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If you lost your job April 2020 and all your spare cash was in stocks you'd be forced to eat a massive loss. Given a downturn makes unemployment more likely thi
by ioseph 6y ago
If you lost your job April 2020 and all your spare cash was in stocks you'd be forced to eat a massive loss. Given a downturn makes unemployment more likely this isn't an improbable scenario.
- stevesimmons 6y agoOnly if you liquidate all your stocks to cash at what is obviously a very disadvantageous time. In reality, your rent/mortgage and other commitments would continue to fall due at a very predictable monthly schedule. So you sell down only as your liabilities fall due. The majority of your holding stays invested so you can capture the rebound over the following months.
- lotsofpulp 6y ago>the rebound over the following months. This is an assumption that some people might say is unreasonable. There have been many times in the past where the rebound takes years. Although, one might be able to make the case that the political winds have changed to ensure the rebound happened in months. But it’s still a riskier assumption than assuming a rebound in a few years.