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01-06-2022, 02:05 PM
(This post was last modified: 01-06-2022, 02:05 PM by ken-do-nim.)
I was just reading the other day in the magazine about a couple who went 100% into cash at the first news of the Pandemic in early February 2020, long before the markets reacted. As the market went down & down, their financial advisor thought they were geniuses. The problem is that they didn't know when to get back in. Even as the market started to rise again, they were nervous and stayed out. Eventually, because they stayed out too long in cash, they lost money relative to just having stayed in through the crash.
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That tale plays out every crash. So does being overly invested in equities as retirement approaches. It should be taught in high school, because the person helping you set up your 401K may be clueless. That is actually likely unfortunately. I've seen co-workers cancel their retirement because they were greedy, or fearful so they had to delay for lack of return.
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I meant greedy with their 401K and lost half their account at a terrible time. Not that there is a good time to lose half your money lol.
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Yeah, you need a really really specific re-entry plan and nerves of steel if you're going to time the market like that. Even if you get the first part right (moving to cash), you're not nearly done.
IMO, March 2020 is what dry powder is *for* -- those are the moments where you set yourself up for life.
XOM was at $31; BEN was at $15.60; MO at $35; DIS in the $90s; and on and on. My logic at those moments is that if the world is really ending, it doesn't matter so much if my assets are in cash or stocks, so might as well load up and enjoy the upside if the world doesn't end.
