The STRIDE Blog

Value Investors, Don't Bat an Eye for Market Crash Predictions

stride-no-need-for-value-investors-to-bat-an-eye-over-market-crash-predictions-socialThe media has lately been flooded with news of analysts predicting a stock market crash.

This comes as no surprise since stories of a bear market and a possible market crash has been coming along since early 2014. The overall concern is that the market has been doing extremely well for too long.

The Phenomenal Bull Run

This year will be the sixth consecutive year that we have been experiencing a booming market. Since March 2009, stocks have more than tripled in share price. In 2014, the S&P 500 hit record highs on 53 occasions. It is the most all-time highs in a single year since 1995. The index made it through the year without once suffering three consecutive daily declines. Last year was a great year for the stock market and it might not be the end of the Bull Run, against popular belief.

The bull market of 1987 is the longest uninterrupted bull market in history, running for thirteen years until the year 2000. It is more than twice as long as the current bull market. At the time, similar stock market crash predictions were made, but the predictions were wrong as stocks advanced by 582 percent during that time, almost three times more than the current bull market. In comparison, the current Bull Run might still be far from over.

Always Be Prepared For the Worst

The stock market is unpredictable. As a 3D Value Investor I never base my investment decisions on predictions nor speculations. I have a bullish attitude towards the market, but still keep an open mind.

It is inevitable that the market will crash at some stage. I don't believe it will happen soon and can guarantee you, I will be prepared when the day comes.

The market can’t grow forever. At some stage it will have to come down. When that time arrives I won’t be losing any sleep over it. Even if it happens that it crashes tomorrow, we need not worry says the Oracle of Omaha.

Stocks Perform Well Over the Long Term

Warren Buffett once said: "Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497."

I stand by his statement that the market news will be good over the long term. In 2014, despite the the Ebola epidemic, the stock market flourished and I am sure it will survive the current oil shock too. 

How To Withstand a Market Crash

If you are a value investor with a long-term horizon, your portfolio will be able to withstand a market crash. You create a buffer against market volatility, a dip, correction or a crash, by doing the following:

  1. Picking great value stocks at the right time
  2. Allocating your assets correctly
  3. Efficiently managing your portfolio

Also see The Best Way to Survive a Market Correction.

In the event of a crash your portfolio will be down with the market but it won’t bottom out on you.

If you take a look at STRIDE, it is based on the principles of 3D Value Investing that combines three dimensions: fundamental analysis, timing and sound valuation to target the best value investments.

By combining the three dimensions, STRIDE’s asset allocation model and its Long-term Profit (LTP) equation, independent investors have managed to achieve consistent market-beating returns which would have been able to withstand the crash of 2009.

Over 14 years, STRIDE generated 19.25% returns per year, every year. A backtester showcasing STRIDE’s performance versus the S&P 500 is available on the Why It Works page. On the graph you will be able to clearly compare STRIDE’s performance in different geographies or globally against the performance of the S&P 500 index from the year 2000 to 2009.

In Conclusion

No one can predict the future of the market, but you can prepare for it by becoming a 3D Value Investor. There is more than enough proof that sound long-term investments can withstand immense market pressures. Adapt a long-term horizon and become a market-beating value investor that never has to break a sweat over market crash speculations.

Want to become a 3D Value Investor? We are offering a free 14 day trial of our intelligent stock picking and portfolio management platform. Click here to start your value investing journey now!

Topics: 3D Value Investing, Buffettology

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