Should you go to cash until the market recovers or should you ride it out?

With the recent market decline, investors may be wondering if going to cash is the right answer. This article outlines why going to cash is not what investors should be doing.

Investing is hard. Staying the course is harder. Rebalancing is the hardest.

The reason these things become gradually harder is that when it comes to investing, our emotions often tell us to do the wrong thing at the wrong time. When markets tumble as they have done from time to time, investors who panic and transfer their potential wealth to those who remained calm. The fact of the matter is that it is extremely rare that opportunities like the current environment present themselves during a lifetime of investing.

When it seems like it is never going to end, it does, and quicker than you realize. Markets and portfolios historically recover similarly regardless of the unprecedented events that faced them (most recently the tech crash in 2001, the housing crash in 2008, and the pandemic crash of 2020), because that is what they do.

We adapted, innovated, created new businesses and technologies, markets made new highs, and portfolios recovered in the years that followed.

During the recent market turmoil, investors have paid the risk of investing, they should stick around for the reward.

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