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<\/figure>\n\n\n\nSource: Federal Reserve Bank of St. Louis1<\/sup><\/em><\/strong><\/p>\n\n\n\n As uncertainty grows over how much longer the global\neconomic expansion can last, central banks and governments have been posturing\nto respond with fresh economic stimulus, rate cuts, or both. But at the same\ntime, investors have been increasingly pouring into safer assets like U.S.\nTreasuries. As you can see in the chart below, the 30-year U.S. Treasury (red\nline) and the 10-year U.S. Treasury (blue line) have been in a sustained\ndecline as demand for safety continues to rise. <\/p>\n\n\n\n Source: Federal Reserve Bank of St. Louis2<\/sup><\/em><\/strong><\/p>\n\n\n\n Some investors may look at the broader picture and think, \u201cWouldn\u2019t\nnow be a good time to go to cash?\u201d If the future is this uncertain and all the\nsigns are pointing towards a recession and weak stock performance in the\nshort-to-medium term, why not just shift to cash and wait until the economic\noutlook improves?<\/p>\n\n\n\n ________________________________________________________________________<\/p>\n\n\n\n As Volatility Persists, Base Your Investing Decisions on Hard Data<\/a><\/strong><\/p>\n\n\n\n Trying to time the market and go to cash, in my view, is not\nthe best option. Instead, I recommend planning for the long-term. When\npreparing your investments for more volatility and a potential recession, it is\nimportant to keep an eye on key economic indicators. To help you do this, we are\noffering all readers a look into our just-released September 2019 Stock Market Outlook report.<\/strong>\n<\/strong><\/p>\n\n\n\n This\n22-page report contains some of our key forecasts to consider such as:<\/p>\n\n\n\n If you\nhave $500,000 or more to invest and want to learn more about these forecasts,\nclick on the link below to get your free report today!<\/p>\n\n\n\n IT’S FREE. Download the Just-Released September 2019 Stock Market Outlook<\/a>3 <\/a><\/sup>>><\/a><\/strong>\u00a0<\/p>\n\n\n\n ________________________________________________________________________<\/p>\n\n\n\n But my message to readers is that even in uncertain times, going to cash is not a good idea<\/em>. I\nbelieve that as a general rule, a high allocation to cash over the long-term\nraises the risk that an investor will fall short of achieving their financial\ngoals. The two exceptions to this rule, in my view, are (1) if a person has the\ncash earmarked for a short-term cash flow need, say in the next year or two; or,\n(2) if a person has sufficient wealth that they don\u2019t need growth to meet their\nfinancial goals. Outside of these two exceptions, I think you should plan to\nstay invested. <\/p>\n\n\n\n To see why timing the markets and avoiding risk by going to cash can be harmful, just look at what happens if an investor misses big up days in the market. The hypothetical table below looks at the performance of $10,000 invested in the S&P 500 between January 4, 1988 and December 31, 2018. It\u2019s important to note that this $10,000 was exposed to two of the biggest bear markets in stock market history, the 2000 tech bubble crash and the 2008 global financial crisis.<\/p>\n\n\n\n Even\nmissing the 10 best days over that period meant leaving half of your potential total return<\/em> on the table. <\/p>\n\n\n\n But\nhere\u2019s the real kicker: Six of the 10 \u201cbest days\u201d in the market were within\njust weeks of the worst days in the market. In other words, some of the best\ndays often happen as \u201cv-shaped\u201d bounces off the worst days. Going to cash on a\nbig negative day means increasing the risk of missing a big positive day, which\nas you can see from the table above, can have a significant impact on total\nreturn over time. <\/p>\n\n\n\n Bottom Line for\nInvestors<\/strong><\/p>\n\n\n\n Uncertainty and volatility in the equity markets is likely\nto persist for the balance of the year and beyond. But an investor\u2019s response\nshould not be to run for cover and go to cash, in my view. I firmly believe\nthat doing so reduces your chances of reaching your long-term goals. Instead,\nif the uncertainty and volatility has you nervous about what the short-to-medium\nterm holds, I would recommend revisiting your asset allocation, where you can\ncontrol your risk profile by investing in different categories of equities and\nfixed income \u2013 and tweaking your exposures to each.<\/p>\n\n\n\n![\"\"](\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/02\/image-2-of-3-Sep-7-motm-1024x395.png\")
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