ISAs, Index funds & crystal ball

I am in the UK.

This is a question about my money in a stocks & shares ISA.

The money is in index funds.

My crystal ball tells me that the stock markets (UK & USA) are going to take a long dive. For how long, the ball has a foggy, frosty appearance.

Is it acceptable - I mean, can I? - sell the funds and keep it as cash in the same stocks & shares ISA, with a view to buying back the funds when my crystal ball shows me the sparkling clear future ahead?

Any problems with this?

(And no, the crystal ball is mine, mine alone, even if it sometime comes up with weird results such as Tranmere Rovers will beat Manchester United before the next blue moon).

Thank you from a newbie.

Yes you can hold cash, but you are basically trying to predict the market, badly.

Google for articles on timing the market, and different strategies. They all mostly point out that unless you are Houdini, time in the market and or regular investing counts.

If you believe in your own prediction, why dont you back it up by looking at some Inverse ETFs, and take advantage of the fall your crystal ball is showing you?

My crystal ball tells me that the UK stock markets are undervalued and due a correction - hence why there has never before been so much foreign firms taking over UK assets. But then people have been saying similar for years, but I think a lot of the negativity is priced in, and a lot of US assets are ‘forward priced’, as in they are capturing in future expected gains.

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Markets don’t crash because they should. Sometimes they stagnate until earnings catch up - at which point you would have been better sat in your ETFs earning the dividend rather than having your money inflate away.

I agree with the above posts on not timing the market, and just get the dividends while you wait etc.

However if you must sell as worried, then why not sell say 50% and then set a timeframe of say 25 months (two years ish) where you buyback in with the cash each month at 2% (so all cash used up after 25 months), or something similar. Then if it crashes tomorrow, or in 12 months you are somewhat DCA. However I dont recommend this as it may crash on the 26th month :smiley:

Why dont I do this? Well 2 reasons, I cant time the market, and also because I deposit new money incrementally (as do most people) so really we are all ‘dollar cost averaging’ all the time.

Thanks to all three of you for taking the time to reply to a novice.
I will investigate and ponder on all of your advice.

If my crystal ball clears and Tranmere Rovers do come up with the goods, I will clean the glass more thoroughly (whilst also rubbing my eyes in disbelief).

That you, team.

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Sorry about my tap tap tap tap English.

That was mean to be “Thank you, team”.

Dougal,

Thank you for your personal advice - both wide and individual.

Will Hutton, once the Economics Editor of ‘The Guardian’ and now a columnist in ‘The Observer’, has been writing about the parlous state of Chinese banks for donkey years. Yet they still haven’t collapsed.

“Long term” may - does - depend on your age. I fear I may be dead before anything positive happens to the UK economy.

Having lived through it since before the Thatcher years, I have little hope that the regions outside London will ever get economic recovery, though there is always hope for other city regions.

All economy is politics - look at a multitude of countries around the world.

After Brexit, a European MEP (I think it was) said: “There are small countries and there are countries that are yet to realise that they are small”. There seems to be a sizeable portion of the UK electorate that has yet to realise the UK is small.

Most certainly the UK is not a thriving dynamic economy. Oh, except for certain rich people.
Excuse me, too much reading of “The Guardian” over the years.

Thanks for your advice. I will check it.

Jim.

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