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Taking advantage of big market crashes is difficult when your whole portfolio tanks. I've been wondering about keeping ~10% of my funds in reserver in safe cash
by guelo 11y ago
Taking advantage of big market crashes is difficult when your whole portfolio tanks. I've been wondering about keeping ~10% of my funds in reserver in safe cash-like assets in order to be able to move in when the whole market tanks.
- vehementi 11y agoThat still counts as timing the market and is Known to be ineffective. What if the market doesn't tank and you sit in cash for a long time? If it does tank, how will you know when is the true bottom for you to invest your last 10% in? Etc.
- jldugger 11y agoGenerally speaking, when stocks fall bond prices rise. In this regime. So if you have a mixed portfolio of assets and bonds, in your scenario you can sell treasury bonds for a profit, and use the proceeds to buy up stocks. If you automate this transaction when your portfolio deviates from a target mix, you will automate a 'sell high, buy low' strategy.