HOW CAN I TELL WHEN A STOCK MARKET CRASH IS ON THE WAY?

QI invested in shares for the first time about 14 months ago and have had a great year. I bought into a fund that tracks the stock market. But I’m worried about a downturn. Is there any way to tell when stocks are going to crash? And is there a fund I can invest in that would pay off if shares do crash?

AGood question. It’s now 8½ years since the last ‘bear market’ of falling share values ended in March 2009.

That makes the current ‘bull’ run officially the second oldest on record, without at least a 20% drop in the benchmark US shares index the S&P 500.

Getting in and out of the markets is very difficult for any investor, let alone a novice. If you do get out at the right time, will you be able to get back in at the right time too? Mistiming re-entry could lose you more than you gain by bailing out at the right time.

So can we tell when the good times are finally going to end?

The market has its ups and downs every day and you’d be driven demented trying to decipher short-term movements.

But there is a system that tries to predict when the next correction will occur. It’s called the Dow Theory. It’s a bit like sticking a stick in the sand to see if the tide is going out. Waves wash over and back until they finally recede enough to show that the tide has turned. The system tracks the bottom of each ‘wave’ of market movement. If the low points and high points keep getting sufficiently lower, the market has reached a turning point.

As of last week, that has not happened yet, according to investment advisors Gillen Markets. However, analyst Rory Gillen recently warned of some preliminary signs that this bull market may be about to come to an end.

‘But that’s pure speculation on my part and anticipating a trend change is no substitute for the evidence of an actual change in trend,’ he told investors in a recent bulletin.

He told Gillen Markets’ inner circle that they will be informed in a timely fashion when the Dow Theory firmly indicates a downturn is on the cards.

To answer the second part of your question, yes, you can buy ‘reverse funds’, which go up when the market goes down. Some will even magnify losses three times over. Danish investment platform Saxobank released 10 outrageous predictions for 2018. One of them was that at least one such reverse fund will make a 1,000% gain next year. However, anyone who’s bought into one over the last 8.5 years has got badly burned and they are probably best left to very rich or very wellinformed investors who are prepared to take a gamble and can afford to lose.

Your best bet is to buy into mixed-managed fund where professional managers take decisions for you on how much of the fund is invested in equities.

Alternatively, listen to your stock broker or sign up to an advisory and training service like Gillen Markets to learn about and play the market yourself with helpful advice and tips. I live in Monaghan and work in Northern Ireland. How will I be affected by Brexit? Will my social security contributions still count down here?

QAIf you become unemployed, the current arrangements for the payment of benefits will continue to apply until 2019 at least. This will mean that if you become fully unemployed, Ireland will be responsible for paying you Jobseeker’s Benefit.

If you become partially or intermittently unemployed, Northern Ireland will be responsible for paying the benefit.

The future operation of arrangements for determining liability for social security contributions and for the payment of Jobseeker’s Benefit in these circumstances will be determined as part of the process of negotiating the UK’s exit from the EU.

In other words, it’s complicated and probably won’t change for some time to come.