Article by Sam Sweitzer
We don’t use the word ‘valor’ much anymore. It seems antiquated and almost cheesy.
I remember liquidating all my mutual funds in late 1996. It was the day after Allen Greenspan testified before Congress and described the “Irrational Exuberance” of stock markets. The psychological pain of giving up gains for the next three years was painful.
In this time of acute anxiety, it is painful to reinvest your increasingly precious cash. As this COVID-19 crisis continues to build, formerly reasonable people will start to predict the end of the world. They will appear on TV, armed with terrifying and accurate data that will serve to reinforce the wisdom of your caution. Every decline will enhance the beauty of cash until a type of terminal paralysis sets in.
Those who came into this crisis over-allocated to equities will be catatonic. Almost always, they will stare at their accounts, sit very still, and pray. Those few who look brilliant, oozing cash, will not want to give up their brilliance. So almost everyone is watching and waiting. In both situations, their inertia will set in like concrete. As a result, those with lots of cash miss a considerable chunk of the market recovery.
Terminal paralysis is cured with a well-thought-out battle plan for reinvestment. Make the plan and stick to it firmly. Execution will take strength of mind.
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