2021 Stock Market Crash looming?

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Hi, in your opinion…. does your outlook of the current markets while taking into account the potential for complete lockdowns despite vaccine distribution could lead to a significant correction or market crash in the coming weeks or months? Looking for some guidance on whether to vacate my positions now or maintain and hold for the medium to long term. Thanks.

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Asked on December 13, 2020 4:35 pm
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Hi there,

Unfortunately, we don't have a crystal ball. That is why we are fans of having a well-diversified portfolio by spreading out our positions. It is also why, we like to hold gold - as a hedge against potential uncertainty. It is near impossible to predict the next market crash, and typically it comes when no one is looking.

Is it possible? Absolutely. However, the markets are still hitting all-time highs and are showing no sings of letting up. It can run by another 30% before it crashes (or corrects) and in that scenario, you would still be ahead by buying at today's prices. Corrections (drops of 10% or more) are a normal part of investing. Market Crashes also happen - but less frequently. All the research points to staying invested. Anyone who has been sitting on cash over the past six months has missed an incredible run-up.

Going back to research, timing the market is near impossible and most often doesn't end up working out. Interestingly, most of the gains happen in very short period of times - you miss being invested in those times, you likely underperform. Even if we foresee a market crash - we'd stay invested and simply top up our positions. If there was a way to know when the market would crash and subsequently when it would rebound, everyone would be rich.

Mat

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Posted by Mathieu Litalien
Answered on December 13, 2020 4:52 pm