The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

Gold Advice

11/17/2019

Goldman Sachs has been a legendary investment firm since 1869. There is no firm on Wall Street that I respect more and trust less. The quality of their research definitely deserves respect!

Last week, they announced that market conditions were too similar to 2007 and recommended investors rotate out of stocks.  In other words, dump your stocks!

Conversely, I do respect AND do trust Warren Buffett, who said long ago that the only time you should be entirely out of stocks is NEVER.

While I have forecast a recession next year, I would never recommend an investor be 100% invested in cash.  Taking a little risk “off-the-table” makes sense and helps investors sleep at night.  A temporary increase in your cash allocation from 5% to 20% or maybe even 30% might be appropriate.  An aggressive investor would never do this.  A “buy-and-hold” investor would never do this.  The downside risk to temporarily increasing your cash or cash-like allocation is you will miss the inevitable bull market when the recession reaches bottom.

If you take Goldman’s advice, you should create the discipline of getting back into the market.  How will you know WHEN?

Seriously, WHEN?

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