
Ask HN: Is now a good time to invest in ETFs? - r0f1
There was a huge drop in all major indices. Is now a good time to invest in exchange traded funds?
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bumpkinjunkie
I am careful about giving financial advice to someone asking about timing the
market. Things that might be helpful to ask first.

1\. What is it about ETFs that makes you ask the question? Do you know what an
ETF is, what it does, and what other financial products are out there that do
similar things and how much they cost (fees)?

2\. There are so many resources on the internet. I would say it's good to
understand concepts like: Dollar-cost averaging, portfolio diversification,
investment horizon, risk aversion. Most introductory investing resources would
cover these things.

3\. Think about what your short, medium, and long term cash and liquidity
needs are to help determine how much you need/want/can invest. Remember, you
can probably sell and get some money back, but it could be at a loss.

In summary, one could argue that it's always a "good" time to invest. The
questions I would ask are "in what", "how much", and "how long".

~~~
etrautmann
This is a perfectly written response, as opposed to an "it's impossible to
time the market" canned reply.

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ardit33
Nope, SP 500 is back to what it was in end or 2017 beginning of 2018

1\. Do you really think the economy is as good as it is in 2018?

2\. Do you think we are in the beginning, middle, or end of this outbreak?

3\. Will the virus come back after this summer? This is the big question, and
depending on this we either have just a deep but short recession, or an almost
depression

Answer those questions and you will know. My take:

1\. I believe we are at the start of a deep recession. The market have been
slow to respond/adjust (they haven't yet fully capitulated)

2\. I think NYC is in the middle of the outbreak, while the rest of the
country is in the beginning of the outbreak and they are just lagging by 2
weeks and things will get worse

3\. This is unknown, but most scientist believe it will return as soon as the
social distancing rules are eased. Best scenario is that when it returns, it
is in low enough numbers that it could be contained in a way Taiwan/South
Korea did (without shutting down the economy). The worst scenario is that it
returns back full force, but mutated and more deadly....

~~~
arriu
If things keep going at the rate they are right now, the market will need to
acknowledge that there is a massive pile of bodies by May 1st*

There are two more questions to ask, is this already priced into the current
market? And, will our social distancing be enough to change our current
trajectory?

*Source: [https://i.imgur.com/YznALHZ.png](https://i.imgur.com/YznALHZ.png)

~~~
alexpetralia
This looks fairly dire, but I do wonder to what extent it may be overfitting?
After all the model was created yesterday.

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bluedevil2k
No one can tell you the right answer to this question and anyone who claims
they can is just guessing. The market is supposed to reflect the expected
future values of the companies, so in theory all the news you know and some
you probably don’t is reflected in the price. Whether it has overshot or
undershot that news is unknown.

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anonu
In the US there are over 2300 ETFs covering major market countries, asset
classes, equity exposures, fixed income exposures, factors, thematics like
ESG, gaming, MAGA. There are also options-embedded strategies and 2x, 3x and
-1x, -2x, and -3x leveraged funds on almost every US sector and major index.

If you have money to invest in for the long run - now is as good a time as any
to start building your nest egg.

If you are trying to "time" the markets, it turns out nobody has a crystal
ball and nobody can tell you with any degree of certainty that the markets are
going to go up or down tomorrow or next month.

If you are considering "betting on America" I would be all in favor. A 130+
year graph of the Dow Jones is generally trending from the bottom-left to the
top-right of the chart.

Another thought on timing: many people believed the markets were way-
overvalued before this drop. Makes sense... we've been in one of the longest
bull runs ever. Now we have a pandemic on our hands - which many people liken
to an event like a war where there is complete uncertainty about the future.
Jobless claims jumped within a 2 week period to 3+ million - many people
thought that would take 4 weeks or more. We're heading to 20 or 30%
unemployment in America. We also have one of the largest stimulus packages
($2tr+) about to rain down on us in the form of never before seen monetary
stimulus AND helicopter money. We just dont know whats going to happen here.
Cheap rates for the last decade has fueled over $7tr in corporate debt. Now
companies cash flows have ground to a halt. If we start seeing a growing
domino effect of bankruptcies, you can expect this market to drop another 30%.
Its a bit of a doomsday scenario - but then again, nobody thought we would be
HERE 4 weeks ago - and we are.

Yes, stocks do look cheap - but dont catch a falling knife.

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robjan
If you use Dollar Cost Averaging[1] there is no such thing as a good or bad
time to buy ETFs. As long as the market goes up on average, which is has done
throughout history, then you will win over a sufficiently long horizon. A
popular phrase is "It's not about timing the market, but time in the market".

Make sure you research your ETFs and what they are tracking e.g most of the
Vanguard ETFs (e.g. VOO, VTI, BND) are quite reliable but if you are investing
(and not day trading) avoid leveraged and inverse/short ETFs such as SPXU and
TQQQ. They may seem attractive now but they are based on derivative products
so their pricing is subject to a number of factors.

[1]:
[https://en.wikipedia.org/wiki/Dollar_cost_averaging](https://en.wikipedia.org/wiki/Dollar_cost_averaging)

