Should I Move Everything to Cash?

Don’t Go Shopping Hungry

I once heard someone say never to go to the store with an empty stomach and no shopping list. Chances are you'll forget to pick up a few things and come home with items driven by hunger rather than necessity. Similarly, making dramatic changes to your portfolio with unchecked emotion and no strategy can leave you in an unfavorable position.

Be Strategic

Investment decisions should be carefully thought out and made strategically. But cognitive biases get the best of us. Our biases such as hindsight, oversimplification, and the tendency towards loss aversion can push against our better judgment. But an overall strategy can help us see past the short-term volatility that can cloud our judgment. Panic selling is not an investment strategy.

It's easy to beat yourself up over what you should have done with your portfolio. But keep in mind that large investment firms with an army of intelligent people and more resources and investment prowess than the average person are not immune to portfolio downturns.

Don’t Lock In Losses

Investors who pull the emergency brake and bail out during a market decline almost always lock in a loss on their investments. And if they stay out of the markets, chances are good they’re going to miss the recovery, which further compounds any losses. Selling at a low – and then buying back when prices are higher – has never been a winning financial strategy.

While it is natural to be concerned about portfolio performance during declining markets, we can learn a lot about how we should (and shouldn’t) react. While it can be painful to ride out the storm, historically the most pessimistic periods often make for good long-term buying opportunities.

Of course, past performance is no guarantee of future results, but I encourage you to carefully consider all options before acting with your investments. I can't give you specific advice without knowing your situation, but hopefully, you have found my two cents helpful.