STREET DOGS: Pros and cons of cash
Ben Carlson on sitting on a big pile of cash in the midst of another correction
From Ben Carlson at a Wealth of Common Sense: A few things for those sitting on a big pile of cash in the midst of another correction to consider. Corrections and bear markets don’t make it easier to pull the trigger. You would assume it becomes easier to buy stocks when they’re falling, but cash is a comfortable place to be during a correction. When stocks begin to fall that comfort can lead to a cash addiction where you keep telling yourself you’ll buy when stocks fall a little further or the dust settles. Let’s say you sold out of your stocks in 2013. Since then the S&P is up around 60% or so. Just to get back to those levels where you got out, stocks would have to drop 35%. Waiting for this type of pullback can wreak havoc on your psyche. Making your buy decision strictly based on when you sold will likely only compound the issue. Make your investment decisions based on the present, and more importantly the future, not the past. Timing the market requires being right twice. You ...
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