Friday Finance: great horoscopes for men lollzzl


This is from a few weeks ago. The ASX is the Australian stock market, but it makes no difference:


Hopefully by now you know what’s wrong with this. Have a gander and predict what I’m going to say:

When the Australian stock market falls, investors often dive right in. The strategy, known as “buying the dip”, is based on the premise that buying when prices are low means reaping rewards when they inevitably surge again.

But experts say now is not the time.

“I would think that people were buying the dip right now is very premature. I would say you’re very premature if you went in and spent a lot of money buying – thinking you’re buying the dip at this stage.” ( . . . )

Mr Hull said there is “no reason for the market to bounce back right now” because there’s “more bad news heading our way” . . .

” . . .  I am not changing my view that investors should continue to play defence.” ( . . . )

The comments follow warnings we are headed towards a crippling 1970s-style “stagflation”.

It goes on like that.

All together now

You should should be singing this with me like a chorus, even if you disagree, because you’ve heard it so many times before:

  1. The market goes up and down, but it goes up more often than it goes down.
  2. Unless we know it’s about to go down, we may as well invest now (so long as it’s for the long term).
  3. We don’t know if it’s about to go down.
  4. Therefore, mathematically speaking, the best time to invest is as soon as you have the money to do so, i.e. now.

So long as your ducks are in a row – you have debt under control, have saved an emergency fund, etc. – then there’s no good reason to put off investing.

This is not precisely an argument for ‘buying the dip’. That would involve having stayed out of the market for some waiting for a dip. For the reasons stated above, that generally doesn’t make sense.

However, if you did that anyway and you’re wondering when to invest, what’s wrong with now? The market’s down. You were waiting for it to go down. You got lucky.

Sure, it might go down further and you may miss the exact bottom, but how much luck do you want? You already pulled off a mathematically unlikely stunt. Take the W, mate.

A further drop

Yes, as the article screams, things might get worse!

That’s always true.

On any day of any year, there’s a chance the market will crash. It’s largely random so the guys moaning about it for a paycheck could have equally done so in 2014 (and plenty did).

As for ‘more bad news coming our way’, if there are already inklings of bad news on the horizon like increased interest rates, there’s a good chance that’s already priced in. That is, investors already think the news is coming so the market drops accordingly. Sometimes an interest rate hike is announced and the market rebounds because investors were expecting it to be more severe.

We can’t know for sure whether anticipated bad news has already been priced in until it is officially announced. At the moment, though, there’s enough doom and gloom to make me suspect that everyone’s already expecting misery.

This means there’s strong upside potential. If inflation eases, the Ukraine war ends, China returns to sanity or some other unexpected good thing happens, markets may suddenly improve.

It can’t rain all the time.

Play defence?

The right time to be ‘playing defence’ is all the time, but in the right way.

You should have a balance of cash, bonds and stocks that meets your needs and risk profile. This will be different for everyone.

However, it will not vary according to the business cycle, only according to your own circumstances.

If you are nearing retirement and have decided that 30% bonds is right for you, there’s nothing about current market events that ought to change that calculation.

If you’re young and are 100% invested in stocks, again nothing has changed to alter this strategy.

Stick to your own plan. It was supposed to make sense regardless of market conditions. If it doesn’t, you were doing it wrong.

‘Crippling stagflation’?

No one knows what will happen next.

This time around, central banks have the benefit of hindsight. They remember what happened in the 1970s and how it was fixed.

At that time, inflation had been allowed to run wild for years, setting up a self-fulfilling cycle that was hard to break.

This time they started reacting much more quickly (though still not quickly enough) and seem willing to do the necessary.

We might get stagflation, or things might improve from now on, or we might get some new thing that no one expects.

There’s not much you can do about it anyway, presuming you’re already well diversified, so you might as well not worry about it.

Why does the media do it?

Pundits are always carrying on about what the stock market’s going to do next.

This is horoscopes for men.

On average, stock market pundits do slightly worse than a coin toss. A lot has already been written about this.

Those people spreading greed or panic in the financial pages and on TV are entertainers, nothing more. The article quoted above is designed to get you to click and see ads.

A sensible headline would say something like, “Market’s future direction unclear; experts suggest investing steadily as usual.” But who would click on that?

Not me. I prefer stupid articles that I can snark at.


The best time to make a long-term investment in an index fund is when you have the money to do so. Slice it and dice it however you want, grim mathematics always brings us back to this principle.

If the market drops again, so what? You already got a lovely discount from where it was at the start of the year.

The market dropping further would not prove me wrong. The future is unknown so we can only play the odds, and the best bet is always to invest immediately then hold for as long as possible.

If you are investing for a time period greater than a decade, it doesn’t matter what happens tomorrow.

In fact, so long as you’re still in the accumulation phase, further market carnage is good news for you. The money you invested earlier will go down (on paper) but shares will also be cheaper for you to keep buying as you save your income.

Stock market crashes are a young man’s chance to get ahead.

  • This article provides general information. It does not take into account your personal circumstances and is not intended to influence readers’ financial decisions. Get your own, professional advice.


  1. Kentucky Gent · August 12

    “Not me. I prefer stupid articles that I can snark at.”

    Heh. Then, for you, we are living in a Golden Age. Anyone who trusts the media at this point is probably a hopeless case.

    Liked by 2 people

  2. Allen · August 19

    I always buy on dips. Why not? If you are going to invest for the long term, in say an index, buying at a relative low point makes absolute sense. You have to choose some sort of time frame say quarterly so why not time it a little more advantageously. I’m not sure how these people invest their own money but I’d ask them that question rather pointedly.

    Liked by 1 person

  3. Allen · August 20

    Your point is well taken. I wasn’t entirely clear, I don’t mean waiting for dips, but rather moving earlier than scheduled or perhaps with some more, if available, on relative dips.

    Liked by 1 person

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