# Is There a Good, Current Argument For Converting All Our Investments to Cash?



## dogleg1 (Jul 4, 2016)

Given the complexity of world tensions and the evident bubble in the markets some investors have sought the 'safe haven' of cash and have moved their investments there. Is it irrational or reasonable to go that far at this point?


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## Pluto (Sep 12, 2013)

dogleg1 said:


> Given the complexity of world tensions and the evident bubble in the markets some investors have sought the 'safe haven' of cash and have moved their investments there. Is it irrational or reasonable to go that far at this point?


This is an ongoing debate and the answer is it depends. If you invest in companies with tons of assets, and reasonable debt relative to assets, don't bother selling, ride it out. (Some people during a bear market who invest in such "blue chips" buy more at lower prices on margin. Then when the bull market resumes they eventually sell off enough shares to get out of debt. that way they benifit from the leverage by ending up with more shares.)

If you are in more speculative volatile shares my opinion is you could benifit from knowing when to step aside and hold cash.


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## DollaWine (Aug 4, 2015)

You don't get hurt on a rollercoaster unless you jump off...

If you're diversified AND in it for the long haul, ride it out...


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## Mortgage u/w (Feb 6, 2014)

Not timing the market is the first rule of investing.
Buying in a bear market is the second rule.
Holding long term is the third.

Ok, so maybe I made the rules up, but nonetheless......


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## Rusty O'Toole (Feb 1, 2012)

It depends on your goals. If your goals involve making money, then you should stay fully invested as long as your stocks are going up. If they start going down you should consider selling them.

Again, if your goal is making money, if the stock market averages like the Dow, S&P and NASDAQ show we are in a bear market it is probably a good time to stay on the sidelines.

Call me Captain Obvious, but just this level of shrewdness has saved smart investors an awful lot of money.

By the way you should have a trading plan before you make your first purchase. Even the most dedicated long term investor will bail when a business he has invested in begins to fail and slide towards bankruptcy.


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## lonewolf :) (Sep 13, 2016)

I do think the average person would be best off keeping their money as safe as possible


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## lonewolf :) (Sep 13, 2016)

Mortgage u/w said:


> Not timing the market is the first rule of investing.
> Buying in a bear market is the second rule.
> Holding long term is the third.
> 
> Ok, so maybe I made the rules up, but nonetheless......


 Time is always present can not buy or sell in a vacuum outside of time. Can not play the market without timing market


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## dogleg1 (Jul 4, 2016)

I appreciate all the interesting comments. I believe I am well diversified ,however, I know from experience that the market can leave one high and dry and it can happen suddenly, ie 2008. Maybe I am over-reacting but when I look at all the insanity that is present in the 'political world' it scares the hell out of me. Even in our own country our trade situation could turn into a nightmare given the front- line players we have to rely on and deal with. I'm sure you know what I mean. Please reassure me !


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## Rusty O'Toole (Feb 1, 2012)

I've just been reading The Successful Investor by William O'Neil. He lays out a method for pinpointing the top of the market practically to the day, using price and volume.


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## Eder (Feb 16, 2011)

Sell a few shares on Monday....not too many ...


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## new dog (Jun 21, 2016)

I think it comes down to the Fed, will they continue the con or will they withdraw and keep raising rates. The markets have been artificial for a long time.


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## mordko (Jan 23, 2016)

Rusty O'Toole said:


> I've just been reading The Successful Investor by William O'Neil. He lays out a method for pinpointing the top of the market practically to the day, using price and volume.


In that case, how come he makes his money selling bullshit to investors and is only worth 100 million? Surely, the man who can "pinpoint" the top to the day has to be the richest person in the world?


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## Rusty O'Toole (Feb 1, 2012)

"Only" worth $100 million lol.


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## Lost in Space 2 (Jun 28, 2016)

This has been sitting in the back of my mind for a while, but has anyone sold and moved to cash to take advantage of the "coming" market correction. I've seen a few comments to this effect on Greater Fool. Now the thing is I did this end of 2015 and the market did correct but it took a lot longer than I expected. Now again there is talk of another correction and at the same I'm considering selling an ETF I have and moving back into some dividend stocks (why is a discussion for another thread) so my thinking taking profits and moving waiting for a correction.

The main argument for is that housing is reaching peak insanity and once it finally ends it should take the bank stocks with it. So in theory you could sell and wait to pick up the stocks on the cheap. The main argument is you don't know how long it will take and at what point is bottom!





I've beenn seeing comments on Greater Fool about investors moving to cash to catch the next market crash. I did this end of 2014 took profits and moved 100% to cash expecting a Garth inspired crash. Now here's the thing the market did correct but it took a lot longer than I thought.


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## Eder (Feb 16, 2011)

You better buy the book Rusty's reading.


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## twa2w (Mar 5, 2016)

mordko said:


> In that case, how come he makes his money selling bullshit to investors and is only worth 100 million? Surely, the man who can "pinpoint" the top to the day has to be the richest person in the world?


Yes but can he pinpoint the bottom to get back in. And can he pick the right stocks?


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## mordko (Jan 23, 2016)

twa2w said:


> Yes but can he pinpoint the bottom to get back in. And can he pick the right stocks?


No need. Just short a bunch of indices on the right day and repeat the trick until Bill Gates is like a pauper compared to you.


