Should We Wait for a Market Crash Before Investing? (FQF)

[@mikecollins967]

The title of this video doesn't do it justice. I'm in pre-retirement mode and intend to pull the trigger within the next year, more likely within 3-6 months. I've watched a number of your videos and they are excellent. Your ability to explain things in easy to understand ways, without the drama, and with a teacher mentality, is incredible. This video to me is 5 of the top financial questions I've been wrestling with in preparing to retire. Thanks so much for sharing.

[@StanHasselback]

The great point you make is you have to be right twice if you time the market. I have been lucky getting out of the market before 3 big downturns but I was not smart about when I got back in. When I calculate it the best I can it's probably been a wash for me but there was a lot of worrying along the way. I now cost dollar average into the market and adjust my percentages for stocks and fixed assists for my age. So far it's worked out well and it takes a lot less time and effort.

[@darenwunderle9670]

I don't normally leave a comment, but when I do it's because someone has created an outstanding video.

[@joceylingranada9115]

From my perspective, I'm convinced 50-100k usd in the right company before it goes big is more remunerative than saving for retirement, however getting the right company is so difficult one feels sometimes saving might be safer, then again who would have guessed Nvda? I have around in $200k in a HYSA and want to invest, puzzled on current on the best opportunities.

[@alexanderrowan5723]

I for one believe investors should start off with the traditional S&P ETFs for a solid foundation, then move to getting in on different asset classes and maintain discipline to minimize risks and maximize positive outcomes.

[@diegoa3991]

Don't shoot the lights taking unnecessary risks, a lot downplay it but best to know the role of a fin coach as regards remunerative investments, this approach has gotten by $50k startup at least ten time the initial. Nothing compares to professionalism and expertise.

[@douglasjefferson8533]

well said sir, I'd appreciate more info on your coach if you don't mind, thanks.

[@diegoa3991]

You'd want to do a little due diligence on Amelia Sophie Woledge. She's top notch and exceptional.

[@douglasjefferson8533]

I curiously put her name to google, found her bio page, going through her page one can see why you're so profitable. Thanks for this.

[@lindsaynewell6319]

I'm glad Rob clarified that it's not the bucket strategy per se that he really has an issue with, it's characterizing the buckets in terms of years of income. After all, a 60/40 or 70/30 portfolio with some emergency cash set aside is basically a 3 bucket system as well (stocks + fixed income + cash = 3 buckets).

[@70qq]

thanks , ive always felt the same ... call it whatever you want but its the same thing really ... a 70/30 portfolio to me is the same as a 21 year/9 year bucket set up for 30 year retirement ... and you need to rebalance either or adjust your allocation as you age or choose

[@adabamas]

I don't see what the difference is. If my net worth is changing year to year, I need to adjust AA on a yearly basis. For example, if year 1 I have 5 million with a 60/40 split and in year 2 I have 10 million, I don't need 40% in bonds. So I'll adjust bond allocation downward like 80/20 to take into account yearly expenses which remains stable. I might as well just fill the bucket as needed instead of futzing with AA changes.

[@everceen]

Half the videos say next year is a bull run. Other half say it will crash. I just dca my major ETFs along with 5 stocks I believe in and will see how it turns out in 5 years. I am not smart enough to know if a crash is coming.

[@mikedearden777]

Nobody can predict a crash even Peter lynch and Warren Buffet said they can't predict it. All you can do is move more into cash for opportunities. But difficult even for experts to predict crashes. Over 10 years the market usually rises even if it's overpriced. So dca is a good technique

[@mikedearden777]

I bought 10 ETFs and about 20 stocks and am not planning to sell any for 10 years. I will try add to my positions during this time

[@michaelwiebeck3]

My expectation for 2025 is that markets starts to broaden out more,” what if the interest rates go up? i have a ton of questions....can I safely invest $220k? What should I do differently?

