Time to Sell Investments and Hoard Cash?


Time to Sell Investments or Hoard Cash?

Hello folks! Thanks for visiting The Green Swan. Lately I have felt the urgency to explain why I do not plan on selling investments or hoarding cash. And instead, I will actually keep on investing as part of my normal course.

I can already hear it now…

“But it’s been a bull market for almost 8 years, Swan! It can’t keep going up forever. Haven’t you seen the news, we are destined for another crash and it could be bad. Yada yada…”

Since 2008, everyone and their mother have called for the next crash and forecasts for “the perfect storm”. Bank failures, the Eurozone, the Eurozone again, China, Brexit; anything and everything will result in the pending crash. Yes, these are compelling stories and highly-rated news programs feel the same. But highly-rated new programs don’t get that way by telling stories about blue skies and sunny days…except maybe in San Diego.

Well, for the sake of sounding Pollyannaish, let me present the flip-side.

The Old Bull

Yes, this bull is old. 88 months to be exact, but it isn’t the oldest bull in the pasture as many would think. It is actually just the fourth longest running bull market per records going back to 1854. But just because this has been a long running bull market, doesn’t mean it is the strongest running bull. Annual GDP is low relatively speaking, at around 2%, and the slowest growth of any expansion since WW2. Basically everyone agrees that this has been one of the weakest and slowest recoveries on record, which makes sense that it would last longer.

The Upside

There are a number of reasons why an expansion can continue. I’m not an economist and neither do I want to pretend to be one. But I do follow a lot of economists weekly publications (more or less as part of my day job) and would like to think I’m fairly in touch. So let me lay out a few quick points I’ve picked up on, which could lead to brighter days coming. Oh, hi Pollyanna…

  • Household and business debt ratios have improved significantly in recent years leaving room for growth in spending.
  • The productivity growth in this economic recovery is at its lowest since WW2. Specifically, the improvement of each of us workers’ productivity level has been legging. What if we finally see the bounce we’ve been waiting for?
  • Overall employment and specifically, employment of millennials has improved drastically in recent years. And we aren’t even at full employment yet. There is still room to gain and for our economy to grow with the increased employment.
  • Real household incomes have recently seen a bounce up. Let’s hope it continues! And if it does, that could lead to increased purchasing power.
  • The consumer confidence index is at its highest since the recession, and it still has room to grow from the highs achieved in the late ‘90s.

Not only has global growth been sub-par during this recovery, it has been unsynchronized around the world. But for the first time this recovery, it seems all major global economic policies are aligning (including Japan, China, Europe and the US) which improves the odds of a synchronized economic bounce being likely.

What do the Economists Think?

Like I said, I’m not an economist. So maybe we bring the economists in to see what they think…cue the Wall Street Journal (WSJ)!

On Friday, October 14, the WSJ published its latest survey of economists. The survey was conducted over from 10/7 – 10/11 and included 59 academic, business and financial economists. Some of the major findings:

  • The odds of a downturn in the next four years is 60%.

Wait…only 60%!!! Your telling me the economists give only 60% odds that the almost 8 year bull market will continue for another 4 years! Wow

  • The economists give a 20% chance of a recession within the next year.

So what’s all the fuss about. Only 20%…really?

  • A quarter of the economists surveyed place odds below 50% there will be a recession in the next four years.

That’s 15 very smart and educated economists, people who do this for a living, and they don’t expect a recession in FOUR YEARS. Ok….we get it….a recession is not guaranteed in the next four years let alone the next year…so I’ll move on…

The Economy is not the Stock Market…

Of course we shouldn’t forget that an economic recession and the stock market are not one in the same. We can still experience a drop or correction in our stock and bond investments even if the economy keeps plugging along. But that would likely just be a temporary correction. Especially if in the longer term we continue to see economic growth, it should continue to support growth in the stock market.

What I hope this post has helped persuade you of is that nothing is certain when it comes to the economy and stock market. Not even among the experts. Yes equities may be overvalued by some standards such as the Price to Earnings Ratio (P/E Ratio), but if some of the economic indicators mentioned above continue to improve (which definitely is conceivable considering it hasn’t been all guns blazing the last 88 months) then this may right itself and lead to further growth in values.

