Crash math

[easysurfer]

Has anyone actually calculated if or when you should turn everything to cash based on some informal probabilities? I read predictions that a correction would come in March, by the end of the year, and even next year. So, if you figure on the worst case scenario (being in cash for the longest time) and assume it's next year and you wait another month to liquidate and stay liquid for a year, then reinvest at some low point of your choosing, would you likely lose money? The assumption is that there will be a correction in that year's time. Your mission is to guess how low it will be when you reinvest and whether you'll likely save or lose money by doing this.

(Bold added by me for emphasis). Too many assumptions which adds to variables and uncertainty. Plus, doesn't mention the expense involved in moving in and out of cash.

I haven't given up on you Boho. A year or two from now, you may be praising how rational the approach of just sticking to asset allocations and rebalancing is compared to trying to swing for the fences and whiffing.

 

[Boho]

Yes - - after reading several books on investing from this booklist, I think most investors will conclude that "turning everything to cash" is a pretty stupid thing to do in a crash. A crash is a blue light special, a great buying opportunity when funds are on sale.

I know...I just posted about how I bought Urban Outfitters stock after bad news brought it way down. I didn't ask about selling near the bottom. Worst I asked is about "some low point of your choosing." Then it could get lower and you can buy back. It obviously has to get somewhat lower than normal before you have an indication that it will be dropping more. (actually this thread is about selling when high, but selling when there's a quick drop in progress could work too)