Does it ever make sense to ditch stocks and move to cash?
Some investors and advisors have been increasing cash positions in their portfolios in anticipation of continued volatility and falling prices. With an inverted yield curve — when longer-term interest rates fall below short-term rates — suggesting that a recession could be looming, exactly where the market goes from here is anyone's guess.
"There can be value in holding cash, but it should be part of a larger plan, not because you're running for the hills," said CFP Erika Safran, founder of Safran Wealth Advisors in New York. "The average investor would tell you that their objective would be to sell at the peak and buy back in at a much lower point," Robbins said. "However, in practice, the vast majority of clients who try to time the market will sell based on fear and wait until they feel less fearful to buy back in.And, there is inflationary risk that comes with cash.
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