off selling all your shares just before and buying government bonds instead, then reversing that when the stock market hits the bottom.
But since you can't predict it, there's not much point doing anything (you can rebalance a bit from stocks to bonds if it makes you feel better but the impact will be minimal). The growth you'll miss out on from selling too early and buying too late will almost certainly outweigh the benefit.
There’s nothing wrong with playing with a portion (up to you 20%) of your nest egg but only if you enjoy it. If your reptilian brain is steering the ship and you’re reacting based off of fear or greed you find yourself on the wrong side of trades.
If the mutual fund charges 3%. Then the underlying securities have to increase 3% before you have broken even. Which if you're mixing bonds and such, you're probably not getting yearly returns much higher than that. So your money is literally doing nothing for you. Then during a market downturn, you just plain lose. You're down the market amount AND the 3%.
Flipside, ETFs like Vanguard have fees of 0.05% on some of the big ones. So when the stocks increase in value, you pretty much get all of the benefit.
You're not making some banker and financial advisor rich off your money. You're retiring sooner.
Just buy s&p500 index funds (or total market index funds). A crash won’t affect your long term retirement plans. You only have to worry about a crash <10 years before retirement.
I'll tell you something that nobody wants to admit to:
Nobody really knows how money works.
The average 401k holder has one because they don't have a good idea of how money works or what they should do with it. If they really understood their 401k, they'd know that they're probably getting ripped off in fees over their lifetime.
If economists and financial analysts completely understood money, they wouldn't be in such disagreement all the time over basic things. A financial advisor might tell you to leave your money in a 401k, and the next one might tell you the same, but it's not that hard to find one who will tell you to get your money out of your 401k ASAP for a variety of reasons.
At the end of the day, you have to trust your own judgment. People don't get rich doing the easy thing.
By the way, here's some things you should think about with 401ks:
- Someone with an average salary pays $138,336 in 401k management fees over their lifetime. Not only are you the only party taking a risk, but you're getting charged for taking that risk. Advisors and broker dealers aren't risking anything except your money.
- You don't own the money in your 401k. Read the fine print and you will find "FBO" (For Benefit Of). The tax code makes it technically owned by the government, but provided for your benefit. In a crisis, the government can confiscate any amount of your 401k to pay off debt and pensions.
- 401k teaches people to cluelessly invest. Do you know if your money is being invested in big tobacco or big oil?
- The government has the advantage with your money. Because you can't cash out without penalties, when you die, whatever's left over for your children is not only subject to income tax but to estate tax as well. They want your 401k money to be gifted to someone else because that means they don't get to cash in on your pile of money.
I believe the general advice for people who don't want to care about their money all the time is to invest it in a diversified portfolio and then slowly turn that portfolio into things with low volatility as the time where you want to start selling approaches.
Best thing you can do is keep it in index funds for now. You're relying on dollar cost averaging to take care of the long term trends in the market. Downturns actually make you money as you're continuing to buy the better deals. If you pull out before you let your money buy these deals, you'll never receive the benefit when the market recovers, where you make the real money. Also, I read somewhere that the best trading days happen in a very short period of time. If you're not in the market during those days, you miss some significant gains.
First, make sure you’re not 100% equity. You clearly don’t have the stomach for what that would do in a downturn. 60-40 equity-bond is an old standby for a conservative portfolio (I don’t recommend that allocation, though). Then, head over to portfoliocharts.com and play with some of the portfolios and asset allocations to get a sense of how they change historical results. For a conservative portfolio, I like the All Seasons/All Weather, and the Golden Butterfly is an interesting modification of the Permanent Portfolio another poster mentioned. But don’t just blindly follow them, use them as a jumping off point to learn more about the asset classes. Bogleheads.org is a nice forum for learning more about index investing. Good luck, and happy to expand on anything.
From the Bible: "Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth" (Ecclesiastes 11:2).
That is: diversify. You don't want your entire 401k in one stock. An S&P 500 index fund is better, but you might want to put a bit of money in an international stock fund, and a bit in a bond fund. (You probably still want to be mostly in stocks at your age, but note well: I am not an investment advisor.)
If you want to diversify in a non correlated assets, you can put a part of your money from stocks into commodities, like gold/silver/Bitcoin (housing market is highly correlated with the stock market, so it's not a good diversification).
All asset (and storage) types have their advantages / problems, you should read about it of course.
Not an expert, but my opinion: Your money is probably safer where it is. Economic turmoil comes and goes, and as long as you don't need the cash right now, you're somewhat able to absorb that risk over a long period of time.
This comment received sooo many replies with link references, I cannot help but think that at least half of these are from advertisers. A recent trend on HN...
