Our Director of Institutional Asset Management Ben Carlson wrote about the psychology of sitting in cash this week and it’s a big topic among traders right now. But should it be a big topic among long-term investors?
The trouble with swinging to cash, even if you end up being right and selling out right before the market falls, is that then you have to get the timing right for when you buy back in. But market timing is hard on both sides.
There is also a change in psychology that takes root in the mind of someone who has just avoided a stock market sell-off. They begin to root for even further declines and see all new developments as potential negatives, rather than positives.
Michael Batnick and Josh Brown tackle the points raised in Ben’s post in this new episode of Live From The Compound. If you enjoy these videos and they’re helping you become a better investor, be sure to subscribe to our channel and leave some feedback in the comments below!