If I were managing a mutual fund, I would always have about 20% of cash on the sidelines. Some of it would be used to meet redemptions on down days in the stock market, like today. That way, I wouldn’t have to sell good stocks in order to cater to investors who were selling because they weren’t actually prepared for the inevitable market pullbacks.
Buy Low Investment Strategy
But there’d also be plenty of cash remaining with which to “buy low”. I LOVE BUYING LOW.
I know what I’d buy, too. When you have cash reserved for days like this, and an investment strategy, you don’t have to wonder how to proceed. You’ve planned it in advance, and you get to simply enjoy the process of shopping for bargains in the stock market.
These are some of the most satisfying times in the market cycle.
Crista Huff offers insights into investment at Good Fellow LLC