What would you do if Crystal Ball showed long term market drop of 30% next week

[bobandsherry]

Curious... what would you do with your investment portfolio if you had a crystal ball and could see a long term (2+ years) drop in the market of 30% in the next week? What would be your flight to safety? Gold? Bitcoin? CD's? Cash? Specific stocks that fair well in market downturn? Do you already have a plan in mind or just fly by seat of your pants?

 

[travelover]

I have an asset allocation and I stick with it. Worked in the last crash and I expect it to work in the next one.

 

[REWahoo]

I'd market the services of my crystal ball to the masses and make a bundle as a market guru.

 

[RobbieB]

I'd start shorting stocks and covering then buy them back in 2 years -

 

[MRG]

I'd market the services of my crystal ball to the masses and make a bundle as a market guru.

+1

Otherwise I'd buy puts or inverse ETFs.

 

[6miths]

I'd probably realize that what I could see in my crystal ball was no better than any other predictor of where the market was going, try to ease up on the recreational drugs (if I were prone to using any) and stay the course.

 

[W2R]

I'd market the services of my crystal ball to the masses and make a bundle as a market guru.

+1 But I wouldn't market to the masses.

I wouldn't give away the information I obtained from that crystal ball, for free or for any price the masses could afford. I would absolutely NEVER write a clickbait column about market doom'n'gloom.

Instead, I would keep my mouth shut except to discreetly market my info for astronomically high prices to those with massive wealth. Zuckerberg and Gates would be on their knees before me, begging piteously for my information.

"No, Mark! No, Bill! You peons KNOW that will cost you another $10 billion, so pay up!"


*****************************


As for what I would do with my portfolio to protect it from the predicted market drop, I'd do absolutely nothing other than rebalance as needed. I have it in very broad mutual funds, 45:55.

 

[wmc1000]

If indeed I had a true crystal ball I would go to all cash and then rebuy to accumulate the extra shares thus increasing my dividends. Without the crystal ball, I, as most on this forum would do is stay the course.

 

[Nemo2]

If I had an operational crystal ball I would have already won the last 50 major lotteries....

 

[flyingaway]

How much is that crystal ball?

 

[tmm99]

The premise is too outrageous for me to entertain.

 

[GravitySucks]

Since I have no crystal ball I'm more concerned with what I'm going to do when the inevitable 30% drop actually hits. We haven't had a hard smack down since I retired. It was easy to keep buying while I was working, wonder if it will be with no new income coming in.
The plan is to hang tough and rebalance buying shares.

 

[bobandsherry]

Sorry, but the crystal ball was a one time use, only focused on just the market outlook. So you can't win lottos or other prizes with it in the past or future. And let's just say you can't share info with others.

Sure at face value its just silly, but what if it was just your read on the market instead? What if there was 50/50 chance of that being right? Would you really just stay the course with that knowledgeable?

Its Sunday, a bit of levity before the kickoffs. Enjoy the day.

 

[OldShooter]

... I wouldn't give away the information I obtained from that crystal ball, for free or for any price the masses could afford. ...

Exactly. The corollary here is that anyone who actually can predict the market is on a tropical island somewhere drinking from a glass garnished with an orchid. He/she is not writing a newsletter or working for a money managment company.What we get (if we are dumb enough to pay attention) is a bunch of chattering monkeys, each of whom hopes to get lucky and, for that, be lauded as a genius.

 

[Gotadimple]

Nothing - no changes to asset allocation or to investments. Wait for it to happen, then rebalance. Then wait for W2R to yell "W...."

Rebalance again.

- Rita

 

[gauss]

Would the crystal ball tell of later increases in the market?

If its only capability is to predict drops in the market then I would have to ignore it.

Knowing when the market will increase in value is just as important.

-gauss

 

[Gotadimple]

Knowing when the market will increase in value is just as important.

-gauss

This part is easy. Just wait for W2R. Speaking of which she could probably earn more for her favorite charities by selling the date/time when she will speak the "W..." phrase.