Should you hoard cash or sell investments in case we see a correction soon? That’s up to you, your investment objectives and your risk tolerance. Since I’m a long term investor, and I know that time in the market is more important than timing the market, I’m not too concerned about a pending drop. I think trying to time the market is a fools errand and more often than not you end up missing continued growth which would more than offset the gains by timing the upswing after a correction.

So why bother trying to time the market, hoarding cash or actively selling investments for a “pending” correction? The only sure thing you stand to gain is an increased anxiety level, added worrying, grey hairs and/or balding…yikes!

So I will keep on keeping on, investing today just like I did yesterday and letting my investments continue their journey toward providing me financial independence. I’m a long term investor and my investing strategy / plan has always been riding the waves. Just like Pollyanna, I know brighter days are ahead…


Where do you stand on this? It certainly seems like a lot of attention has been given to a “pending” crash lately. What’s your investing strategy and do you plan on keeping with your plan? Let me know in the comments below.

Thanks for taking a look!

The Green Swan

Work Harder, Work Smarter, Retire Earlier and Find Your Beach


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  1. Completely agree GS!! Buy and hold for me.
    Michael Batmick had a great post this year over at The Irrelevant Investor blog:


    He analyzed what a portfolio would do if you missed the best OR worst 25 days since 1970. Huge losses or gains. And you know where this is going…..good luck for an investor trying to time any of it. Impossible to do either, let alone both…..

    Yes, buy and hold, buy and hold.

  2. I agree 100%, it’s too risky to try and time the market. I was worried about interest rates going up for example and my bond fund still returned 5% this year. Pretty solid.

    You can rarely predict what is going to happen. No way I’m going to pull out of the market to hoard cash, I can’t afford to miss a potentially extended bull market!

    1. Good point on the bond returns. Folks have been saying for years how they’ll get killed when interest rates rise… Well interest rates still haven’t risen…

      Thanks, Jon!

  3. Statistics, statistics – they can show you what they want to show. The USA is in a strong position, that’s for sure. That’s why the Fed is considering increasing interest rates. But other areas of the world aren’t in a good position, some are a lot more indebted.

    I hope that nothing huge negative happens, for all our sakes, but there’s always that chance. Buy and hold, yes, definitely. We’re not selling anything, and I wouldn’t recommend that for us, you or anyone else. But we are accumulating more cash than 2011 for example. Australia has a few more local, domestic issues that could be a problem for us. Hopefully not. But we’re still buying nonetheless 🙂


    1. There always has and there always will be some statistic out there that makes you nervous. That’s true. Buy and hold for me and wake me up when I get there 🙂

      Thanks, Tristan.

  4. Agreed! Great distinction that the economy is not the stock market. I think any long-term investor should realize that the stock market will rise and fall, but over time it’s going to rise, while hoarded cash will depreciate with inflation.

  5. We actually talked about this over the weekend with a bunch of other FIRE folks, most seem to think that a correction of some sort is coming and were hoping for one too (for the buying opportunities only, obviously). But most seem to agree to just continue investing as if nothing happened (with the exception of a few). There has been a lot of buzz lately about people hoarding cash and/or selling portions of their portfolio. Maybe they are right, but since you cannot time the market, its hard to tell at this point if they are.
    For now for us, we also stick to continuing the investments, thanks for this reassuring view.

    1. I agree, there has been a ton of buzz lately about it. It’s just too hard to predict what will happen and I don’t want my FIRE status to be upset by a silly unnecessary decision to hoard cash. I just don’t need it. Thanks, Team CF!

  6. I’m glad you feel this way because I honestly don’t know that I know how to do anything other than keep putting little bits in our investment accounts. I’m not going to try to time the market. I’m not convinced that’s possible at all, and I know it’s definitely above my skill set.

  7. I’m not sure what comes next either. On the one hand usually before a down turn people’s emotions turn to less fearful at the peak of the market. That being said I’ve yet to see the doom Sayers pushed to the side like in recent decades. Even when that happens timing is no guarantee. Alan Greenspan termed the market Irrational exuberance in 1996. It took years after that for his premonition to come true with the dot on crash.