[@Amberabove]

Individual stocks can beat ETFs like VOO, SPY, IVV if you play your cards right

[@CindyValenti]

You're right, I and a few Neighbors in Bel Air Area work with an advisor who prefers we DCA across other prospective sectors. Instead of a lump sum purchase, Following this, my portfolio grew 40% in the last quarter.

[@Rachadrian]

Mind if I ask you to recommend how to reach this particular coach you using their service?

[@CindyValenti]

Annette Christine Conte is the licensed advisor I use. Just search the name. You’d find necessary details to work with to set up an appointment.

[@Rachadrian]

She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.

[@profsteve7653]

great work Rob,your opinions and insights are helpful. I self manage both Fidelity and Vanguard IRA accounts successfully for 45 years. 25% bonds,50% stocks 25% cash for emergency and market opportunity. SSA is more than sufficient to pay my bills,the next 4 years are going to be interesting.

[@kw7292]

Rob, well done, timely video. Thank you again

[@ChrisKAloha]

It’s nearly impossible to buy when the market is down. That’s been my experience. I’ve had the best results when I just buy when I have the money.

[@lovethomassowell]

Time in the market > Timing the market

[@mikephilpot9857]

^^^ THIS ^^^ I was going to post this, but you beat me to it. 😁

[@michiganman845]

Damn right

[@johnbeeck2540]

Sequence of return risk is real and should be mitigated with some cash reserves and a reasonable fixed income allocation.

[@John1925T]

Repetitive.

[@rogeliosoto6953]

Obviously but you also want to get a decent entry price. Go ahead and buy at the top if you want.

[@MichaelToub]

With 6 years till retirement, and with PE being so high, and since sequence of returns risk of a correction early in retirement being the major cause of horrible outcome for one's entire retirement, why wouldn't I want to lower % of stocks and wait for PE to be more reasonable and THEN rebalance? Rob kept mentioning 12 months over & over again. If stocks drop 50% in 24 months and then I re-balance, I'd be happy with that. Also consider that Vanguard's outlook for stock performance for the next DECADE is much lower than it has been in the previous decade. My main goad is safeguarding what I've accumulated in my retirement account. If I was 20 years from retirement, my goals would be much different. Thoughts please!

[@freedomlife3623]

Totally agree with you, we have to consider one’s goal in developing investing strategy. Plan to retire in 2025, I have moved 5 years of spending from stock to MM in Jan. 2022, then bought into laddered GIC last two years to cover 2025-2029. Also used part of my portfolio to buy deferred annuity to cover all my essential spending along with CPP& OAS( I am in Canada) when I am 70. Feeling a lot at ease for next 4 years when US is under management of bunch of grifters & manias. Good luck with your final stage of retirement planning.

[@theWebWizrd]

Your way of thinking leads you on the same path as Warren Buffet, really, and I think it is the only rational way to think about market timing. You shouldn't predict the future, you should assess what you buy in the present. When stocks are expensive, they offer a very bad risk/return proposition, and that might very well be a worse proposition than fixed income. Right now US large caps offer similar expected returns as fixed income, with immesurably more risk. No wonder Buffet is piling up cash - it is what you do when you find nothing worth buying, and right now arguably there is almost nothing worth buying in US large cap.

[@jimbo3609]

I love this 3 buckets strategy. It does make it more clear to me now. Thank you Rob

[@malaybasu961]

The ideal way buckets can be used in financial planning is to decide on the fixed income fraction of the portfolio. Consider a 1M portfolio with 4% withdrawal and 40K /yr consumption. With bucket strategy, it will have 80K in cash, 200K in bonds with a roughly 70/30 portfolio. With the same consumption but with a 2M portfolio the asset allocation can be 85/15. It's a good way to decide on a asset allocation rather than blindly following a fixed percentage portfolio.

[@WealthyChronicle]

I feel your pain on the Roth conversions! It's like trying to solve a puzzle blindfolded. But great tips on planning ahead for those taxes! 💰

[@josh9231]

I recently read a paper ( I wish I could remember which one) . It posed a theory that PE ratios are higher in the recent past because of stock buybacks elevating the values. Where as years ago more companies awarded investors through dividends, today it’s done with more buybacks. This change has affected the PE calculations. I think it’s an interesting theory and plausible. Merry Christmas Rob!

