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Waiting for a correction has derailed many great investors .. The likes of John Hussman have been convinced it’s coming for the past 7 years – and the longer you wait, the worse the decision to get back into the market becomes.
So: now is always the right time to invest..
The dilemma is that ANY time you can have a market crash .. We could get a correction; then get 15 more corrections – I always advise a look at the Nikkei 225 from 1990 onwards .. Down 80% over 20 years .. You’d have never known you weren’t at the bottom of the market.
Markets could go up for the next 15 years, or slowly and painfully down .. So the answer is always: ASSET ALLOCATION.
Knowing a crash never stops being a possibility, you need to hold a portfolio that can withstand inevitable falls, and by rebalancing the regularly, ensures you’re always buying low and selling high.
If you know markets are going to fall, you’d buy government bonds and gold .. If you don’t know, you hold, stocks, bonds and gold (or cash) in some ratio that fits your investing needs.
And drip-feeding over 12 months is as good as pointless .. It makes you feel safer, but there’s just as much chance the correction comes on the 14th month, and you simply made less money on the way up .. Drip-feeding (or time diversification) is best thought of in terms of decades, or regular earnings.
Holding 50% stocks, 50% bonds (and rebalancing annually) means you’re always drip-feeding from one into the other, depending which way the market goes.