[deanmoriarty]

Why, exactly?

If you have a healthy emergency fund in cash to cover your liabilities for 6 months (or even 1 year to be more conservative in this environment), what is the problem in throwing every bit of cash that comes your way (paycheck savings, ...) and you won't need for a few years, at the stock market as it goes down? Over decades the stock market has had an IRR or 8%+, and that IRR includes crashes like these.

[gbrits]

“and that IRR includes crashes like these.”

No it doesn’t.

[deanmoriarty]

Could you please substantiate your claims?

This is what I mean and what I do, by always allocating the same amount of savings per year, in good or bad times [1]. You can see how in 2008 such portfolio had a drawdown of more than -50%. Despite that, it performed well above the 8% IRR I mentioned.

Another interesting data point, by investing lump sums of money at the very peak of every market cycle, immediately followed by a massive crash [2]. I believe the IRR in this case is still above 7%, which is absolutely phenomenal considering the horrible investing timing.

If you don't agree, please tell me exactly why I am wrong and why you are right, so I might learn something. I come to HN to read HN-quality comments, not Reddit-quality content. Thank you.

[1] https://www.portfoliovisualizer.com/backtest-asset-class-all...

[2] https://awealthofcommonsense.com/2014/02/worlds-worst-market...

[tarsinge]

The past is not a predictor of the future, 2008 is a single point hardly representative of any economic crisis to come. A lump sum invested in 1929 would have taken decade to recover, and with the Nikkei it still wouldn’t have. These models based on 1 or 2 selected crisis as if we had seen all always amaze me.

[deanmoriarty]

it’s obvious that past performance is not a predictor for the future. Yet, I could have said your same exact words in 2000 and 2008: “this time is different, let me go out of the market!”.

I don’t know any other investment which is completely passive that will statistically allow me to grow my capital over the long term. So yes, I will rely on 100 years of data I have, and to prevent Nikkei I try to diversify using a healthy international allocation. If you have a different investing vehicle to suggest, please let me know.

[ScottFree]

> If you have a different investing vehicle to suggest, please let me know.

Land, seeds, livestock and ammo. If you're worried that the market might collapse so hard that it won't recover in your lifetime, then trading money for lasting goods while money still has value is the best course of action.

Personally, I'm not convinced it's going to get that bad, but I have friends who have gone down that route. They all prefer their new lives to their old ones.