[@coltondotdev]

Early Retirement Now has an article about this. It definitely plays a role. He made his own adjusted CAPE measure that takes this into account. It is lower, but that number is roughly also at all time highs.

[@theWebWizrd]

I mean, that makes literally zero rational sense though. Companies use earnings to buy their own stock, or to pay out dividends, and the money should theoretically be worth just as much regardless of how it is delivered to shareholders. No one should pay more for a 100$ buyback than a 100$ dividend. So it should have absolutely zero impact on PE ratios. It should, however, have an impact on how we calculate total expected yields, since the dividend yield will be far from sufficient to show yield from returned earnings.

[@GregoryLooney]

@RobBerger - Love this new series of 5 Question Friday! I'm wondering about an additional benefit to consider when doing a Roth. You mentioned one being the ability to effectively move some money from after tax accounts into the Roth- a move that is likely universally agreed on (especially given the relatively low max contribution limits, some income limit restrictions, and the earned income requirement that's especially harsh in the early years of retirement). My question applies to the money going into the Roth, regardless of where the tax bill gets paid from. Doesn't the fact that the growth, now occurring in the Roth, will also be tax free in the future, play a role? You point out that a lower tax rate later on at eventual withdrawal usually means the conversion was a bad move, but doesn't the potential growth of all that converted money (at no tax ever) add some measure towards the conversion being a good idea after all?

[@J-2024-v8i]

In part is not just the tax rate you will be withdrawing at, but also how much you will withdraw due to growth at that future tax rate. Say you convert now $100k and you pay 20% effective tax rate. If you had not converted and let the $100k grow to $1M, even if you withdraw that million over 5-10 years at the same tax rate of 20%, you will be paying a lot more total taxes on those withdrawals.

[@GiantBlue1963]

Another problem with anything that's a ratio is that the numerator and denominator work against stability. (they move independently) So if we know that the earnings number has a growth pattern (which we do) it's relationship to the price is changing too. As Rob says, it's better at predicting long term results (because it smooths out the P and E pulling on their own) such that using it for market timing is a bit random. Once that happens, your emotions will usually bollix it all up. The best "market timing" devices I've seen are triggers to increase or decrease equity exposure that are really just amplifiers of the concept of rebalancing.

[@LanceSoFast1]

Good stuff 🤛

[@rontalmage2264]

Nice presentation as usual, Bob. I have a follow-up question regarding the bucket or bucket-like strategy. I'm retired, age 77. I have to take RMDs from my IRA which is all money market and bonds. As luck would have it, my current and projected RMDs are >= my annual income needs. Since I have no choice about taking the RMDs and paying tax on them, my thinking is just using them to fill out my annual spending needs. I don't have to touch my taxable equity investments. I could freak out about rebalancing, but why not just let my 60/40 just gradually move to 65/35 and live with it? I can adjust my plan.

[@BiggMo]

Rob, would love to your opinion on the difference between the 1929 market and today. I recently read an article that theorized the market crash that brought the great depression was due to overvaluation and investor optimism

[@alex10291]

Tarrifs too

[@rubberducky6411]

Even back then the media blamed Trump which led to the crash and eventually WWII

[@johnbeeck2540]

Banks were allowed to invest savings accounts in speculative manners. Glass-Steagal act was put in place to prevent banks from using savings accounts in investments. The Republicans got Glass-Steagal canceled in the late 1990's and a few years later we had the tech bubble (Billions in Savings were invested in speculative tech companies), then a few years later we got the Great Financial Crisis - speculative derivative investments - which almost destroyed our financial system. Now we see the same speculative risky nonsense going on. Based on technicals and reversion to mean the next market reset could easily be a 60% drop. Need to keep Savings safe but don't count on our corrupt politicians to enforce any meaningful protections.

[@freedomlife3623]

That usually the case for recession part of the economic cycle. Euphoria lead to over valuation & over bought, then lead to a crash.