Sorry I don't feel bad for you since I have no retirement and very little savings.
My understanding is that generally you do not want to touch your 401k. If you do then usually it's because you screwed up.
You are (obviously I thought) supposed to be saving and investing in addition to the 401k. 401k is supposed to be low risk. The backup to that is something entirely different.
He is not making any macro statement about the economy. If anything it's a statement about large cap stock valuations. Warren Buffett likes to pick value-priced stocks, and there just aren't that many of them around anymore after 10 years of easy money. Especially if you look at large companies, most of which are priced to perfection. There may certainly still be bargains in the smaller company space, but those don't move the needle for a giant like Berkshire Hathaway.
Expensive stocks may be one sign of an upcoming crash, but they are by no means a sufficient condition. Stocks can stay expensive for many years, and the conditions that led to them being expensive (easy money) actually look like they'll be around for quite a while yet. There are other possible indicators like the inverted yield curve, but again, one can never say for sure. Oil prices for example are depressed, and that is not what is typically seen before a recession:
It's not news that people are predicting a 2020 recession. The bond yield inversions are literally people putting their money where their mouth is and betting on a recession. The definition of an inversion is that 3 month bonds yields better than 10 year bonds. The first inversions happened in March. It has been a mistake to go 10 year over 3 month. The 3 month bonds would have returned already and then you could have picked up the 10 year. It's completely irrational to make these decisions unless you are predicting a crash.
It's not just bonds. Price of Gold has skyrocketed since June; Gold is higher than it has been for years. Bitcoin is back above $10,000. These are your standard mechanisms to isolate your money from a crashing market.
ISM is somewhat of a decent report. Soon as they lower below 50% it means manufacturing is shrinking; which means layoffs. July 2019 new orders are 50.8%.
Nissan is laying off 12,500. GM closing multiple plants. Ford has $20 billion cash stashed and layoffs. Chrysler is laying off thousands. Toyota, Honda, everyone is laying off.
It is important to recognize Buffett runs an absolutely massive amount of money and wants concentration. If you are limited by those factors you are limited to about 400 companies in the USA. Then among those, about half of them have weak returns on marginal capital invested. Among the remaining 200 or so, he doesn't like the price.
Most investors are not limited to about 200 companies. Keep looking. Look under 500M market caps. Plenty of companies trading for ev/ebits under 7, PEs under 10, price/books under 1, with decents ROICs.
Sure stocks on average are expensive, but bargains always exist.
In a similar fashion to the Warren Buffet, it would be nice for people who give advice to also post a high level asset overview like house, mortgage, stocks etc. It's hard to evaluate any comment without knowing some biases. I believe it would also help commenters to stop and think about their own biases before posting.
Buffett has been known for a long time to keep cash handy as his 'elephant gun'.
He patiently waits, watching and analyzing, looking for an excellent company to buy for a fair price (or better). When such a bargain emerges, Buffett deploys the 'elephant gun' and makes a massive buy.
This has nothing to do with timing the market. Buffett will buy no matter what the broader market is doing-- it's all that excellent company at a good price that matters.
Above all, remember: It's not timing the market, it's time in the market.
Warren knows that his statements are enough to move markets, so even if he wanted to say something, I think he'd be cautious of how it was said. There's something called the "Warren Buffet" effect where, when he announces a new purchase or trade, much of the market follows him and proves him right.
He invests in candy? Everyone invests in candy! Oh look, candy stocks went up, it must be a good investment!
One of my favorite "Zen Master" quotes from Gust in Charlie Wilson's War... Zen Master says, "We'll see." Great life advice along the lines of counting chickens...Buffet is the Zen Master extraordinaire.
The analogy that I have started to use recently is that of a pressure gauge. Money has to flow somewhere. The US just dumped a ton of money into the economy when the pipe (ability of the economy to move a lot of money between a large number of people, aka bandwidth) is essentially static, not much wage growth, little hiring, etc. That money has to go somewhere, so it goes to the stock market, because that is where the pressure is the lowest (very easy to call up a broker or go online and dump money into an account, compared to say, hiring and employee that can add real value to your company and the economy in exchange for a paycheck). Most of the time people assume that companies are going to take the money they get from stocks and invest it in growing the company or in paying salaries or paying for goods that pay salaries, etc. Unfortunately the corps are all sitting on loads of cash, and buying back stock, and not hiring or expanding (on average). As a result? Money that we normally expect to be growing the pipe, increasing the bandwidth of the economy to do real work, is instead flowing back into the pressure gauge and up goes the pressure, zoom! The economy is doing great! Right?? No. It is hard to get a good measure of the bandwidth of the pipe, and trying to interpret the pressure without it is folly, especially with regard to the impact of reducing the money supply (incoming volume of water). When the flow through the pipe is large and there is high bandwidth and the pressure is high, and the money supply drops, then we would expect the pressure to come down a bit, but in general to be stable essentially due to high inertia in the primary pipe, but if the total bandwidth is low? Then the pressure gauge is going to plummet, because the increased pressure (stock value) was due to a large flow trying to fit into a small pipe, and that pressure increase was due primarily to the change in the money supply, not due to fundamental soundness of the current economy (inertia).
