Given the market, should I make a move to cash?

My experience has been it is far more lucrative to systematically rebalance a portfolio based on the planned blueprint (allocation) than what is going on in the market — even through a seventy-year down-turn such as we had in ‘08/’09. Those who lost money in ‘08/’09 were those who sold; the rest of us weathered and even profited from the downturn.

If the current market has you uncomfortable, then, when the market recovers to its prior highs, assess changing to a more conservative allocation, but not now, and certainly not if the market goes lower.

We average a correction every year and we average a bear market every three and a half years but making changes now for the possibility of loss goes squarely against the far more powerful probability of gain.

The S&P 500 was up between 1926 and 2015:

– 54% of the days
– 68% of the quarters
– 74% of the years
– 86% of the lustra (five year periods)
– 94% of the decades
– 100% of the indictions (fifteen year periods)

Even for the fifteen-year period ending March, 2009 (which included the collapse of ’08 / ’09) the market still averaged +6.5% annually for each of the fifteen years). Past performance is no guarantee of future results.

An allocation works, and works incredibly well, by sticking to it and administering it through thick and thin.