[@johnbeeck2540]

The intent of the bucket strategy is generally to reduce the sequence of return risk. The cash is for short term needs, the fixed income is cover longer term market corrections and provide a source of investment funds when the market goes on sale, and the equity portion is for long term growth.

[@freedomlife3623]

What happen when both stock & bond go down?

[@Amir-je6wl]

Div stocks went down 50% during Covid. Worse than s&p 500 and worse than tech. Bonds went way up. That's the purpose of bonds!

[@SueTNguyen]

Good one, gotta explain it in common sense terms.

[@Bugginout79]

We hear 100 experts call for a crash 10 times a day. The way i see if there is a crash coming is when most say the market will go higher. The market always does what is least expected , i think we have another 2 years honestly.

[@mikedearden777]

Market dropped over 3% last Thursday. I was buying on Friday. In hindsight it was great timing. Not that I was trying to time the market. Just taking advantage of Lower prices

[@ericgold3840]

I like the volatility comparison when deciding if DIV stocks can replace BNDs, but don't you have to also account for correlation (or lack thereof) ?

[@dckyle]

With respect to paying a Roth conversion tax, I wonder if using a withholding out of the tax-deferred could be more beneficial if you expect tax rates to go up since your RMDs should be less. So less future tax there potentially and more time for taxable accounts to compound. In this view, I’m envisioning moving extra to ensure the full sum gets into the Roth account (which means more tax withholding). Might be a wash but not sure.

[@alex182618]

VTI p/e ratio is 22 according to morning star. Why would I consider Shiller P/E, which is an average of 10 year Earnings divided by Current Price? The world is developing much faster than that. 10 years ago Tesla and Uber were not even in S&P 500.

[@coltondotdev]

Stability, basically. Earnings can rise crater quickly. Prices can do the same, meaning both numerator and denominator are volatile, so the whole calculation can be very volatile. I do think 10 years is too long though. It's a useful measure but like all things it isn't one size fits all.

[@stevegould5185]

I especially liked the discussion around bond mixes when a retiree has a pension. That is my situation also. Even the professionals I've spoken to have differing thoughts.

[@bhall7997]

Roth conversion positions go market value I sent CD's I was holding last week as part of conversion , they was 3 month old ones maturing early January with only a few penny's of added market value but a good amount of interest there accrued upon maturity. Great video explaining paying taxes from checking account to get more $$$$ into Roth :)

[@davidkotke9479]

Rob, I love your show. I have a question regarding BND. I checked my monthly distribution and it is 3.52%. When you state the yield on your BND, are you stating the SEC Yield vs the actual yield? Thanks

[@jaymetheaccountant]

Hey Rob, is there any noticeable difference between buying tips and a tips ETF fund?

[@TedWesterfield]

My brain says no but the investor in me says yes. I also said the latter in 1982. Alas….

[@leesmith9299]

SCHD - i don't think they care too much about the volatility of the fund value. i think they mean to live off the dividends which i'm guessing will be less volatile than the fund itself. if the fund goes down 30% the dividend will possibly not go down that much. maybe a follow up on that?

[@infinitemonkey917]

I think DCA is better. Vanguard's study on it is interesting. I like the peace of mind part of it.

[@quintc1039]

How long to stretch out the DCA?

[@johnbeeck2540]

I think the volatility of your investments should be less with DCA without sacrificing too much appreciation over time. DCA of a large lump sum over two years seems prudent at this time due to the extreme overvalutions and turmoil the new administrations policies will create. Wall Street hates chaos and turmoil...

[@Tomzzzzzz]

To avoid SORR you need to look at what risk you're willing to take, especially at or close to retirement. I'd rather enter retirement with a low equity allocation and gradually increase the equity allocation during the first 15 years, then level it off for the remainder of retirement.

[@johnbeeck2540]

I'm retiring this coming year and have whittled my equity exposure down to 10% with the idea that I'll reinvest after the new administration's policies are better known. Also taking cues from Warren Buffet's recent asset sales and war chest building.