Not a perfect analogy, with plenty of mixed metaphors, but simple enough to reason about and see where it breaks down.
tl;dr economy is flow in pipe, stock market is pressure gauge, if you don't know the flow through the primary pipe (hard to measure directly), then your pressure gauge could be extremely, dangerously misleading
This was my take away from the article, reads like a hit piece instead of an article on Warren Buffett and his warning. Bloomberg is pulling out all the stops these days...
>Trump’s bonkers G-7 made the world less safe....
>That has all changed in the President Donald Trump era....
>Trump’s erratic behavior before, during and after...
>Another Trumpian chaos agent...
>Trump’s economic-policy anarchy ....
>Trump vs. China vs. Companies....
>One of the more bizarre things Trump said ....
>Trump said he could declare an emergency ....
>Trump ad-libs wild claims...
>While Trump verbally berates his own country’s companies...
>Trump’s trade war will make things much worse...
>Far from the economic basket case Trump would have you think ...
The news these days is a big stinking pile of crap, it's not even news anymore.
[+] [-] hacknat|6 years ago|reply
Warren Buffet is actually a big believer in not making macro economic predictions. It just so happens that if you pick stocks like he does (based on fundamentals and a certain proprietary “discount”) you’ll probably avoid having your investments tagged in a recession.
Stocks in the Great Recession took a nose dive because of a market downturn, not the other way around. It is very possible (and much more common) for stocks to dip significantly and for the broader market economy to shrug its shoulders and say, “meh”.
We have familiarity bias though, so we think that the next one will look like the last one. Pro tip: it won’t.
[+] [-] mywittyname|6 years ago|reply
https://www.macrotrends.net/stocks/charts/BRK.B/berkshire-ha...
[+] [-] whatshisface|6 years ago|reply
[+] [-] digitalsushi|6 years ago|reply
I have a 401k, it's got more in it than the median 60 year old in the united states, and I'm 20 years from that.
And I am terrified of how little I know about how it exists or survives.
I read these articles and get a sense of overwhelming urgency that, without any explicit indication, I should do something with my nest egg to make it safer to survive a crash.
And then I keep reading, "don't touch it" when I go to read about what I should do.
So I sit here, not doing anything at all about it, crippled with dread.
What's the best strategy for someone like me, who has absolutely no idea how their retirement account exists?
[+] [-] lbotos|6 years ago|reply
Stocks/Bonds are money converted into "abstract human output". You are taking a bet that the group of humans that work at the companies that you've invested in will continue to become more advanced and efficient as to "generate value".
The stock market is "sentiment". It is collective group think as to what those companies are up to.
This is why you see people say "don't touch it". If you don't need the money now, the advances in "value creation" will possibly give you more money in the future.
I think the number one disservice that "stocks/investing" do is pretend it's not "gambling". Sure, you can minimize risk, and choose instruments that are 99% sound (gov bonds) but it's still _a gamble._
You are scared because you don't understand your risk exposure. (also, black swan events could change the exposure, but they are exactly that -- black swans)
You can:
- Decide to stop playing the game, convert your stocks/bonds into money which gives you absolute units and pegs your risk to inflation/deflation/government default.
- You can continue playing the game, and decide what your risk tolerances are, and adjust your strategy accordingly. This should give you a little bit more peace of mind.
If you want reasonably accessible exposure to these concepts, Khan Academy videos are free, you don't have to sign up to watch, and can fill in some gaps:
https://www.khanacademy.org/economics-finance-domain/core-fi...
[+] [-] lethologica|6 years ago|reply
Also, be aware that even when you do educate yourself and you do everything you think is in your power to 'safe guard' your nest egg, that there are are still a billion and one ways that it can all be wiped out tomorrow.
Micro managing you're finances if you don't know what you're doing is a fantastic way to wipe it out. As the good old saying goes, “The market can stay irrational longer than you can stay solvent.”
[+] [-] mhb|6 years ago|reply
The permanent portfolio was constructed by Harry Browne to be what he believed would be a safe and profitable portfolio in any economic climate. Using a variation of efficient market indexing, Browne stated that a portfolio equally split between growth stocks, precious metals, government bonds and Treasury bills would be an ideal investment mixture for investors seeking safety and growth.
