Should Investors Hold Cash on the Sidelines?

Описание: Michael Hanson, Fisher Investments' Senior Vice President of Research and Investment Policy Committee member, explains why keeping cash on the sidelines to time the stock market is often counterproductive for long-term investors seeking stock-like returns. According to Michael, given stocks rise in roughly 70% of calendar years, cash can become a drag on returns.

Instead of trying to time the market, Michael thinks investors should focus on their financial goals and objectives to determine proper asset allocation—the mix of stocks, bonds, cash, and other assets that drives long-term wealth building. Michael does suggest holding enough cash for a six-to-twelve-month emergency fund, or to cover any known upcoming expenses.
For most growth-oriented investors with medium to long-term horizons, Michael recommends maintaining disciplined stock ownership rather than dancing in and out of positions or holding excess cash.

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Investing in securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. Nothing herein is intended to be a recommendation. The opinions expressed are subject to change without notice.