FYI: In early-2015 Ben wrote a piece called The Psychology of Sitting in Cash where I tried to answer the following reader question:
I took one piece of advice from a close friend that the market was too high and that I should go to cash and wait for a correction. I am still waiting. How do I proceed from the position I have of feet embedded in concrete?
Ben never did heard back from this reader to see how they handled this situation.
There have been opportunities to put money to work at lower levels in this time. In the summer of 2015, the S&P fell more than 12%. Then in early-2016, it fell more than 13%. Earlier this year stocks were down over 10%. In each of these cases, foreign stocks dropped even more.
But if they didn’t take advantage of those corrections and are still sitting in cash, things have gotten even more painful. Even after the latest bout of selling, the S&P 500 is still up a little more than 40% in total or just shy of 10% annually since I wrote that piece.
Professional investors like to talk about how holding cash gives them optionality and the ability to swing at a fat pitch. That may be the case, but when you consistently hold a large majority of your entire portfolio in cash all it does is add pressure to the timing of your buy and sell decisions.
Regards,
Ted
https://awealthofcommonsense.com/2018/10/the-psychology-of-sitting-in-cash-part-deux/