    One final thing to remember with the stock market. Price per earnings might be good show of current value, but as a look forward you are trusting predictions of future earnings or that current earnings are representative of future earnings. I.e. It’s all just a magic eight ball over the mid term.

  8. The bulk of our money is invested in our 401ks and I won’t touch or adjust the plan there unless something insane happens.

    I am still buying in our other investment accounts – dollar cost averaging will work itself out in the ups and downs.

  9. I think it’s so easy to make predictions, but the reality is that the stock market, by nature, is unpredictable. There are long term patterns, but we can only see those once we step away and look at the big picture, and even these fluctuate.

    The bottom line is that people should do what’s right for them. I think it’s sound advice to hang onto your investments instead of cashing them out. And that’s especially if you’re looking at the long term return, which averages a 4% yield (which you would forfeit by cashing out the stocks!).

    1. Great point, Mrs Picky Pincher. Reminds me of the book titled A Random Walk Down Wall Street. No truer the lesson of how unpredictable the market is.

      Thanks for the comment!

  10. Great point you raise there. And I agree with you on that one! It’s hard to time the market! And what’s the alternative to the good old buy-and-hold? What’s the definition of hoarding cash? 100% cash? 50% cash? What do you do if the market goes up again? Sit on the cash and wait for years or decades for the entry point? Too many questions, too many cans of worms. There are people who sold in 2008/9 and never got back into the market. Talking about opportunity cost.
    For people afraid of a correction who want to raise 20% cash, why not shift to stocks that have 80% market beta? At least you still get the dividend yield!

    1. Yeah no kidding. I’d have a hard time with the psychological impact of the market keeps going up and deciding when enough is enough and I need to get my investments working for me. Too great of risk there for me.

      Thanks for the comment, ERN!

  11. Totally with you. People have been predicting a recession for years now. I’m sure it will come eventually, but I don’t want to sit on the sidelines until it does. I plan to just keep plugging with the buy and hold strategy.

  12. Agreed!!! We left our investments in place in 2008 (didn’t touch them, but I didn’t look at them either – yikes). After going through that and experiencing the recovery and growth, I feel confident that leaving our equities alone is the best strategy…no matter what is predicted.

    1. Yes me too, I have more confidence in a bounce back if and when a setback happens given my experience through the 2008 recession. As scary as it is going through it, having that confidence is key.

      Thanks, Amanda!

  13. I wouldn’t mind a market crash, recession, correction…. whatever you call it. So long as I were still gainfully employed, I would continue to put the same amount into the market. Just more value for me later when the market goes back up later. I would only be worried if it had a major impact on my career field and I were worried about having a job.

    1. Yes, very true. I think most people would agree with that logic who are still in the workforce. My mindset would certainly change if I were retired already and reliant on my investments and subject to sequence of returns risk.

      Good way to look at it though and I like the optimistic attitude! Thanks for sharing, Gwen!

  14. Since I’m a complete indexer and have a long ways to go before I need any of this money anyway, I just keep on putting in money, month-after-month. Since the market goes up a vast majority of the time, I’d be going against the odds to not bet on things continuing to do as they do. And if things go down, then I get a great opportunity to buy on the cheap.

    Sure, I could try to time the market and get higher returns. But in the end, I only need enough money. So why deal with the headache of trying to guess where things are going if I’m doing fine with what I’m doing now?

  15. I am praying for a correction once I begin working but I will not be trying to time the market. In my very limited time of investing I have realized that you can never predict what will happen tomorrow. Just need to let the market do its thing and continue investing normally. If there is a correction I will cut back in any way I can and maybe find a way to earn some extra money so I can put more into the market. Buy and hold has withstood the test of time so no need to tinker with what works!

    1. Understanding where you are currently, having just started full time, I can totally understand that sentiment. But be careful what you wish for. I started full time toward the end of 2006 and not too much later in 2008 we all know what happened.

      But good plan to put as much as you can and any extra you can scrap up to investments during a downturn. Thanks for sharing, Stefan!

