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Last week, the US S&P500 share market index finished the day at an all-time high, which would be a cause for celebration ... if it wasn’t the 33rd time it’s happened this year. Similarly, the ASX200 got within spitting distance of its record – which it had only just set in late August.

Pretty much no matter where you look, markets are smashing it out of the park, so much so that even gold, a relatively boring asset, is the talk of the town.

Obviously, this is great news for investors and anyone with a super fund, but I’m sure I don’t need to tell you that the good times can’t roll on forever. At some point, markets will have to correct themselves – with the trillion-dollar question being, when?

What’s the problem?

Global markets have been steadily rising since 2023, when the world began to shake off the shackles of the pandemic, economies picked back up and interest rates began to rise again in earnest. Since then, there have been repeated warnings that markets were heading for a downturn, including some from the Oracle of Omaha himself, Warren Buffett.

Guessing what will happen with markets is akin to answering an impossible question, like how long is a piece of string, or how much is that doggie in the window? But that won’t stop us from trying.

What you can do about it

We’ve gathered some perspectives from financial boffins and Money gurus to answer two questions: are markets about to crash, and what should you do about it?

• Not over yet: Don’t pack it in just yet, global markets still have some juice in them according to Tim Murray, capital markets strategist at investment firm T. Rowe Price. He believes equities will continue to rise through the end of this year and into the next thanks to rising global fiscal stimulus, the lagged impacts of monetary policy kicking in and a continued acceleration of AI-related spending. But, much like a house of cards, Murray warns one wrong move could see it all fall apart. “It’s important to note that because valuations are already quite stretched, if fundamentals falter at all, the downside risk is much more significant than usual,” he says. “Additionally, elevated geopolitical uncertainty means there are more avenues for negative surprises than usual.” Murray recommends investors stay invested in equities, but not too much, suggesting a “healthy” allocation to less volatile assets such as gold, or short-term bonds.
• Slowing down: Billy Leung, senior investment strategist at Global X, says while he doesn’t expect growth to stop, he is predicting a slowdown of the rampant, record-breaking highs investors have come to expect this year. “Global markets are entering a slower growth phase as the extraordinary earnings strength of recent years normalises,” he says. “I expect the next 12 months to revolve around rate cuts and slower corporate growth, with investors shifting focus from momentum to capital return.” With this in mind, Leung believes allocating more of a portfolio towards companies with strong dividends could set investors up well for the months ahead.
• A dangerous time: Hugh Selby-Smith, co-CIO at investment firm Talaria, believes the current scenario in markets is somewhat febrile, saying some market operators are running with a growing disregard for the dangers of illiquidity. “Speaking about the US, there may be a shared sense that the government will act as a shield from disaster,” he says. “If you are going to walk on ice, you might as well dance, especially if someone is there to catch you should you fall.” Compounding this is the growing “peer pressure” in markets, Selby-Smith says, with the infamous “FOMO” making investors feel forced to act. He recommends investors focus on well-established companies with strong balance sheets that can weather any potential downturns.
• Don’t worry about it: Finally, Noel Whittaker, Money columnist and renowned finance guru, says as someone who’s been investing for nearly half a century, this is a question he’s often asked. His take? For the majority of people, it’s not something to worry about – everyday investors should just take a long-term view and accept market swings as the norm. “Volatility is normal. In Australia, you can expect about six positive years and four negative ones in each decade,” he says. “Don’t try to time the market; it’s impossible. Stay invested for the long haul, keep enough liquid assets to ride out downturns, and never put yourself in a position where you’re forced to sell valuable assets at the wrong time.”

Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.