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> By sitting in cash you're also losing money through inflation: Also by sitting in Stocks, you not only lost 20% this year, but also 9% due to inflation for a
by dragontamer 4y ago
> By sitting in cash you're also losing money through inflation:
Also by sitting in Stocks, you not only lost 20% this year, but also 9% due to inflation for a total loss of ~30%+.
Cash is cash. It gets the job done. I'm not saying go 100% cash btw, but it has its place in this time of uncertainty. You cannot buy the dip if you're 100% invested, you have to be holding cash.
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I suggest holding 10% cash and rebalancing as needed. As the market goes up, you naturally sell stocks for more cash. As the market goes down, you naturally sell cash to buy more stock. This stabilizes the portfolio significantly.
- quesera 4y ago> Also by sitting in Stocks, you not only lost 20% this year, but also 9% due to inflation for a total loss of ~30%+. But if you sold the stocks, you would have taken an immediate tax hit of ~20-35%, and you would have to time the bottom to get back in. So, it's not at all clear that getting out makes sense. Depends on the depth of the decline, and that is unknowable.
- remote_phone 4y agoOnly on the profits, if you even have it.
- dragontamer 4y agoSurely you have some cost-basis lot where selling just 10% of your portfolio results in a capital loss (ie: a tax _break_) if you were going to switch into Cash today. > you would have to time the bottom to get back in. Nah, you just rebalance at 10%.