 

[calmloki]

Curious... what would you do with your investment portfolio if you had a crystal ball and could see a long term (2+ years) drop in the market of 30% in the next week? What would be your flight to safety? Gold? Bitcoin? CD's? Cash? Specific stocks that fair well in market downturn? Do you already have a plan in mind or just fly by seat of your pants?

Guess I'm just dense, but this seems like a worthwhile thing to ponder. We are up a fair bit in the market and I can easily imagine a 30% drop. If we sell now we pay 15% taxes to the feds and a chunk to the state. Then we have say 80% of our profit left and we... do what with it? Nobody with a better answer than leave the money in the market and wait for a rally (inevitable saith the faithful)?

We had a good sized loan pay off last week and the money is sitting in the bank losing ground at 1.15%. I'm trying to figure out what to do with it - do we hold and wait for a big stock crash and buy in then? Wait for another real estate crash to go shopping? Buy more stocks at an all time high? I persist in not understanding crypto-currrencies, we have a dab of gold and I don't think it's where we want to stash a pile.

 

[REWahoo]

Sorry, but the crystal ball was a one time use, only focused on just the market outlook.

Maybe yours has that limitation, but mine doesn't.

 

[RonBoyd]

We had a good sized loan pay off last week and the money is sitting in the bank losing ground at 1.15%. I'm trying to figure out what to do with it - do we hold and wait for a big stock crash and buy in then? Wait for another real estate crash to go shopping? Buy more stocks at an all time high? I persist in not understanding crypto-currrencies, we have a dab of gold and I don't think it's where we want to stash a pile.

I have the same situation. For several months, I have been unable to make a move... I am the world's greatest procrastinator.

 

[bobandsherry]

Guess I'm just dense, but this seems like a worthwhile thing to ponder. We are up a fair bit in the market and I can easily imagine a 30% drop. If we sell now we pay 15% taxes to the feds and a chunk to the state. Then we have say 80% of our profit left and we... do what with it? Nobody with a better answer than leave the money in the market and wait for a rally (inevitable saith the faithful)?

Truth be told, my question stemmed from discussion I was having with a few friends of mine last night. In general the discussion was "experts" calling for market correction and what would people do in response (basically once it happens it's in theory too late so might as well just ride it out). But then it turned to if you knew in advance that market correction was coming what would you do. In summary, even with advanced knowledge there's no a lot someone can do as you don't know why the market is correcting, national, international, political, economic, etc. So anything you do could be step in wrong direction. So if one has advance knowledge and can't come up with a good plan with advance knowledge, then reacting to the experts on their advice that the market is going to correct is really just an effort in frustration too.

In the end people thought holding cash was silly, putting money into CD still not worthwhile as rates would remain under pressure. Seemed people though getting into gold was good as most likely a drop would be from something stupid going on in the political world and gold is safe. But one guy held onto Bitcoin as where he'd dump his investments, uncertainty in the world would continue to drive up Bitcoin.

The discussion last night was influenced by beers and cocktails, just curious what people not under the influence would think. Again, silly premise, but no sillier than what the experts keep spewing forth every day as they talk about "markets hitting new highs and ready for correction soon".

Enjoy the day.

 

[lwp2017]

I already made my crystal ball moves in July. Changed asset allocation from 80/20 to 45/55.

Sure I missed some big gains last three months.
But I am very satisfied that I locked in some significant profits.

 

[RenoJay]

I already made my crystal ball moves in July. Changed asset allocation from 80/20 to 45/55.

Sure I missed some big gains last three months.
But I am very satisfied that I locked in some significant profits.

My crystal balls says you’ll look like a genius in a few years for a well-timed move. I’ve gone from pretty much same AA to same AA as you, but over a period of years, not all at once.

 

[BreathFree]

Pinky: Gee, Brain. What are we going to do tonight?

The Brain: The same thing we do every night, Pinky. Try to take over the world.

 

[truenorth418]

I would go into my portfolio tracking spreadsheet to see if this would trip a rebalancing band if so what purchases I would need to make to rebalance.

You said what would we do if we knew the market was going to go down 30%. You did not indicate how quickly it would recover.