[+] [-] jumbopapa|6 years ago|reply
[1] - https://www.amazon.com/Random-Walk-down-Wall-Street/dp/03933... [2] - https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Lar...
[+] [-] acollins1331|6 years ago|reply
[+] [-] mooreds|6 years ago|reply
Asset allocation is one of the few levers to control risk that you have. The more you have in safe assets (bonds and cash) the less likely to lose money in a downturn. Nothing's free, however, and that stability will cost you long term growth. Only you can figure out what level of risk you can love with (are you ok losing 10% during a downturn? 25%? 50%?). An advisor can help but you need to look in your heart of hearts and determine the number.
If you don't want to educate yourself or need a helping hand, get a fee based financial planner. Last I looked (years ago) was a couple thousand bucks to have a financial assessment. Ouch. But cheap compared to the 1% of assets the other kind of financial planners take annually. More on that here:
https://www.napfa.org/financial-planning/what-is-fee-only-ad...
[+] [-] tengbretson|6 years ago|reply
[+] [-] simonh|6 years ago|reply
[+] [-] AmericanChopper|6 years ago|reply
[+] [-] sweeneyrod|6 years ago|reply
But since you can't predict it, there's not much point doing anything (you can rebalance a bit from stocks to bonds if it makes you feel better but the impact will be minimal). The growth you'll miss out on from selling too early and buying too late will almost certainly outweigh the benefit.
[+] [-] wefarrell|6 years ago|reply
There’s nothing wrong with playing with a portion (up to you 20%) of your nest egg but only if you enjoy it. If your reptilian brain is steering the ship and you’re reacting based off of fear or greed you find yourself on the wrong side of trades.
[+] [-] sleepysysadmin|6 years ago|reply
Your 401k no doubt is holding mutual funds that are tremendously expensive and practically just robs you. https://www.sec.gov/fast-answers/answersmffeeshtm.html
If the mutual fund charges 3%. Then the underlying securities have to increase 3% before you have broken even. Which if you're mixing bonds and such, you're probably not getting yearly returns much higher than that. So your money is literally doing nothing for you. Then during a market downturn, you just plain lose. You're down the market amount AND the 3%.
Flipside, ETFs like Vanguard have fees of 0.05% on some of the big ones. So when the stocks increase in value, you pretty much get all of the benefit.
You're not making some banker and financial advisor rich off your money. You're retiring sooner.
[+] [-] rhino369|6 years ago|reply
[+] [-] ravenstine|6 years ago|reply
Nobody really knows how money works.
The average 401k holder has one because they don't have a good idea of how money works or what they should do with it. If they really understood their 401k, they'd know that they're probably getting ripped off in fees over their lifetime.
If economists and financial analysts completely understood money, they wouldn't be in such disagreement all the time over basic things. A financial advisor might tell you to leave your money in a 401k, and the next one might tell you the same, but it's not that hard to find one who will tell you to get your money out of your 401k ASAP for a variety of reasons.
At the end of the day, you have to trust your own judgment. People don't get rich doing the easy thing.
By the way, here's some things you should think about with 401ks:
- Someone with an average salary pays $138,336 in 401k management fees over their lifetime. Not only are you the only party taking a risk, but you're getting charged for taking that risk. Advisors and broker dealers aren't risking anything except your money.
- You don't own the money in your 401k. Read the fine print and you will find "FBO" (For Benefit Of). The tax code makes it technically owned by the government, but provided for your benefit. In a crisis, the government can confiscate any amount of your 401k to pay off debt and pensions.
- 401k teaches people to cluelessly invest. Do you know if your money is being invested in big tobacco or big oil?
- The government has the advantage with your money. Because you can't cash out without penalties, when you die, whatever's left over for your children is not only subject to income tax but to estate tax as well. They want your 401k money to be gifted to someone else because that means they don't get to cash in on your pile of money.
[+] [-] adrianN|6 years ago|reply
[+] [-] rubyskills|6 years ago|reply
[+] [-] panarky|6 years ago|reply
You're not alone in this.
I've found that most people who think they know how money works often just repeat conspiracy theories that don't hold up to critical examination.
While I'm pretty good at spotting bogus theories, I'd be hard-pressed to offer a coherent explanation myself.
[+] [-] ericd|6 years ago|reply
[+] [-] AnimalMuppet|6 years ago|reply
That is: diversify. You don't want your entire 401k in one stock. An S&P 500 index fund is better, but you might want to put a bit of money in an international stock fund, and a bit in a bond fund. (You probably still want to be mostly in stocks at your age, but note well: I am not an investment advisor.)