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## jargey3000 (Jan 25, 2011)

If you can & want to cash out at a profit - do it! Over the years, I've never cried in my beer too much that I got "out" too early & coulda made a few more bucks. However, I still to this day shed tears over the times I got greedy & held out too long. A small profit is waaaaaay better than a big loss IMHO.
(side-note: I do, however, think that this market still has legs....at least til dow hits 22 - you heard it here first! -no charge!)


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## Davis (Nov 11, 2014)

I agree that it feels like we're reaching a peak, but who is to know for you? Royal Bank of Scotland told its clients to sell everything and "to brace for a “cataclysmic year” and a global deflationary crisis, warning that major stock markets could fall by a fifth and oil may plummet to $16 a barrel." http://www.telegraph.co.uk/business...sell-everything-as-deflationary-crisis-nears/

The problem is that they did that at the beginning of 2016. If you had heeded their advice, you would have missed the TSX index's 22% total return in 2016 while your money was sitting in a 0.5% bank account. 

If you are certain that the market is going down, then you should go all-in and borrow as much as you can to bet against the market in the options market, then retire once the market crashes. But you'd better be 100% certain. And if you think you can be 100% certain about something, stock market investing probably isn't for you.


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## Lost in Space 2 (Jun 28, 2016)

My thinking is more that I want to move away from an ETF and back into dividend stocks. Emmera caught my eye, as I live abroad the transfer agent cancelled my DRIP so now I have a share certificate and quarterly dividend cheques which I need to send back to Canada. Anyways I looked back at my transactions and since 2008 Emmera has nearly doubled the dividend while my Dividend ETF cut mine slightly. Sooooo back on track I'm considering selling the ETF and parking the cash buying into Emmera maybe when the price dips a bit. The only problem with that theory is that the price has been on a slow but steady increase, so it may never go "on sale"


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## twa2w (Mar 5, 2016)

mordko said:


> No need. Just short a bunch of indices on the right day and repeat the trick until Bill Gates is like a pauper compared to you.


You still need to know when to close out your short. Is the market going down 1%, 5%, 20% or 30%. Or 29%.

How often does the market drop 5% or 10% or 20%. How many bounces and dips on the way from a market top to a 20% dip.


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## Rusty O'Toole (Feb 1, 2012)

First off I'm not the one asking if it is time to go to cash. That was the original poster's question. Second of all William O'Neil author of the book I mentioned, is not only a highly successful investor but the publisher of Investors Business Daily in other words, he is a genuine source of information not some fly by night character. Third if you don't read books by recognized authorities in the field I wonder where you get your ideas? From your broke neighbors down at Tim Horton's? As for me I will continue reading books and trying to learn better methods of investing. You can do as you please with your money.


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## MrsPartridge (May 15, 2016)

I listen to Marc Lichtenfeld's podcast on investing. It comes out every Monday morning and runs just under a half hour. Last week, he or his guest said we may only be into the 3rd or 4th inning of this bull market. What if you cash out way too soon? How would you get back in? Buying high? You can listen to his podcast here: http://oxfordclubradio.com/

Even if the market does a dive like back on 2008, it means I'll get even more stocks when my dividends get dripped. So if it's up or down, I'm happy with it. Dividend growth investors focus on the income our pot throws off, not the size of the pot.


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## mordko (Jan 23, 2016)

Rusty O'Toole said:


> Second of all William O'Neil author of the book I mentioned, is not only a highly successful investor but the publisher of Investors Business Daily in other words, he is a genuine source of information not some fly by night character. Third if you don't read books by recognized authorities in the field I wonder where you get your ideas? From your broke neighbors down at Tim Horton's?.


Tell me who got rich out of IBD (except Mr O'Neil, of course)? See... I don't recall Warren Buffett, George Soros or any other other really successful investor following Mr O'Neil's - or anybody else's "technical analysis". 

The reality is that acting on the ideas from IBD, Tim Horton's neighbour or a bunch of random monkeys is equally good for your retirement fund. 

I do read books, just not by astrologists.


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## Davis (Nov 11, 2014)

I think the OP should get his or her investing information and advice from total strangers on the internet who have no particular credentials or experience and who don't sign their real names to their posts. 

Obviously. 😉


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## dogleg1 (Jul 4, 2016)

As the OP I am trying to figure out what to do with the range of opinions that have been offered on this topic. I have spent some 'good coin' on so-called financial advisers whose advice hasn't been worth much to me --- in a few cases it was downright damaging (to me ,not them). My wife asked me to explain in one sentence what I have concluded from these twenty five or so posts. I am still thinking about it. I appreciate all the comments.


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## Rusty O'Toole (Feb 1, 2012)

I still think you should let the market tell you when to get out. For each of your stocks you should have some idea what you consider a normal reaction and what is a change of trend from positive to negative. You should be ready to get out when the trend goes negative.

Or, watch the S&P weekly chart with a 50 week and 10 week moving average. When the 10 crosses below the 50 get out. When the 10 turns up get back in. This is rather primitive and clunky but it would have protected you from the worst bear markets and increased your account considerably. If you invested in the S&P ETFs or mutual funds, it would have increased your returns by 50%.


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## Dilbert (Nov 20, 2016)

Although it isn't fun to watch your NW drop, I don't really care what happens to a large degree. Just buy and hold high quality blue chip banks, telecomms, utilities, pipelines, etc. and enjoy the divvies!


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