Sitting on cash and waiting for some inevitable dip is normally the wrong move as often the market will be higher even after the dip than it is now. Unless you time the dip perfectly, being early is the same as being wrong.
The economy is super strong and the market is just going to keep going up. People have been waiting for the dip for 10+ years now.
I am only 30% cash and 70% invested.
Been managing my money for over 34 years. It is rare when I build this much cash…..so that should tell you something.
I have only done this 3 times in the last 20 years.
This will be my fourth time in 20 years being in this much cash.
I will be fine.
I only caught a true bottom between March 16-23rd in 2020
In 2002 we were a tad early as well as in 2008/09 but we did extremely well having some powder while staying mostly invested.
I never met anyone who was poor for taking profits and sitting in some cash awaiting an inevitable pullback which never gets away from me as I buy aggressively when I feel like the market is in capitulation.
Staying fully invested is also a great long term strategy and I will never argue it’s not. Especially when you are 100% mutual funds.
Just understand I am bringing a professional money manager perspective here and again…..taking profits is never a bad idea. I never said get out of the market. Just reduce some exposure to both stocks and bonds here as we enter 2022 and the inevitable change in monetary policy. I am early….I have said as much….and I am sure I won’t catch a bottom….but I will get great value next year at some point and that is my tactical strategy.
Especially with new money as well.
I know the economy is strong….I don’t think you read a lot of my previous posts laying out exactly what I am thinking and why I am doing it. This is not a hunch. We are about to pump the brakes on this red hot economy…..because if Powell and the Fed don’t inflation will overrun the economy.
A lot of people don’t understand what monetary policy and all this stimulus maybe doing and it will blindside amateur investors chasing high flying stocks. When that happens a panic sets in and people start dumping S&P top ETF’s QQQ’s and indiscriminate selling begins to meet redemptions.
A classic and normal and overdue correction. It will be fast…..and then the market will resume another bull run.
And if I am wrong the money will go back to work anyway.
Time will tell…..but Friday should be a quick reminder just how fast it can unravel when it gains steam and snowballs. That was just a taste.