What to do if the Stock Market Crashes – Without Losing Money! *According to Statistics*

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One of the things I haven’t really covered yet in my videos is the risks of investing and how to recover from a market crash, especially now with stocks at their all time highs. But is it possible to time the market? And what’s the best time to invest? Well, according to statistics, doing THIS is what generates the highest profits. Thanks for watching! Feel free to add me on Snapchat/Instagram: GPStephan

Here’s the stock market timing game!
https://qz.com/487013/this-game-will-show-you-just-how-foolish-it-is-to-sell-stocks-right-now/

If you expose your money to any type of market, you expose your money to risk – it’s unavoidable. But markets are cyclical and there will be a time when the markets go down and you see some losses.. It’s totally normal. That lends the question – since the markets continuously hit all time highs, is it a good time to sell and then wait for a crash? Statistically, it’s shown that market timing rarely ever works – it’s impossible to know exactly when the market will crash and when to buy back in. Hypothetically if this is possible and you can do it consistently, great – but the chances of doing this consistently and accurately rarely ever happens, and it’s shown that time in the market yields higher average returns than timing the market.

Studies by Brad Barber and Terrance Odean find that individual investors experience reduced returns with their stock trading accounts, with increased active trading a key reason in lowering returns. Examining 66,465 US household trading accounts over the 1991 – 1996 period, Barber and Odean find that the average household account earned an annual return of 16.4% over the period, compared to the 17.9% market return. Those households which traded most earned an annual return of 11.4%.
http://faculty.haas.berkeley.edu/odean/papers%20current%20versions/behavior%20of%20individual%20investors.pdf

They’ve also determined less than 1% of households were able to reliably predict market cycles between 1992-2006.

I’m personally against market timing because no one truly knows when the next crash could be. If you pull out now, you could miss a few more years of gains. If you sell now and it crashes, how do you know when the bottom hits and when to buy back in? There have been numerous studies that show that the more you tinker with your investments, the higher the probability of achieving lower returns than if you had just stuck it out and held on to your investment.

Now speaking of risk and all-time highs in the market, what about a large upfront lump sum investment NOW, or slowly putting it in the market over time? Or waiting until the market is down, and then investing a lump sum?

Charles Shchwab ran the numbers from 1993-2012 for each investment strategy.
If you start with $2000 per year available at the beginning of each year, and bought at the YTD low every year, this resulted in $87,004.
If you just invest immediately as soon as you have it, you’d have $81,650.
If you invested $2000 equally every month over the course of the year, you’d have $79,510
If you had bad timing and bought at the YTD high, you’d have $72,487.
And if you had cash investments, you’d be left with $51,291.
http://www.schwab.com/public/schwab/nn/articles/Does-Market-Timing-Work

The study concludes that the most reliable investment method has always been to buy immediately, and hold. Do not try to time the markets.

So how do you deal with risks and the possibility of losing money? First, don’t invest money you will for sure need in the next 2-5 years. For all other investments, have a long term outlook – don’t be too short sighted to panic sell or try to time the market as soon as it’s down. Instead, you should see this as a long term 10-20 year play.

According to research conducted by Charles Schwab Company in 2012, between 1926 and 2011, a 20-year holding period never produced a negative result!!

For business/music inquiries, you can reach me at GrahamStephanBusiness@gmail.com

Suggested reading:
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
Your money or your life: https://goo.gl/fmlaJR
The Millionaire Real Estate Investor: https://goo.gl/sV9xtl
How to Win Friends and Influence People: https://goo.gl/1f3Meq
Think and grow rich: https://goo.gl/SSKlyu
Awaken the giant within: https://goo.gl/niIAEI
The Book on Rental Property Investing: https://goo.gl/qtJqFq

Comments

victor_tlm says:

Yesss I made a $10k ROI with your game ! If only that was the easy

DavidMarinoJr says:

That white speck tho

Cookies says:

Never trade with the idea that you know anything about the future. That's how you lose. That's why probability trading is king. You dont now anything leave it up to the math behind volatility cyclicality, managing winners, have a beta weighted portfolio with a delta of 0 so you don't care where the market goes… all this math comes the cost basis reduction from selling option premium. Holding the market and reducing cost basis on holding the market has always beat holding it passively based on historic data.

