Answer: no-one knows.
Still, given the superior long-term returns* provided by 'growth' investments such as stocks, compared to having cash sitting in the bank (or under the mattress), it is a decision all investors have to make, or else they will end up never investing.
At the moment the Australian stock market is already down by about 18% compared to the highs reached only last month. It's been an amazingly fast sell-off, more similar to the crash of '87 than the GFC bear market of '17/'18. So I have to start wondering when (and how much) to start investing again in the stock market.
The 'portfolio' of investments I had purchased a few years ago (and had intended to hold for 10+ years) using my Commsec margin lending (CSML) account was sold off on 6 Feb, and, based on current prices I could already buy back that portfolio at a 18% 'discount'. But so far I've only purchase a small tranche (~$10K) of Westpac Bank shares using my CSML account a few days ago - and that purchase proved to be a bit premature (WBC is down by about 10% in just two days!).
So, I'm tempted to start buying, but unsure just how far the market might sell off before a true 'bottom' is reached - share markets could rebound from here (but that could easily be a 'dead cat bounce' and the market might then continue even lower as the global health crisis worsens -- we are likely to see total Covid-19 cases exceed 200,000 by the end of the week, and deaths to exceed 6,000 -- which could lead to *real* panic in Europe and the US, where society has become increasingly risk averse in recent decades and the population may not cope at all well with a personal existential crises - even if the risk of death is 'only' 3% (on average) when/if you catch the disease!), or the ASX200 could fall to 5,000 (another 15% decline) or even to 3,000 (another 50% decline to the post-GFC lows) before bottoming out.
So, while an 18% drop is significant, I don't see any indication that the spread of Covid-19 globally will be brought under control in the next few weeks, so I suspect that market may stagger quite a lot lower before a bottom is reached. How far? Who knows.
I'll probably (maybe) buy back some (maybe 1/4) of my previous holdings if/when the market (ASX200) drops to ~5,000, and then see how things develop.
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* based on historic performance: past returns are not a reliable indicator of future performance, yada yada. History rhymes, but doesn't repeat.