"Is the ASX share market going to crash in 2016?"
It's something I get asked all the time.
Usually, it precedes, "When will the market crash?"
Or, "Will the ASX crash this year?"
Sorry to burst your ASX share market bubble but…
Frankly, no one knows if the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO), Australia's leading stock index, will crash today, tomorrow, this week, or this year.
Nor can an 'expert' say the ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) (Australia's other leading share market index) will reach 5,000 points or 10,000 points by the end of the year.
The reality is, no share picker, analyst or economist knows for certain where the share market will end in 2016.
Just think about this. If pundits really can predict where the share prices of all of Australia's top 200 ASX companies will be in 2016, why would they bother telling us? Surely they'd take their crystal ball and go and relax on a beautiful beach in Fiji.
The fact is, doomsayin' – like predicting a market crash in 2016 – sells more newspapers. "Wall Street set for worst yearly start since Great Depression after China market dives," a Fairfax masthead screamed after just two days of ASX trading in 2016.
Gazing into a crystal ball also leaves mums and dads more confident in their financial advisors.
"Gee, Stacey, I tell you what, he answered every one of my questions — he's a genius!"
"I know, Kevin, he even told us about the price of tea in China!"
And don't forget the economists. They'd be out of a job if they didn't make a bold ASX share market forecast. As the saying goes, economists have correctly predicted 9 of the last 2 recessions.
As for the online brokers and day traders. Just remember how they're incentivised. And no matter how many candles they can fit on one graph, volume and resistance will not make you a better investor.
Foolish takeaway
The ASX will crash. It may not be this week or this year, but it will crash. And share price volatility (like we've seen so far this year) is the price of admission.
So the next time someone asks you: "Is the ASX share market going to crash in 2016?" Just say it's going up and down and across, but not in that particular order.
And when they follow up with: "Where will the ASX share market go over the long term, then?" You can reply with: "Up! But I'm not gambling on it."
Here's to happy and profitable investing for the rest of 2016 and beyond.