[@70qq]

@@johnbeeck2540 that just sounds like market timing to only leave 10% in the market until a later date ... 50% sounds extreme to me , but at least youd still have half of your portfolio working for you , and 50% (i guess 15 years worth) out of risk in the market ... Buffet is dealing with the need to make his investors money on a daily/yearly basis using a value method , not live on it , so its a different animal entirely ... but its your money and you'll be the one dealing with it so good luck !

[@goodbodha]

People would probably be better off having a balance of stocks and bonds with rebalances happening towards stocks when they are oversold on a 1 year timeline and towards bonds when stocks are overbought on a 1 year timeline.

[@Anthony-zw1qb]

I think everyday is a good day to invest 💯

[@2023Red]

Everyone has an opinion. You have this you tube channel. My view as an MBA in finance with MS in Project Engineering does not argue with your video, just a fast addition. Sp500 index outperforms bonds. So I do not argue with 50 teapot history. At age 76, and 857 FICO, I only use SPY. Set 5% stop. And withdraw cash each January for deposit into my checking emergency fund. As a simple illustration for many people, a year ago a nominal SPY of $100,000 is now worth $125,000. On January 1st, I take $25,000 profit for new emergency fund money. And let the remaining $100,000 sit there in SP500 index. In four years. I have $100,000 in my emergency fund to spend extra if I need it. As background, we just completed a year of chemo for breast cancer and the aggregation for associated bills were a million dollars. So never ever thing those unplanned events an happen to you. 1 in 8 women get breast cancer according to our oncologist.

[@J-2024-v8i]

Are you assuming 4 consecutive years or more with 25% gains each and every year? Not sure I understand when the 5% stop plays along in this example.

[@2023Red]

@ I made assumptions knowing many projections could be better or be worse. SPY went up considerably and has gone upwards for decades. So the median over decades is around 10% but recently 25%. I used 25% in my example. I think it willl be higher because the USD reigns supreme on the planet thus the stock market should increase as a result. The 5% stop is arbitrary. I use stops all the time because I need to protect my portfolio as priority one. As a math example, if a 100 stock drops 20% to 80, it requires 25% increase to break even. 20 dollars over 80 is 25%. By using 5% I limit my loss. And I stay out of the market until price increase above that earlier stop price value. Just my mentality for safety.

[@jimbo3609]

@2023Red, where are you putting your cash? Bonds, Cd, mm?

[@Amir-je6wl]

1999's SPY took 12+ years to go back to break even. 10%/year return means nothing with current valuations (30+ trailing PE). Do you have 10-15 years to wait? Lock in a 10y gov bond at 4.5% instead.

[@2023Red]

@ Yes. 1999 plus ten years as not good for spy. Perception is our reality. This past year SPY is up 25% and u cannot predict the future at all. In the past year, hyg or corporate bonds increased 1.4%, TLT or government bonds dropped 11%, silver is up 20% and gold up 26%. I like sp500 which is up 28% and is well diversified. So good luck with your bonds. Bonds nigh be good for you but I would not touch them. And 6% yield on your money deposit does not wet my whistle!

[@dougspry3101]

Bnd up a whole 1 percent again this year. Bnd i believe 10 year return is 1 percent.

[@dianediliberto1876]

Great video. Thank you.

[@ltgemini1599]

Do you submit questions to Rob Berger here? Or is there an email?

[@noreenn6976]

Sign up for the free newsletter to get his email address. Check the description box for the link

[@J-2024-v8i]

Either here or in the chat during his live events.

[@ltgemini1599]

@J-2024-v8i I often miss the lives. Thanks for the reply.

[@billcarruth8122]

My approach is avoid ETFs and pick profitable companies that have a bright future. I blame the popularity of ETFs for most of these outrageous valuations. When the Magnificent Seven do well they bring up the performance of an S&P 500 ETF, and when people buy that ETF the bring up the valuation of all the other junk that isn't performing well. If you just own the best industry leaders then who really cares what the share price is doing.

