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I hope this question isn't too opinion based, even if I'm afraid it might be.

Looking at historical data, one could argue that a market Crash in 2018/2019 might probably happen. Obviously no one can answer how high the chances are. I'm pretty new to the stock market, so my question is:

Is it likely that the market will crash soon? Sure, the market would recover over a time period of 6-7 years if we look at the past. But what's more advisable, invest now or wait for a crash? If we look at DAX, S&P500 and NASDAQ-100 right now, it looks like a good time to invest money right now (assuming there will be no crash).

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    Comment not an answer because of no supporting references. . The basic principle of managed stock accounts is buy low sell high. If you believe a crash is imminent, it is wise to wait for the market to bottom out. – pojo-guy Apr 28 '18 at 13:57
  • @pojo-guy Thanks for your comment. I understood this, and looking at the past I think it's likely we will see a Crash. But I am quite new to stock market and my question is if it's "common Knowledge" that a Crash will happen within the next few years? – Zure Apr 28 '18 at 13:59
  • A crash is a sudden steep double-digit percent loss in the market over a period of several days. It cannot be predicted. OTOH, a bear markets involves declining stock price over months to years which you can react to. The two may be concomitant or not. Combining your two thoughts, if you think that it's currently a good time to invest but you fear a crash/correction then utilize more risk averse strategies, ceding some of the reward to reduce risk. – Bob Baerker Apr 28 '18 at 17:24
  • It is utterly impossible to predict what is going to happen to stocks. These questions are just like UFO questions on the Astronomy SE site. – Fattie Apr 29 '18 at 6:53
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No, you shouldn't wait for a crash. What if the crash doesn't come? What if the stocks you're interested in aren't specifically affected by a crash? What if what's considered a crash by others doesn't meet your criteria and you miss out? If it was that simple a concept, why doesn't everyone wait for a crash and then buy? How is your money being invested and making you money while you wait for this crash that may or may not happen? What if you think the market has crashed, but it actually hasn't and you regret not waiting longer?

There are resources out there (use your favorite search engine) that say there is a crash (or rather, a correction) coming "soon". There are also resources out there that say there isn't. Trying to anticipate market swings is like gambling. You might hit big, or you might lose big.

Investing is about the long run and spreading out risks so that in downturns, you don't take too much of a hit, and in upturns you make a reasonable profit. If you're trying to "play the game" and target specific company stocks, you're in for a bumpy ride as a self-admitted newcomer. If you're going to target specific stocks, then you should be worried about their market hold and performances rather than the global market as a whole.

Hindsight is a torturous thing for anyone trying to beat the markets. Make investing decisions that you're happy with now. Maybe that decision is to wait a bit longer before entering, or maybe that decision is to get in with what you view is a good entry point now, knowing that you might hit a dip in 18 months. If you've invested correctly, those dips will be short-term and you'll be back up and running on the other side.

I also recommend taking a look at the current top answer here, regarding not buying during an "all time high": https://money.stackexchange.com/a/24404/30798

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    Thank you, especially the linked answer is very helpful as well! – Zure Apr 28 '18 at 15:00
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Truth is that historical data performance is not an indicator of future performance. That said, the answer to your question depends on a number of factors, such as what are you seeking to invest in. Is it actively managed funds, hand-picked stocks or index funds? Do you expect a long-term return of your investment or are you after short-term, high-risk gains etc.?

For example, if you think that a market crash is imminent, it does not make sense to invest in equity only (and as a popular opinion, it does not make sense to do that generally, as your portfolio needs to be diversified to reduce the risk).

If you are thinking about a mixture of equity and bonds or bonds only, that's a safer bet in case the market crashes. This doesn't mean that you won't lose any money this way in the short term, but it means that there is reduced chance for your investment to take longer to recover. My answer is vague because I cannot talk based on facts, only what is a good general practice.

What makes most investors lose money in a market crash is panic. People that do not expect this are afraid the market is not going to recover ever again and thus prefer to withdraw their investment and make a moderate loss, than keep investing with the hope that it will recover, as experts suggest. So far, it has always recovered.

This monevator article is a good read that might provide a better answer than I have.

  • Everyone long the market loses in a bear market or a crash (the two are different). Panic causes one to cash out and realize the loss rather than bearing the pain and hanging in there for a recovery. The difference is realized versus unrealized LOSS. – Bob Baerker Apr 28 '18 at 17:14
  • I thought about investing into dax, s&p500 and nasdaq to diversify. Is that a good form of diversifying my Money? – Zure Apr 28 '18 at 17:15
  • As a comparison, the QQQ outperforms SPY but are they really diversified? Their correlation is over 95% and that won't insulate you from losses. – Bob Baerker Apr 28 '18 at 17:45
  • I would add in some government bonds to diversify. Also, combos of domestic/international and developed/developing regions is always good. @BobBaerker I don't quite agree with that, it depends on the timing. If you can afford to wait longer to sell, you could recover and have profit. – DimP Apr 28 '18 at 18:22
  • You don't agree with what? Isn't it kind of obvious that if a stock/ETF/index is recovering that if you hold on long enough that "you could recover and have profit" ? Or are you disputing that diversification doesn't save you from a severe bear market? – Bob Baerker Apr 28 '18 at 18:45

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