  16. I’m still in the workforce and will be for at least about 7 more years (probably more, but on a part-time basis after that). I feel very secure in my job, I am very employable at this stage of my career, and I could go solo if need be. My pre-tax contributions of every dollar I can spare will be going in regardless of bear, bull, or space monkey markets.

    So….come on, recession!!!

    1. Haha I love that plan! I haven’t experienced a space money market yet myself but it sounds like fun and I’ll probably react to it the same as you… By investing more!

      Thanks for sharing, Vigilante.

  17. Good post GS. Agree with your thinking except that no economist has EVER predicted any recession in the past 80 years correctly. In fact, even after a recession starts, many economists don’t get it right. So I wouldn’t place any bets on economists’ forecasts. As Warren Buffett said, the main purpose of economists is to make astrologers look good.

    1. Haha I hadn’t heard that quote from Buffett before, that’s a good one. What I have heard they have predicted 9 of the last 5 recessions correctly… Either way I agree they don’t have the best track record. All the more reason for me not to take up the sport…

      Thanks, TFR!

  18. For me, the frustrating thing about the stock market is that it’s the only place for many to get any return on investment because interest rates have been so low for so long. Eventually the “law of diminishing returns” sets in, money can still be made by investing but not as much. When (or will) people lose confidence in the markets?

    Another frustration has been the economists & the uncertainty. Who thought foreign banks would charge negative interest rates or domestic interest rates would have stayed flat for so long? In recent history, I believe this in somewhat uncharted territory as we continue to transition from the 20th century to the 21st century as technology continues to revolutionize every aspect of life.

    There’s money to be made, but it will require patience and diversification.

    1. Yeah that’s a good point and perhaps that will play out. But I agree there aren’t many other good options available besides the stock market. It’s an interesting day in age we love in, that’s for sure.

      Thanks for the comment, Josh!

  19. I think time in the market matters the most too. That’s why the vast majority of our net worth is still invested. We have some cash on the sideline just so I can feel useful. 🙂 The stock market has been pretty volatile lately. Whenever there is bad news, it drops like a rock. I think we’ll see a crash at some point, but maybe the economy will keep chugging. That’s the best case scenario for long term investors like me.

    1. Thanks for stopping by Joe, since I know you’ve mentioned holding more cash lately. Glad to hear that the majority is still invested and put to work. It’s not a bad deal to hedge your bets with a little on the side ready to be put back in as soon as you see a dip. And like you said, hopefully the markets keep chugging along for all of us long term investors.

      Thanks again, Joe.

  20. I like a mix of cash and investments to be honest. I’ve learned not to wait for corrections or crashes because that will just leave you on the sidelines. Cash serves a couple of purposes. Protection against a free fall and also the ability to buy discounted stocks! Who doesn’t like a good bargain?

    1. Thanks for sharing your perspective, Mr DS. That’s why personal finance is personal and investment choices are dependent on comfort levels, risk tolerance, and long term goals. Glad you found something that works well for you.

  21. I have been thinking about this more than normal. We were going to take the year off of investing, but I bailed on that idea. So now I have some cash to invest. I have never tried to time the markets, but admit I have been wondering about what the price might do in the next few months. Being 50% of the country will be horrified about the well being of our nation come election day no matter who wins, I might invest half now and half then. =)

    1. Not a bad plan there, Ms Montana. Or maybe a third in each of the three months. If you have a lump sum it doesn’t hurt to even it out just a bit, that’s what I’ve done in the past anyway and I feel better about not getting burned possibly.

      Thanks for the comment!

  22. My favorite comment from economists is when they predict the next recession. On average a recession comes every 5.5 years. I love when they say it’s got a 15% – 20% chance this year. Of course it’s between 15% and 20%, like it is every year based on the math 1/5.5.

    I think this is why dollar cost averaging is so smart and you don’t have to worry about timing the top or bottom of the market.

  23. Cash is a fantastic investment for people who hate building wealth.

    For everybody else it’s a pretty crummy place to park spare change.

    And for long-term investors there’s no better bet than equities because it hardly matters what the market does this year or next or the one after that. Over any meaningful long-run investing horizon stocks win. Punto!

    1. Plain and simple, Libre. Punto for you! No need to over complicate things, buy and hold works like a charm and no doubt equities are the best investment for the long term investor. That’s why I’m all in with 100% equities.

