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The "gut" feeling

Cullen,

I am an admitted economic ignoramus.  However, just before the turn of the century, I had a "gut" feeling that the American economical state had over-stepped its boundaries and I took everything I had and put it into cds.  I came out looking like a genius, but I know it was just dumb luck.  The problem is that I'm having that same feeling in my gut again.  I know you're wise in the area of economics.  Do you have any "absolutes" that would tell you when to apply conservative economic policy?

 

Hi Troll,

I know the urge. But in my experience this sort of “all in” or “all out” mentality leads to sitting out of the market for long periods of time. The problem is, you not only have to time the out correctly, but you have to time the in correctly. Most people have a plan to get out, but don’t have a plan to get in so they end up missing huge parts of a bull market because they get frozen out. That’s why I am a big advocate of maintaining a form of a permanent portfolio and rebalancing it to match your risk profile.

I talk about the all in and all out mentality here:

https://www.pragcap.com/all-in-or-all-out/

"Pragmatic Capitalism is the best website on the Internet. Just trust me. Please?" - Cullen Roche