~~~
xnx
Dollar cost averaging seems to be more of a psychological strategy than a
financial one:
[https://en.wikipedia.org/wiki/Dollar_cost_averaging#Criticis...](https://en.wikipedia.org/wiki/Dollar_cost_averaging#Criticism)

~~~
throw0101a
Putting away a little every month generally gives the best results as the main
alternative is 'buying the dip', and good luck with that:

* [https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co...](https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averaging/)

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astura
Whenever you have the money to invest is the best time to invest in ETFs.
(assuming passive index funds with a long term horizon and you understand your
risk tolerance)

Timing the market for the "best price" is almost impossible.

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treyfitty
Note: I don’t agree to what I’m about to say, I’m just providing an
alternative view.

There’s a hypothesis that there’s a “passive investment” bubble. By some
estimates, about 20% of the market is fueled by passive investment strategies
and at a certain point, it divorces asset pricing to true fundamentals. I
don’t know the transmission of this, but it makes sense- just like investors
flock to the wrong ZOOM stock to inflate the price of a wrong stock, too many
people passively buying ETFs has the downstream effect of people buying too
many shares of something that isn’t valued properly.

[https://fortune.com/2019/09/14/passive-investing-stock-
marke...](https://fortune.com/2019/09/14/passive-investing-stock-market-
bubble-etfs/)

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raincom
To keep the market going up, the market needs more buyers than sellers in
terms of aggregate dollars. Bogleheads and DCA 'evangelicals' are not going to
liquidate their equities; so, they are happy to preach truisms like "you can't
time the bottom", "time in the market is better than timing the market", etc.

Market is driven by 30% fundamentals, 70% herd psychology(technicals try to
capture some of this). Keep that in mind when you evaluate answers here.

Longs want you to join the market to make their assets safer. Shorts and those
who are on the sidelines, want to time the market by half a standard
deviation; so, they want you on their side in order to break the price support
of any ETFs/indices, etc.

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throw0101a
Every month is a good time to invest in index funds:

* [https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co...](https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averaging/)

Generally if you try to get out to miss the worst days, you generally end up
missing the best days as well:

* [https://theirrelevantinvestor.com/2019/02/08/miss-the-worst-...](https://theirrelevantinvestor.com/2019/02/08/miss-the-worst-days-miss-the-best-days/)

Even if ended up investing at the top of the market, i.e. just before a major
crash, you generally still end up in an okay position as long as you do not
panic and liquidate your position:

* [https://awealthofcommonsense.com/2014/02/worlds-worst-market...](https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/)

So: each month put in whatever you can afford ($100, $1000, whatever) into an
index fund (Russell 3000) and bonds depending on your risk tolerance and
forget about it. If you have access to a 'target date fund' that'd be good
too.

The above three weblogs are good if you're into personal investing.

Also: for equities, probably best to go with a total market things that track
something like the Russell 3000:

* [https://www.pwlcapital.com/should-you-invest-in-the-sp-500-i...](https://www.pwlcapital.com/should-you-invest-in-the-sp-500-index/)

* [https://www.marketwatch.com/story/vanguard-thinks-its-own-em...](https://www.marketwatch.com/story/vanguard-thinks-its-own-employees-should-own-this-fund-not-the-sp-500-theyre-right-2018-06-08)

Also, assuming you're American, having some international exposure to avoid
_home country bias_ wouldn't be a bad thing:

* [https://www.etf.com/sections/index-investor-corner/swedroe-h...](https://www.etf.com/sections/index-investor-corner/swedroe-home-country-bias-ubiquitous)

* [https://www.vanguard.com/pdf/ISGGEB.pdf](https://www.vanguard.com/pdf/ISGGEB.pdf)

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freetime2
I would say if you're interested in getting into passive investing it also
makes sense to get into dollar cost averaging, or in other words invest a
fixed amount of money into the stock market at regular intervals.

Passive ETF investing is like saying "I don't have an opinion as to which
company will perform the best, so I am going to invest in all of them and be
content with getting the average return of some index". Dollar cost averaging
is like saying "I don't know if the market is overvalued or undervalued right
now, so I am going to spread my investments out over time and be content with
getting the average returns of the market over the next X number of years
(where X would ideally be something like 20 to 30 years)."

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agilebyte
And then what? When you invest money, you have to have a purpose. "Making
money" is not specific enough. When do you need the money by? For example, if
you'd like to invest for retirement, and this assumes you'd make periodic
deposits to your account, then it does not matter if you invest today or in a
month since you wouldn't sell for (presumably) decades.

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yellow_postit
Which ETF? There are more ETFs than individual stocks [1]. Rather than time
the market you are better off, in most cases for most people, just regularly
buying broad indexes and periodically rebalancing, see [2]

[1] [https://ssrn.com/abstract=3465888](https://ssrn.com/abstract=3465888) [2]
[https://www.bogleheads.org/wiki/Bogleheads®_investment_philo...](https://www.bogleheads.org/wiki/Bogleheads®_investment_philosophy)

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kojeovo
Better than the past ~6mo. I invest a % of my pay no matter the price.

No real answer to this though. You can get ETFs that go against major indices,
you can get ones that track it, or many other types.

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blendo
ETFs often have relatively low management fees. If your current fees are high,
by all means reallocate!

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ericmcer
Dollar cost averaging is the right answer.

If you want to attempt to be smart (it rarely pays to try and time the market)
I would wait a couple more weeks, end of April is probably when the market
will most likely reflect the reality of what our economic outlook is. Trump &
the Fed have been doing a good job propping the market up with confident words
and cash injections for the last weeks. Again trying to time the market is
usually a fools mission.

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xwdv
Here’s the straight answer, from someone who has made _real_ money investing
for the past 15 years: Yes.

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m0llusk
No! Are you kidding? What is even in there? Also no.

