How To Handle A Stock Market Crash? With Jim O'Shaughnessy

In the second excerpt of my interview with Jim O'Shaughnessy, we discuss how to handle a stock market crash or stock market boom and how understanding psychology can help you become a better investor.
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#StockMarketCrash #JimOShaughnessy #PensionCraft

[@Pensioncraft]

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[@Gaz12360]

Interesting fellow and a good interview because you let him talk.

[@Pensioncraft]

Hi Gary, thanks. With Jim, it's easy to let him talk! Thanks, Ramin.

[@johnyjsl9219]

Don’t do something, just stand there !

[@MultiformeIngegno]

Two wise men! Thanks for the interview.

[@Pensioncraft]

Our pleasure!

[@AS-iu3pl]

Hi Ramin, great to see a new format in your channel. Keep up the great work.

[@Pensioncraft]

Hey, thanks!

[@smvinay1206]

You are a great listener Ramdin... Even when you too have a community who listens to you.. good to see you being a good listener yourself...👍

[@Pensioncraft]

Thanks Vinay that's kind of you to say. Ramin

[@ReVoltAgefilms]

Between the high in 1929 market to the next high in 1954 was 25 years! I don't have that long to wait. Insulating yourself for the long term from a probable crash may lower your returns in the short term, but could mean you come out the other side with something.

[@aliasgharkhoyee8911]

Did the market take 25 years to recover, or was 1954 the next crash? Generally it doesn't take 25 years for markets to return to reasonable levels.

[@jasonmiddleweek1509]

"Im not a target fund guy" "Im fully invested".

[@chrisj8764]

@@aliasgharkhoyee8911 25 years to recover

[@jasonmiddleweek1509]

Thanks for posting this interview. Im gonna watch it every time before I do my rebalancing or want to tinker with my portfolio. Poor old Newton!!

[@kunverjihirani276]

Good information 👍

[@Pensioncraft]

Thanks

[@michaelzeng4529]

Info retrieval, info processing, lastly behavior management. This interview talked so in-depth about the hardest behavior management for human being. I really hope KZbin allows me to like 👍 1000 times!

[@Pensioncraft]

Wow, thank you!

[@alexharrison1198]

Great video. Thank you. Great listening to a very experience investor like Jim. Looking at buying some off his books 👍🏻

[@Pensioncraft]

Glad it was helpful!

[@kingofwebguru]

Great video. Is it possible to make a video on how to tell if a company's share price is overpriced?

[@ravindersingh4822]

Great advice - thanks Ramin.

[@Pensioncraft]

Thanks Ravinder. Glad it was helpful! Ramin

[@louisaparker]

A bull market is much more difficult to handle for most investors. You should make a video about that. How to invest during a relentless bull market, where most investors are hoping for a crash that never comes?

[@arch123clipz2]

I'm so envy of his painting :(

[@Pensioncraft]

Thanks @Arch123 Yeet, I agree it is a great painting. Ramin

[@sunaxes]

And what do you do when the value of the "safe" currencies around the world is going down because some people can't stop printing money?

[@antonystringfellow5152]

Excellent interview!!! Like many people, I thought that simply learning about cognitive biases was enough to immunise myself against them. Seems it probably isn't. It's also left me wondering about how much of my memory has been falsified to fit a current narrative. I'm particularly wondering about my memories from the 2008 crash, when I got wiped out margin trading. I learned a lot from that experience but maybe I would have learned more if I'd kept a journal/diary (I now suspect a few of my memories form that time may have been altered).

[@Pensioncraft]

Thanks Antony. I'm glad you liked it. Ramin

[@chrisf1600]

I'm a skeptical type, and I wonder about the advice to keep an investment journal. Does it really help ? I sometimes jot down my thoughts in a personal diary, and it's fun to read back and remember what I lived through... but does it make me a better investor ? I have my doubts. Keeping a journal seems to have become one of those bits of advice that everyone trots out without any actual evidence, like always setting a stop loss. Sounds plausible, but it doesn't actually stand up to scrutiny when you look at the evidence.

[@Pensioncraft]

Hi @@chrisf1600 the thing is that to learn you need to remember. And as Jim says, we misremember just as he did with his huge put position which he forgot that he sold the day before the 1987 crash. A big part of overcoming our cognitive biases is to find workarounds, and a journal is one way to do that. But Jim also says that he has no monopoly on the single best way of doing things - you have to find what works for you. Personally I make videos about how I invest so I can't forget! Thanks, Ramin.

[@SaraFJones]

Buying low is hardly nothing 😜🤪 That’s the plan stan!

[@kindke]

Here's how you handle a stock market crash 1. Have enough money in cash to cover 12 months of living expenses , ultra tight budget numbers only 2. Have a bit of cash on sidelines to buy the dip which will give you some optimism since you bought at lows 3. Dont sell anything and PRAY to god that the market recovers.

[@rod-contracts1616]

They always recover, eventually or soon!

[@chrisf1600]

Great advice, although personally I would skip the praying part unless things got really gruesome :)

[@ivanpetakov]

What a great strategy

[@TDubya811]

Totally different dynamics than a laissez-faire government now. The central banks can initiate the next crash anytime they want by stopping QE and/or raising interest rates. If they don't start a crash and keep doing QE with low interest then stagflation and further wealth stratification are on the cards.

