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The Acrid Smell of Gunpowder

01/25/2022

Every profession has old adages of advice.  For example, lawyers are fond of saying “a lawyer who defends himself has a fool for a client.”  Of course, Wall Street also has its share of adages, such as “ride your winners and sell your losers.”  Probably, the oldest was first heard during the Napoleonic Wars, which was “sell when you hear rumors of war, and buy when you hear the cannons fire.”

The stock market is already worried about rising interest rates before the war on inflation actually begins, probably in March.  Likewise, it is now worried about war in the Ukraine.  That’s two good reasons to increase the cash allocation in your portfolio . . . if you feel like you must do “something,” but it gives zero reasons to get out of the market completely.  Like the venerable Warren Buffet suggested, the only time to be completely out of the stock market is NEVER.

If you do increase cash now by selling part of your portfolio, please determine your trigger to decrease that cash when you reinvest that cash later.  Getting out of the market creates another danger — missing out when the market comes back.  Seriously, what is your trigger?

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