Covid. The Election transition. Christmas. The market sure hates uncertainty, and the virus is getting worse. It will probably continue until we have a good vaccine in enough volume. The election transition looks like it’ll play out until January 20. Hopefully not. With the downturn this year, Christmas shopping season is less than certain. And by the way, will we get more stimulus? Who knows.
The thing is, if you’ve made good stock picks and have a five year window, whatever happens will mean very little. Now if you are concerned, raise cash. Generally I would suggest up to 30% of your total brokerage in investable cash.
So yes, you are likely to see the market value of what you own go down, and go up, and go down, and go up. You need the stomach to handle the roller coaster ride but you don’t need to time the market’s gyrations. You are better off just holding on.
I know that when I am coming up on a major goal, like buying a house, I do get extra nervous about what the market is doing. So if you are in this kind of a situation where you need money in the next 6 months, raise more cash. It is likely to be a bumpy ride and either you can wait for a while, or you need more cash.
Hopefully you have an emergency fund so you can avoid tapping your brokerage in an emergency. If not, you know what to do. Raise cash. I would like to believe if you are reading this that you know what your short-term needs are in an emergency and you have it ready and waiting in cash.
I’m not worried because I know that no matter how wild things get, it goes up in the long run.
- How Do You Position a Portfolio for Uncertainty? – Commonwealth
- Strategies for Coronavirus Market Uncertainty – Dechtman Wealth Management
- Financial Markets Are No More Uncertain Today Than They Were Last Year – Behavioral Investment
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