Capital preservation is your friend
There are better ways to preserve capital than being in all cash and/or holding $US especially if you want to reduce market risk if your measure the 'Market' as the DOW and/or S&P 500.
On a side note, one of the larger risks for the gen-X- group is losing the future value of their 'Human Capital'. Very smart Robots and intuitive AI software will replace a lot of the current labor intensive jobs. Therefore, how should they prepare to preserve their Human Capital?
It's a rhetorical question . . "Capital preservation is your friend".
-------------------------------------------------------------
Value investors are in it for the long term and typically own assets that are not overvalued. We are constantly evaluating our stocks to see if they are priced at/near fair value. Just because an Index is at an all time high does not mean our stocks are over valued and/or are at all time highs. In fact most all of my new Buys are at/near 52wk lows and I continue to sell shares in stocks I considered fairly and/or over valued. I also employ a strategy of building up low cost shares (over years) that preserves the purchasing power of those assets and increase the income generation (ie yield on cost) too.
To me it looks like your situation is more of a Capital Allocation move, one towards more stable income and low risk investments and/or asset allocation to stable low volatility holdings and assets that maintain their purchasing power.
-----------------------------------------------------
For me, w/ enough diversification, owning assets that generate income while maintaining (or growing) their value, buying undervalued assets and selling those that are fairly valued, shifting into low risk/high reward value propositions, and periodically balancing the portfolio and/or building cash reserves as the general economic markets dictate.
I did paid off the last of my real estate debt this year. I now carry no long term debt (all my real estate mortgages are paid off), have built up very large lines of credit that can be used to buy distressed assets, built several streams of income generating assets to more than cover all my current and future expenses (including health care insurance) and have several investment accounts (brokerage/bank/credit union) to escape any Black Swan credit freeze due to any natural and/or economic disaster. I do not use margin and have segregated the majority of my equities to cash only accounts (that do not allow the Broker to 'hypothicate' my securities). This hopefully prevents any specific account freeze 'lock-up' should my broker and/or their counter parties be exposed to any large derivative 'calls' on their book and/or client securities they hold.
It's not an all or none proposition for me (ie all Cash and/or Cash equivalent assets). Even at my death, beneficiaries will inherit all of my assets (revenue streams and all). Most importantly, they receive a step up in the cost basis so taxes do not wipe out the portfolio(s) net worth.
Markets go up and down and your capital allocation, asset type & mix need to be adjusted accordingly. Value investors try to accomplish this by holding and buying undervalued companies and selling those that are over valued.
EKS |