Brett Stanley says:

LOSING**>

Bryan Bobadilla says:

Risk is good

mikedohong says:

Man that game was hard and fun but in real life I wouldn't mess with it too much and listen to the experts, thanks Graham ✊??

Snake says:

Just attended a conference where this was demonstrated.

Jacob Burrell says:

So it looks like I should time the market according to the quiz. On my first try I got:

"You beat the market!
The $10,000 you invested turned into $14,229. If you hadn't made any trades you would have made $3,460 less—leaving an ending balance of $10,769. You took a risk and it worked out, but there's no guarantee you could do it again. Why don't you try?"

Sold By Agent Steven says:

Graham, I remember you stating in another video in order to purchase your first property(s), you stashed away a numerous amounts of cash. You became like a hermit in order to put away as much as possible. If we are loosing 1-3% yearly due to inflation by "keeping cash", what would the alternative be in speaking on banks to hold? Instead of investing in stocks etc, I'd like to stash away all my cash in the highest return possible but also really little to no risk while adding to it every so often. Would you recommend putting away cash in a money market or Discover bank I believe gives around $40 back for every $1,000 yearly. What would you suggest is worth doing if my goal with all my cash is to follow in your footsteps on buying rental properties etc? "Maybe when the market tanks", I would have my cash relatively available in order to make a purchase vs locking it away in a CD.

Thanks again man for all the great content!

FFHD says:

Is that an AP?

LibertarianTV says:

the game is very stupid since it doesn't let us take the time to think about the market's mooves and there is no ecomic data, news or other indicators to study

richard mark says:

Great video,and also want to use this media to say a very big thanks to Mr williams,May God bless the day i contacted you Mr WILLIAM DAVID, people weer saying good things about you, i decided to give you a trial and today i ended up with success by using your great strategy, Thank you sir, my fellow traders here is his contact, feel free and share your problems with him(williamsdevid1952 @ gmail . com)

Japa says:

I'm assuming you posted this video around this time due to from what I've been hearing that a crash is coming soon?

Matthew Kraig says:

Such a good video, thank you AGAIN for these, Graham!

Matthew Kraig says:

Keep Calm & Gray Ham ?

One Way Life says:

The thing that most people don't understand is the difference between Investing and Speculating. Trading in itself, doesn't matter if it's the stock market or real estate is always Speculating. Investing on the other hand is quite safe and should consists of never making a one time purchase, but building up your portfolio of whatever you are buying over a period of time. E.g. buy a stock every few weeks and hold it long term, so it doesn't matter if price goes short term (markets crashes) up or down. It's the easiest investment method anyone can do and leads statistically to more return then any hedge fund can produce.

Btw for people with not much cash, buying "real estate investment trusts" (REITS) is quite a good alternative to take part in real estate without all the hassle and statistically over time the return is near the same as renting out properties, around 7-15%.

Sean Krause says:

Shot at Snapchat, ouch. They were a huge bust though.

Taylor Theis says:

Great vid, would be interested to hear what you think about saving gold through companies like 31p1.

Kristiyan Stoychev says:

Hi Graham, this is an attempt of constructive feedback. You have made some money from real estate and watching your videos I can see that you know your stuff, and definitely would browse your channel for buying houses hints. Lately you've moved to talking about general investing, for which you are not an expert, easily seen because other people explain the concepts in a more clear manner. Honestly, your channel has turned into one of those channels "basics to investing". There are 1000 of those and only repeat each other..like everything you say has been said in previous channels. Please leave that to wealth managers. Peace

joshua Black says:

Please do the multi family rental video asap. Its a really good idea.

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