[@MauiPunter]

Timing the market is a fool's errand.

[@johngarceau541]

Will be watching for some roth conversion dips in 2025

[@jimbarron2596]

If you use after tax money to pay taxes on a Roth conversion then you’ve actually paid taxes twice - you paid taxes when the money was earned and then again for the conversion. If I pay the Roth conversion tax with pretax IRA funds then I’ve only paid tax once. Any thoughts Rob???

[@James-li7do]

Sounds reasonable when worded that way, but there's a subtle distinction. Tax was paid once on the after tax dollars when earned and once on the Roth dollars when converted. So tax is only paid once on different dollars. Using the after tax dollars to pay tax on Roth isn't paying tax twice on the same dollars. So it's a sourcing question of where best to pull money to pay tax on the Roth conversion and not a double taxation issue

[@JosephSWheeler]

Agree with @James-li7do. The other distinction, and Rob touched on it, is you are essentially moving the money from your checking account into a Roth account by paying taxes from checking rather than your pre-tax account, because you preserving pre-tax funds that would otherwise go to taxes.

[@mirchimome]

I lost over $80k when everything started to tank. Not because I was in an exchange that went belly up. I was just stupid to hold and because that's what everyone said. I'm still responsible. It just taught me to be a better investor now that I understand more of what could go wrong. It took me over two years of being in the market, I'm really grateful I found one source to recover my money, at least $10k profits weekly. Thanks Charlotte Miller.

[@DianaLinden-l6q]

I'm celebrating a $30k stock portfolio today. started this journey with 6k. I have invested on time and also with the right terms now I have time for my family and the life ahead of me

[@GertonTootle]

The very first time we tried, we invested $1000 and after a week, we received $7500. That really helped us a lot to pay up our bills.

[@brandonshaw71]

She is my family's personal broker and also a personal broker in many families I'm United States, she's a licensed broker and a FINRA AGENT in United states

[@mirchimome]

she's mostly on Instagrams, using the user name

[@mirchimome]

FXMILLER 9 💯.. that's it

[@glennpham2763]

Yea, I wouldn't wait for a market crash. They have a habit of rarely showing up.

[@DPTrainor1]

No Bucket Strategy is NOT complicated in practice. Always withdraw from Bucket #1. Rebalance every 2-3 years. Without timing the market. Dead Simple. Translate the bucket #2 time horizon (eg. 9 years) into a percentage figure, if that makes you feel better. Post that percentage on your refrigerator if you care. :)

[@RajReviewsDualSportPhotoGadget]

Good questions. Same that I had. 👍

[@zyaayz]

Thank you

[@goldstandardaviation1667]

I am. Good things come to those who wait.

[@freedomlife3623]

Specially when MM pays out almost 5% yield.

[@charlesfrench9557]

Is smart money selling and building up cash? Everyone talks about Buffett but what about others?

[@DowntownCharlieBrown-w5c]

I would say most of the smart money is already half out. They never liquidate all.Been tons of articles this year insiders selling.

[@MargaretWest-m8u]

More than a collapse in the stock or real estate markets, inflation has a direct impact on people's standard of living. It’s no surprise that current market sentiment is so negative. To navigate this economy, expert guidance is more crucial than ever. ETFs, stock markets, and the housing sector are all volatile. My $350k portfolio has taken a serious hit.

[@FrankJaaay]

However, there are still investors making solid returns during this period. You need to be well-informed or seek help from a professional.

[@Toni__Michelle]

In my view, investing was far simpler back in the '80s; today’s environment is much trickier. Those consistently profiting in the current market are usually professionals, which is why I've been working with an advisor for the last five years to build my portfolio in preparation for retirement.

[@HotManP-l5g]

How can I find a trusted financial planner like yours?

[@Toni__Michelle]

I consistently recommend Rebecca Lynne Buie as my top choice. She is well-known for her expertise in financial markets and has an impressive track record. I highly endorse her services.

[@michaeloconnor6683]

passive bid -- all that matters. flows