[@rod-contracts1616]

Anyone wanting to help their understanding of share investing should read O'Shaughnessy's book "What Works on Wall St", and Jeremy Siegel's "Stocks for the Long Run." Both were published and revised some years back but are based on analysis of decades of share data so are still relevant. Sorry, but short term instant wealth from any investment is rarely achieved. I've twice recovered from 40+% crashes, and have above average LONG TERM results.

[@stevo728822]

Both bull and bear markets remind me of the movie Sink The Bismarck. Everyone in the movie has an obsessive determination to win. But throughout the movie, it's pure chance that determines the events and final outcome.

[@gwal93]

How did he know I wear full armour, never leave my house and I am armed to the teeth ?

[@mikehardwicke23]

Well - how many years did the US market take to recover from the crash of the early 30s - certainly longer than 10 years! What's his 'cash buffer' - certainly larger than mine! In summary - a totally irrelevant interview!

[@Who-cu9eu]

I disagree as the fed wont be able to print enough money in time to recover people from the next market crash if it happens again this year or next

[@Pirake123]

Tldr?

[@duanefranklin8796]

Great video! Trading right now will be at every wise individuals list,in some months you'll be ecstatic with the decision you made today

[@theshiftinginvestor]

His comment about the low probability of a crash doesn't take into account our unprecedented debt, money printing, stimulus, and the economic effects of the pandemic. He's way off base, totally ignoring the overvaluation of the stock market based on so many metrics. Don't sell all your stocks and bonds but sell a lot, diversify, and hedge.

[@rod-contracts1616]

Ultra low interest rates and massive increases in money supply as we have now always spurs economies, but yes the counter balance to that is massive debt! So expect and ride big volatility at times is my approach.

[@alexair7936]

So he never sells?

[@rod-contracts1616]

I never sell out heavily trying to anticipate a crash. Scale back buying, sell some over priced, to build cash for a crash one-day (that day never seems to come, just like surges, then wham), but being out of the market foregoes gains from individual companies having earnings break through, and also invaluable dividends. Instead of exiting, build some cash for some post-collapse buying opportunities.

[@rod-contracts1616]

@Liquid Gems Yes he focused on behaviours. Having been in stocks learning since 1998 I experienced a 45% fall during the GFC collapse, and thought my goodness what have I done! I rode it out and soon after restarted investing in new attractive growing businesses that were realistically priced, ie PE ratios 15 or below, paying dividends (O'Shaughnessy's book What Works on Wall St shows valuations are determinants of performance). Over relatively few years the portfolio more than recovered to well above previously. My biggest mistakes; going over average weight in stocks which I figured would fly. Ultimately one cannot tell which will or when, so golden rule is keep new investments within say max 20% of the average stock entry cost of your portfolio, and perhaps under weight at least initially those which look perhaps less certain (Murphy's law they sometimes fly!).

[@rod-contracts1616]

@Liquid Gems One more; you cannot tell when the market will turn, ie has it yet or about to reach top or bottom, so being out of the market can have a heavy opportunity cost, because the biggest moves either way are without warning AND over relatively short periods.

[@rod-contracts1616]

@Liquid Gems and another; because you cannot tell which stocks will perform or flop diversification in 10-20-30+ stocks as portfolio grows is critical.

[@rod-contracts1616]

@Liquid Gems There are relatively few and only brief times when I don't buy attractive stocks if at good value and with good growth prospects. To mitigate risks I often make lower initial entries then progressively add over time, but that can result in missing out sometimes! The US market looks dangerous (all that debt!!) now so I'd think extreme caution is warranted until something breaks as it will. I invest in Australia. My policy is to never spend investment capital, only dividends otherwise the latter will dry up along with capital! Instead, we have capital and dividend growth. The beauty of shares however is one can easily sell a few for needs, unlike investment property (which I also really like). Similarly it is easy to periodically or regularly buy a few (or more) shares from "day job" savings, as do it yourself superannuation savings.

[@redrain3228]

please check this out it's for a computer science University project please give me feedback

[@paulkeenan2691]

A lot of waffle

[@ReVoltAgefilms]

This is the guy who doesn't understand Bitcoin. Gold is analog, Bitcoin is digital.

[@philgosling]

...........and your expertise is ...................? give us a link to your broadcasts and we can see?

[@ReVoltAgefilms]

@@philgosling he's not anymore an expert on Bitcoin than I am.

[@antonystringfellow5152]

I understand Bitcoin. It's really quite simple once you cut through all the BS. It's a digital medium of exchange. Unlike gold, silver, copper, etc, it has zero intrinsic value as it has no other use (it doesn't exist in the physical world). Unlike fiat currencies, it's value is not decided by governments or central banks, it is worth whatever value people ascribe to it. Because of this, it has no upper limit and its lower limit is precisely zero. Bitcoin is very unlikely to fall to zero anytime soon but it could quickly fall to zero if it gets replaced by a superior cryptocurrency. Without going into the technicalities of blockchain technology, that's basically it.

[@theshiftinginvestor]

@@antonystringfellow5152 Exactly. And if the value could go up, might as well invest a little in it and take profits of the table too but other things when you see fit. But keep in mind that is value can crash quickly.

[@rod-contracts1616]

Neither gold or bitcoin produce much or anything. Companies do, and produce real earnings, so don't rely on, and excuse my reciting the line, the "bigger fool" syndrome based on others being prepared to pay even more.