If The Stock Market Were to Crash in 12 Months Time

If the stock market were to crash in 12 months time and you had 10-20k to invest now - where would you put it?

I assume these low interest rates can't hold the market forever and when they rise the market will crash? Or vice versa

If so, where would you put the money now, so that you can cash in and buy up stocks when it does crash?

Comments

  • +10 votes

    gold

    • +1 vote

      Second this. In fact, in VIC, they are about to slug Gold Tax.

      https://www.australianmining.com.au/news/victorian-miners-to...

      • +6 votes

        Yes, but the trick is to NOT buy Gold Stocks rather actual gold mint. And have them in various sizes, so they can be used as barter when currency collapses, whilst you're defending your tent from Mad Max villains.

        •  

          I'll sell you a loaf of bread if you can snap $4 worth of gold from your gold bar?

          Gold has always been the go-to safe haven when paper money loses it's value, which it has, so I understand the thinking of the gold bugs and do have a little myself. Russia and China have been buying tons of it over the last few years as well. My problem with putting 'too much' into gold and other precious metals is they are not very fungible. If you own PM's you have to go to an exchange and get fiat and THEN you can buy what you want. Or sell it for fiat to somebody else. Unless you pre-negotiate with the seller of the goods you want to buy first? The other problem I see is that historically, when a country's currency goes down, PM's were the natural 'reset' as a country could accumulate enough PM's to back their currency with something of value. When the next big crash happens it will be global in nature(IMO)and I don't thin there is enough gold or PM's to cover the whole global economy so whatever moves in to back local fiat will 'probably' be something like crypto or some kind of 'energy' economy. Of course NOBODY really know what's coming next, how big it will be and what will emerge afterwards. All we can do is look at the current state of affairs and try to make a 'best guess' from there. It will be interesting though…..

        • +1 vote

          Gold is useful in a semi-catastrophic collapse of the global economy. It would still be pretty useless in a full on Mad Max scenario though because you can't eat or drink it.

  •  

    Which market? Property, stock, commodities, bonds, etc.?

  • +1 vote

    The cash rate doesn't particularly correlate to or prop up the stock market — how many people do you know margin lending?

    The biggest impact is housing, so short a big bank (the big short, if you will).

    • +1 vote

      This.

      Put warrants or put options on the big banks to maximize leverage……..but if you're wrong about the crash then kiss your capital goodbye.

    •  

      nvr mind :)

    •  

      Hi pais, its not so much margin lending per se but moms and dads moving their savings with increasing dismal interest rates into the ASX as a kneejerk to RBA rate cuts (otherwise what other assets would they invest their hardearned retirement savings aside from riskier property?). Just look at how high the ASX is trending now with ridiculous PE ratios which doesn't reflect the sluggish business sentiments on the ground, ie, a bubble is well and truly forming.

      I say the smart money is on moving money into emerging markets overseas before the ASX bubble bursts and the RBA cut rates and sends the AUD spiralling down further.

  •  

    Good original question OP.

    If interest rates rise, relative to other countries, AUD/xxx will rise. You likely know this.

    Stocks follow the dollar for ages sometimes, and go opposite other times. So whatever is trending is the only clue.

    If the stockmarkets around the world crashes, like GFC, people put their money into gold, thought of as a safe haven.

    You can short almost anything, but mostly will have to pay interest on margin lent. But if the currency you buy it in is above about 2.5%, you will receive interest everyday for effectively lending money in shorting. So while waiting for months years you can make a fair lot of $$ even if you close the trade even.
    The above is true but this crap is risky as, so you must know what you're doing thoroughly or you can lose everything(!!!).

    Finally, there are country properties for < $50,000, you could renovate and rent out. I mention this as if you lend from bank to buy, you pay such low interest at the mo it's a great longterm opportunity I think.

    Finally, finally, you could hedge stock indexes, which can make a little holding them, but that is complex to explain how you might have good odds in doing this.

    Best to just wait for a big SM dip then buy I think.

  • +1 vote

    BBOZ

    (Note: this is not financial advice.)

  • +1 vote

    If I knew for sure it would tank i'd buy BBOZ or BEAR.

  • +1 vote

    If you think the stock market were to crash in 12 months time, then you should only buy in 12 months time…

    The market (ASX) has already reacted to the low exchange rate which pushed a lot of stock price up and to be overvalued in the past 2 months. if you really want to buy, i'd recommend blue chips stock that pay good dividends. Otherwise buying other growth stocks now are riskier due to overvalued

  • +2 votes

    Stick it under your bed and buy up in 12 months.

  • +1 vote

    Tom waterhouse. com

    ask for odds for market crashing

  • +2 votes

    If you knew what was going to happen, you'd be super rich.

    but you don't, even if you want to time it, you can not. As the saying goes, its time in the market not timing the market that earns you the returns.

  •  

    Deposits etc are so low, take out tax and your not talking about big money, I would take the share market risk.

  •  

    I'd put the 20k in a high return bank account for a year, save every cent you can over the next year and invest in Brisbane real estate. Your property would be going great guns in 10 years time with a projected almost 400,000 population growth in the area by 2030. You'd be surprised how much you can actually save in just one year by giving up all non-necessities. Unfortunately though that does mean also abstaining from any ozbargain purchases.

  • +2 votes

    I assume these low interest rates can't hold the market forever

    you never know

    try japan

  • +1 vote

    US dollars.

  • +11 votes

    The entire apartment building is being demolished in 12 months time.

    Which floor should I buy?

  • +2 votes

    If the stock market crashed and you still had stocks whilst you did, keep the stocks in there as eventually the stocks would come back up as it is all a cycle…..considering you are investing in blue chip stocks, which you probably should unless you are a full time trader as penny stocks would crash and burn.

    $20k isn't the issue, the issue is how you think the stock market may crash, like worrying about getting hit by a bus. I would consider doing everything you can to monitor the market and have the necessary stop losses in place.

  • +2 votes

    Short stocks you think will do the worst.

    https://www.asx.com.au/data/shortsell.txt some most popular shorted stocks

  • +1 vote

    Which stock market? The ASX? If so, put your money in a world-excluding australia fun which isn't hedged to the AUD.
    But make sure you have enough cash to keep you a float in the event that you or your partner lose your job(s) during that downturn.

    Also, don't try to time the market.

  • +1 vote

    If you are CONVINCED the market is going to crash, get yourself exposed to a "short" investment of some description (per what others have mentioned above) and cash in on the way down.

    If you THINK the market MIGHT crash, drop your cash in the bank and buy in when you think it's bottomed.

  •  

    Unlikely scenario:
    If Iran attack England directly, and US can't retaliate or risk Russ, China and friends defense. We may have a big global slide. Unlikely but the 'allies' are just not as dominant as they used to be, but just as aggresive. I'll buy the popcorn to see UK fall and US cork it.

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