Why I’m growing my cash position and you should too

1. Why Why I I’ ’m m growing growing my you you should my cash cash position should too too position and and The S&P 500 is forecasted to generate a modest single-digit return in 2019. The risk-adjusted returns in US equities have no significant upside but big downside. It is important to consider how painful a large large loss could be to investor’s future wealth and how that outweighs the possible regret of missing out. It would be advisable to increase cash positions, de-risk your portfolio and move towards defensive stocks. You have to ask yourself if it is worth it to stomach the upcoming market volatility for a meagre reward? The The U.S. equities equities and U.S. stock stock market and they they are market decline are still still severely decline at at the severely overvalued. the end overvalued. end of of 2018 2018 barely barely made made a a dent dent in in Warren Buffet has built a $129.6 billion dollar war chest amazing his largest cash position to date. Data from Bank of America shows that the rest of the smart money is following suit with professional investors taking their highest cash positions in 10 years during January after the fourth-quarter sell-off. Get the information about Latest Financial News here!

2. Historically speaking Berkshire Hathaway has been very effective at selling high and buying low. Data shows that their cash pile grew in 1998-99, just ahead of the dot com bubble as well as in 2007 before the Great Recession. This strategy allowed the to buy assets at lower valuations as the markets where melting down. Goldman Sachs U.S. equity strategist David Kostin is recommends increasing cash positions in his 2019 market outlook and I do have to agree. Just times times to to sell sell stocks stocks there there are are also also poor poor times while while you you wait wait for for a a better better opportunity opportunity is is often decisions decisions you you can can make. make. Just as them. Sitting Sitting on one of of the the best as there there are are poor poor on cash cash investing times to often one to buy buy them. best investing For For Latest Latest Stock Stock Market Market & & Financial Financial News News visit visit Smart Smart Money Money Gains. Gains. Most retail investors have a limited knowledge of the market compared to investment professionals. Looking at the data it is safe to say that retail investors are ignoring the high valuations, what the professionals are doing and are still pouring money into the overvalued equities. Bottom Bottom Line Line Don’t get me wrong I am not suggesting that there aren’t opportunities out there. I am simply recommending to beware of the enormously high valuation in US equities and to move into a 20%+ cash position. Bear markets present the opportunity of a lifetime if you are sitting on a large cash position. If you have all your money in the market during the crash you won’t have any cash to buy cheap stocks during the turmoil.