I decided to be mostly cash now rather than stocks. I just can not buy stocks when they are this high as I worry what is the upside. Stock markets fall the most as soon as we enter into a recession and they recover fast so I want to be prepared.
I didn't sell everything, but I did sell a few things to take some profits and dumped a few losers to help offset those capital gains with some losses on things I really wanted to get out of. I'm going to over 75% cash right now. If the market drops 20% then I'm going to slowly start dollar cash averaging in to see if it trends back up. If it doesn't I'm just going to stay cash heavy.
If I had been smart enough to buy Google, Facebook, or Amazon a few years ago I would be taking some or maybe all profits there. If Apple goes below 100 I will start buying again and possibly selling covered calls on it.
My IRA's have a really long time horizon so although I'm still putting cash in them every month I'm not buying anything. I'm not selling anything in there either because I just buy SPY (S&P ETF) and occasionally some down and out sector ETFs every month.
In same boat. I've just been splitting my new investments between stock and cash and treat my cash as part of my diversification strategy (or a hedge against possible market peak). If a recession occurs, I'll hope it drops a lot, put my cash back in, and hope it comes back up. All those things have always happened (recession, recovery - not necessarily me timing a market bottom) so I feel ok about my cash. Whatever it loses in value to inflation should come back if I buy cheaper stocks during a market lull. Or so I tell myself.
I got lucky, because I had cash from the sale and the world crumbled before I had time to invest in the market. Otherwise I absolutely would have, and I've have absolutely lost a lot.
Now I have cash and wondering if inflation will become a problem for the first time since the 70s.
This is how I (and perhaps others) console myself for not buying at all. With the capital and risk appetite I had at the time, I would have made a nice five-figure profit before selling thinking 'this is the top, for sure'.
I've become increasingly risk-averse after realizing how devastating a 50% decline really is. Independent of asset class, you will need a 100% gain to get back to where you were. And that will take a while.
Regardless, and apologies for the dumb BTC meme, I am HODLING!
Spread your chances. Buy some now, buy some again later when it crashes even further. If it doesnt crash further, at least you profited from the current dip.
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