[+] [-] xiphias2|6 years ago|reply
All asset (and storage) types have their advantages / problems, you should read about it of course.
[+] [-] mathattack|6 years ago|reply
[+] [-] skolos|6 years ago|reply
[+] [-] cameronbrown|6 years ago|reply
[+] [-] r00fus|6 years ago|reply
Mine in part index fund/part bonds and I move around the % based on the market sentiment.
[+] [-] sertaco|6 years ago|reply
[+] [-] wbl|6 years ago|reply
[+] [-] ruvis|6 years ago|reply
Stop reading the news.
[+] [-] maxerickson|6 years ago|reply
[+] [-] turk73|6 years ago|reply
[deleted]
[+] [-] bregma|6 years ago|reply
[deleted]
[+] [-] ilaksh|6 years ago|reply
My understanding is that generally you do not want to touch your 401k. If you do then usually it's because you screwed up.
You are (obviously I thought) supposed to be saving and investing in addition to the 401k. 401k is supposed to be low risk. The backup to that is something entirely different.
[+] [-] arbuge|6 years ago|reply
Expensive stocks may be one sign of an upcoming crash, but they are by no means a sufficient condition. Stocks can stay expensive for many years, and the conditions that led to them being expensive (easy money) actually look like they'll be around for quite a while yet. There are other possible indicators like the inverted yield curve, but again, one can never say for sure. Oil prices for example are depressed, and that is not what is typically seen before a recession:
https://www.bloomberg.com/opinion/articles/2019-08-27/oil-pr...
[+] [-] sleepysysadmin|6 years ago|reply
It's not just bonds. Price of Gold has skyrocketed since June; Gold is higher than it has been for years. Bitcoin is back above $10,000. These are your standard mechanisms to isolate your money from a crashing market.
https://www.instituteforsupplymanagement.org/ismreport/mfgro...
ISM is somewhat of a decent report. Soon as they lower below 50% it means manufacturing is shrinking; which means layoffs. July 2019 new orders are 50.8%.
Nissan is laying off 12,500. GM closing multiple plants. Ford has $20 billion cash stashed and layoffs. Chrysler is laying off thousands. Toyota, Honda, everyone is laying off.
Recession is coming for sure, no question.
[+] [-] hodder|6 years ago|reply
Most investors are not limited to about 200 companies. Keep looking. Look under 500M market caps. Plenty of companies trading for ev/ebits under 7, PEs under 10, price/books under 1, with decents ROICs.
Sure stocks on average are expensive, but bargains always exist.
[+] [-] shusson|6 years ago|reply
[+] [-] RickJWagner|6 years ago|reply
He patiently waits, watching and analyzing, looking for an excellent company to buy for a fair price (or better). When such a bargain emerges, Buffett deploys the 'elephant gun' and makes a massive buy.
This has nothing to do with timing the market. Buffett will buy no matter what the broader market is doing-- it's all that excellent company at a good price that matters.
Above all, remember: It's not timing the market, it's time in the market.
[+] [-] duxup|6 years ago|reply
[+] [-] jbob2000|6 years ago|reply
He invests in candy? Everyone invests in candy! Oh look, candy stocks went up, it must be a good investment!
[+] [-] Cyder|6 years ago|reply
[+] [-] wUabkSG6L5Bfa5|6 years ago|reply
[+] [-] api|6 years ago|reply
[+] [-] hyperion2010|6 years ago|reply
Not a perfect analogy, with plenty of mixed metaphors, but simple enough to reason about and see where it breaks down.
tl;dr economy is flow in pipe, stock market is pressure gauge, if you don't know the flow through the primary pipe (hard to measure directly), then your pressure gauge could be extremely, dangerously misleading
[+] [-] lowdose|6 years ago|reply
[deleted]
[+] [-] hourislate|6 years ago|reply
This was my take away from the article, reads like a hit piece instead of an article on Warren Buffett and his warning. Bloomberg is pulling out all the stops these days...
>Trump’s bonkers G-7 made the world less safe....
>That has all changed in the President Donald Trump era....
>Trump’s erratic behavior before, during and after...
>Another Trumpian chaos agent...
>Trump’s economic-policy anarchy ....
>Trump vs. China vs. Companies....
>One of the more bizarre things Trump said ....
>Trump said he could declare an emergency ....
>Trump ad-libs wild claims...
>While Trump verbally berates his own country’s companies...
>Trump’s trade war will make things much worse...
>Far from the economic basket case Trump would have you think ...
The news these days is a big stinking pile of crap, it's not even news anymore.