Prudent time to move from stocks to cash

On April 21, 2011, I wrote

Now seems like a good time to start thinking of moving out of commodities and equities and into cash.

And indeed, on April 30, 2011, the US stock markets and oil started to drop from their post-crisis highs.

Probably just a lucky guess, but my current guess is that the US stock rally we’ve seen in this last week of August will (like the July rally) be undone during September and then some. If you didn’t get out of stocks in April (or July), maybe now is a good time to cut your losses.

I just want to preserve my 401(k) contributions for retirement. Today, my “personal rate of return” for the year is 5.4%, while the S&P 500 is down almost 5% for the year. I’m probably too risk averse, but this year that’s working out well for me.

See also “Unemployment is forever in the US” and “USA bear market for at least 10 years — a demographic argument“.

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1 Comment

  1. The April 21 advice was actually pretty good, but this post was dead wrong. In 2011 the S&P 500 index dropped over 15% from April 21 to only 4 months later August 19, but then it recovered it all by Feb. 2012.

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