Have you ever dumped all your cash into the market during a crash?

[jghorton]

I learned the hard way in the 1987 'crash' and earlier in the 70's that I was not smart enough to predict the bottom (or the top). From that, I got smart enough to stop trying ... and thus, did much better remaining steady over the long haul, t
than if I had specialized in trying to make 'big splashes.'

IMO, those who are always trying to get rich quick, are the same ones who often get poor quick.

[jrkliny]

Originally Posted by jghorton

I learned the hard way in the 1987 'crash' and earlier in the 70's that I was not smart enough to predict the bottom (or the top). .......

For a long term investor, it is not at all necessary to be able to predict the bottom or top. Buying near the bottom, even if the market continues to drop, is better than buying at the top. Selling when the market is high, even if it goes higher, is better than selling when it is low.

[snowmountains]

Originally Posted by jrkliny

For a long term investor, it is not at all necessary to be able to predict the bottom or top. Buying near the bottom, even if the market continues to drop, is better than buying at the top. Selling when the market is high, even if it goes higher, is better than selling when it is low.

So it means it's good to always keep some cash just in case a low comes?

[ohio_peasant]

Originally Posted by jrkliny

For a long term investor, it is not at all necessary to be able to predict the bottom or top. Buying near the bottom, even if the market continues to drop, is better than buying at the top. Selling when the market is high, even if it goes higher, is better than selling when it is low.

But is this really "long term"? I invest for vanity, not for funding my retirement or even for making charitable contributions while I'm alive. The objective is to maximize net-worth upon death. This implies, for me personally, to NEVER sell. Never. This of course refers to index funds - not individual stocks.

A conversation some years ago, with my chipper amiable "representative" at Vanguard. Rep: "What is your investment horizon"? Me: "infinite". Rep: "Well, come on now; we all have life-goals; Is it 20 years? 50 years?" Me: "No, it's infinite". Rep: "75 years"? Me: "What part of infinity do you not understand? The sun will cease shining in something like 4.5 billion years. I want my portfolio to endure longer than that".

Originally Posted by snowmountains

So it means it's good to always keep some cash just in case a low comes?

This makes sense in an oscillatory market. And by this I mean a market that makes essentially no cumulative progress over decades, but which is prone to 10% "corrections" every few months. Sound familiar? Since December 2014, an "investor" would have done better darting in and out, staying in cash until seeing another 8%-10% drop, and then going all in. But that takes wisdom, implacable nerves, and fantastically good luck. I lack all three. I keep cash on the side, for self-amusement purposes. But otherwise I remain fully invested, perpetually. Whether one personally feels comfortable with that strategy is of course another matter entirely.

[jrkliny]

Originally Posted by snowmountains

So it means it's good to always keep some cash just in case a low comes?

And to handle emergencies. And for me to fund my retirement expenses if the markets are down for a considerable period of time.


Also I carry 30-50% in bonds and shift investments between asset classes based on trends.

[lottamoxie]

I never put it all into the market; I need monies for other things plus I want to keep some for buying opportunities now that I'm actually aware of investing and look at what the market is doing each week.

[snowmountains]

Thanks for the comments. Just to remind, in my op I said to exclude the cash you need for daily spending and emergency. I'm only talking about the cash that you use for investing, sooner or later. No one should put the cash that they need for everyday use or emergency into the stock market.

[jrkliny]

Originally Posted by snowmountains

Thanks for the comments. Just to remind, in my op I said to exclude the cash you need for daily spending and emergency. I'm only talking about the cash that you use for investing, sooner or later. No one should put the cash that they need for everyday use or emergency into the stock market.

Since you have decided you are in charge of all the rules, I would like to ask a few questions. What do you mean when you want to exclude "daily spending"? Do you literally mean an amount that is to be spent on one day? I suspect you are actually thinking about something bigger. For a working person that might be enough to cover expenses in event of a job loss. How much, 6 months, a year or longer? What sort of emergencies? I just found out I need to spend close to $20K on a new roof. Is that an emergency I should have cash to cover? I am retired. Eventually I will spend all of my assets on "daily spending". How much do I need to exclude?


Let me ask about cash and money excluded from "the stock market". Do you want us to exclude bonds, real estate and/or gold? What about cash? Is that just paper currency? Money in the bank? CD or money market funds? What about highly liquid assets such as very short term bond funds?