      Thanks for the comment!

  24. no way am I hoarding cash in a low interest environment. I think that inflation is actually higher than interest rates which means cash in a money market or CD is still losing purchasing power on a net basis.

    in addition, I believe the DJIA will be at 100,000 in the next 10-15 years. so what if it does take a major downward breather? That just means stocks are on sale.

    1. Good point! Holding excess cash will just be a drag on net worth when factoring in inflation, that’s a double whammy.

      Thanks for the comment, Patient Wealth!

  25. I agree with your post. Having said that, it may be interesting reading in a couple of years time! Markets have a funny way of messing with investors.

    Having lived (and invested!) through the GFC, my steadfast commitment to buy-and-hold turned out to be not-so-steadfast! I’m hoping that the next time around (whenever that may be…) I’ll be a little bit more disciplined.

    1. Yes that’s true… We’ll definitely need to do a look back in a few years time.

      Fortunately my investing patterns were steadfast throughout the great recession, but I did need to be talked of the edge a time or two. No doubt it’s hard watching your net worth drop day after day and that being the only thing covered on the news. It’s important to drown out the outside noise and stay true to the strategy.

      Thanks for the comment, ADI!

  26. I think all out would be a bad call…timing is tough, and there’s no guarantees. Having a bit of a cash cushion? Not such a bad thing, especially if your income is uncertain. The market does seem high right now based on earnings, so I’m more inclined to let interest and dividends sit instead of rushing to reinvest them. Might need some cash if the right opportunity comes along.

    1. Fair enough, Emily, thanks for sharing your plan. How long would you be willing to sit on that cash before reinvesting it, assuming there isn’t a correction? Emotionally, that’s always been a challenge for me.

  27. Nice post! I’m sure many are thinking about this with the amount of doom and gloom in the news. I still plan to continue investing but am also holding some cash given the current uncertainty we are facing here in the UK on Brexit. With base rate down to 0.25%, can’t afford to ignore the stock market!

    1. Yeah interesting situation for you there. Makes sense to maybe have a bit higher cash cushion, especially if employment is in question. Thanks for sharing, MMM.

  28. Another possibility is that the market doesn’t crash but goes sideways for many years. I probably have at the moment more cash than I should, but we’re keeping this available to purchase a rental next year.
    It’s definitely an interesting environment we’re in. It’s the first I’m living through times like while being aware of the market (I had really very little idea and very little involvement in 2000 and 2007) and only time will tell how it’s all going to play out.

    1. Yes, very interesting times and I too could see the market continue to bounce along sideways like it has been. Good luck finding another property. Thanks for sharing, Money Mine!

    1. It very well may be coming. Thanks for sharing your plan. There is definitely room for differing opinions on this site! Thanks, Laurie!

  29. I try not to time the market. I’ve had a bad history trying to do just that and realize I should just stay the course. Of course, I am human and I have also read about this long running bull getting a little tired so I feel a little uncomfortable being all in the stock market. While I’m not selling or moving money out…I do have some excess cash that in normal conditions I would plow in the stock market but am hesitant in doing so now. I regret not having more cash to invest after the 2008 market crash…well not have enough money and the guts to invest at that point perhaps…

    1. Thanks for explaining that struggle, Andrew. You’re right, I think we all feel that. My plan if /when the market drops is to plow into the market as much as I can from my continued earnings which is a benefit I have being gainfully employed and earning a good salary as compared to someone who is retired already.

      Thanks for the comment, Andrew!

  30. Dollar cost average or Value Average and re-balance your portfolio periodically for drifts in your stock / bond allocation and keep repeating this in a disciplined way. Discipline is the key to success.

    Timing the market is not a recipe for success. Speculating or waiting for interest rates to go up or down does not work either.

    CD laddering is the way to go to get maximum yield on your savings. Holding bonds to maturity will ensure that your return is not affected by interest rates. Short and mid term bonds would not be as sensitive to interest rates as well.

    1. I agree Michael, timing the market may work and pay off occasionally but that will be more luck related and not something that can be repeated successfully over and over.

      Thanks for sharing!

