Market correction

Hey guys

As you all know, stock markets have been booming since the COVID crash in March of 2020. People like me, who are relatively new to investing, have only ever seen mainly upward markets.

Some analysts are warning that the market may be getting too hot, with many stocks way overvalued. They say the current bubble could burst, resulting in a possibly big correction.

Are any of you expecting, or worried about such a correction?
If so, when do you think it could happen? How big might the correction be?
And do you take any actions in your portfolio in anticipation?

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Hey Yohhst!

I personally wouldn’t think to much about a big correction. The problem is, no one knows for sure. We might see a crash in the coming half year with evergrande, or some other situation. But by that time the stocks might’ve grown 50% already.

I would advice you to put in a certain amount each month to spread the risk, if you are afraid of a crash. With the current state of money printing and hyper inflation, we could even see the market go a lot more crazy over the years. But again. No one knows… One thing we do know, is that putting your money in a bank account Will lose you money because of inflation.

The most important thing is to diversify in different sectors and companies, so that if that crash eventually happens, you can just wait a few months/years for the markets to come back up!

If we look at the Dow Jones in the massive 2008 crises, it took around 3-4 years for it to recover. This is why I prefer to think of stocks in a 10 year period.

I also want to add that in my 5 years of trading, I have constantly seen those ‘bubble bursting analysts’ pop up. And if you put your money in normal stocks 5 years ago well… Even if the market crashed 50% today, you would still have seen massive returns! I wouldn’t take most of those serious, as they are made to get many clicks / views, and well negativity and fear = more clicks / views.

Lastly, I personally think people lose way more money because they ‘wait for a dip to buy’, instead of just buying.

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Hey @Mixer , I couldn’t agree more with you. As I’m also investing for the long run, I’m not selling anything as long as the fundamentals of the company are still the same.

I do want to keep enough cash ready, so I can buy the dip if and when a correction happens. I’m still very annoyed that I only started investing this year. If I had invested the same amount of money 12 months earlier, o would have made a lot more. Right now I’m kinda flat overall, because I only started this summer, with markets at all time highs :roll_eyes: But as you said, by keeping that money in the bank I’d just be losing money, so it’s still better.

In the long term it matters less when you get in, so I’m just gonna let it grow over time and add to my positions occasionally for dollar cost averaging. Plus a lot of my stocks are less volatile dividend stocks, so there’s always the dividend part too.

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Helemaal met je eens @Mixer !!!

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There will certainly be a correction, there always is when a bubble forms.
When it will happen, no on knows as a correction needs millions of investors to dump their shares and moving so many people takes time.

That being said, the impending Evergrand (and many other contruction firms with it) collapse in China, and the raging inflation in many Western countries due to to the rampant money printing are the stepping stones being laid down for a crash.
What the eventual trigger will be, no one can say.

Best thing is to do one of two things:

  • Position your portfolio in a manner that will minimize the impact of a crash. If you need the money in the nearer term.
  • Wait for the crash and pick up tons of companies at a discount. If you don’t need the money in the nearer term.
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