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If the market declines significantly, and you're still a long-term bull (inherent to the buy and hold strategy), you probably don't want to sell until the asset
by dannypgh 11y ago
If the market declines significantly, and you're still a long-term bull (inherent to the buy and hold strategy), you probably don't want to sell until the asset recovers.
- rconti 11y agoBut is it worth missing out on the potential gains of 6 months' income doing nothing, just so that if you hit an emergency (by definition a rare thing) you don't sell during a down period? I mean, keeping the money in savings virtually guarantees 'losses' in real terms.
- dannypgh 11y agoshrug maybe, maybe not. I sometimes have rather low cash reserves; credit cards and a checking account that lets me overdraft for free (via margin borrowing) can give me a bit of liquidity. But credit cards come due every month, and margin borrowing can always result in a margin call, so it certainly does feel like a risk. Having a bit of cash around gives you some peace of mind, but what's that worth depends quite a lot on the individual. I believe there's a significant risk of deflationary times ahead - the prime rate over the last five years really makes much of that argument for me. It is not a given that keeping the money in a savings account guarantees real losses.