  31. I want to believe I’m “buy and hold”, but having never seen anything else than the bull market, it’s hard for me to predict how I will react in case of a big drop. I’ll let you know, my goal is to stay the course but who knows what my emotions will dictate when stuff hits the fan.

    1. Yeah many folks are in the same boat as you and it’s very important that when that time comes that you don’t divert from the proven buy and hold strategy no matter what. That’s when unfixable mistakes happen!

      Thanks for the comment!

  32. Green Swan,

    Love the discussion on this topic! It’s one I’ve debated internally and with friends in the past.

    Personally, I have a decent cash hoard right now. I haven’t sold anything, but I haven’t been going through with the indexing strategy of my portfolio. I understand that its damn near impossible to time the market and to do so would be arrogant. With the S&P near all time highs, I am personally not comfortable investing at this level after a 7 year bull market, which in my opinion has been driven a lot by the Fed.

    I know a lot of people have told me about losing out potential returns if the market continues for a few more years, but I’d rather lose 2-3% of my cash to inflation than be down 20% – 30%+ in a bear market. More often than not, fear of missing out on returns has actually cost me more money than I’d like to admit haha.

    That being said, I am personally hoping for a recession or at least a correction. I have a decent sized list of companies I’d love to grab if prices come down!

    1. Thanks for the great comment, Andrew. As you know, we are coming it on different ends on this topic and I think that will be a mistake. I know folks who thought the same thing back in 2014 and it bit them in the butt. Another thing you have to remember is that not only do you have to time it right on the front end but also when getting back in. As you may know, the market often bounces back up as quickly as it can shoot down.

      Thanks for sharing your view on this very debatable topic!

  33. Totally agree with this. Its hugely unlikely that cash is going to appreciate in value so hoarding cash is only every going to result in a loss. May as well hold investments which have a chance of appreciating.

  34. Great food for thought! This is why it’s so important to diversify your portfolio. We have four rentals and hope to add a fifth next year. We opted to stop contributing to the 401k for a year or so, and even took a short term loan at one point, all in order to purchase rental no. 2. The plan is to rely on rental cash flow to off-set down years in the market.

  35. We’ll remain invested even during retirement. We have a few years of expenses in cash but that’s not new. We’ve kept cash on the sidelines to buy into the market during dips or for purchasing land, which gives us flexibility. But otherwise we’ll just fasten our seat belts if the ride gets bumpy, and stay the course.

  36. This is a very timely post to read. We are sitting on $300,000 cash that has built up over the past couple years. We have been investing over that time, but not enough of the cash obviously. Trying not to time the market but really have been waiting for a bigger correction. Now that this stash has built, we have been discussing investing much larger amounts monthly until we significantly lower this cash cushion, or keeping it to invest in a hobby farm (my dream) within the next few years. We paid off our current mortgage last year which felt amazing! Anyway, would love your opinion!

    1. Wow that’s a big cash pile! If you think the hobby farm purchase is coming in just the next few years than I’m not so sure about investing the money. If you think it is five years off or more than maybe you can consider dumping larger lump sums into the market on a monthly basis over the next year or so?

      Definitely a tough conundrum but it’d be great to get it working for you.

      Thanks for the great comment, LD!

  37. Steady as she goes for me. I have no intentions of selling and increasing a cash position. I am not worried at all about a recession or slowing economy. If you are a true long term investor you will inevitably hold stocks during boom and bust cycles. I went through 2008/09 with almost every stock you see in my current portfolio. I witnessed every holding go deep in the red but I did not panic nor sell one share. I simply stayed on course and continued to invest every month as I always have been doing and was able to average down quite a bit on a lot of my holdings. All you can do as an individual dividend investor is tune out the noise, stay diversified among your holdings and make sure the dividend remains covered. As long as that passive income continues to roll in I’ll be happy. I think quite a few of us are waiting for some type of correction to enable some stock buying at better prices, values and yields.

    1. Great approach and some proven strong fortitude you have managing through the 2008 recession! I completely agree with your approach. Given I’m a true long term investor like yourself, I wouldn’t mind a good buying opportunity every now and then.

      Thanks for the comment!

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