This is the question on every investor's lips (or was at least until the Swine Flu has entered centre stage.) A presentation made by Robin Bowermen, Principal and Head of Retail at Vanguard, for Smart Company subscribers did not answer the question directly but did provide some useful insights and data for investors to consider.
No surprises that Bowerman suggests that nobody really knows when the bottom has been reached until way after the fact and therefore there is significant risk involved with sitting out from investing in growth assets such as shares and missing what has historically been strong positive returns after the bottom has indeed been reached.
The presentation covered the following points:
Market decline has been both faster and deeper than other post-war bear markets
In Australia it has been more prolonged than other post-war declines
With unprecedented volatility
The appetite for risk has collapsed
Be careful missing out on the beginning of the upturn
Dollar Cost Averaging over at least a 12 month period provides a useful approach
There are two methods to view the presentation:
Presentation Slides and Recording
Presentation Slides only
NB - If you want to listen to Robin Bowerman's presentation you may be required to download some extra software to allow this to work, If you have any problems viewing the material please do not hesitate to be in contact.