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Staying Cash for the Dip Is Just Plain Stupid

Aaron Levitt Jul 02, 2017


In case you haven’t noticed, the stock market has been on a tear for the last seven or eight years. Since the end of the credit crisis and Great Recession, equities have spent much of their time going straight up. And that’s continued this year.

But with valuations and prices for many stocks now approaching or exceeding historic norms, investors have become worried about a ‘dip’ or bear market for equities. To that end, many are starting to raise cash to rush in and buy the so-called ‘dip’ for the next long-term leg up.

Don’t do it.

There’s plenty of evidence that saving cash for the ‘dip’ ends up costing you more in the long run than just sticking to your plan. Holding too much cash can be hazardous to your health.

Are you thinking of cashing out from your 401(k) if you are switching jobs? Read on to know why it might be a bad move.

A Straight Shot Upward

Turn on any business news channel or read any financial publication on the web or in print and a common theme is starting to emerge – stocks are expensive. Even here at Dividend.com, we’ve begun to paint a cautious tone about the markets. And there is a reason to be cautious. Since the end of the recession, stocks have gone straight up. Since bottoming out during the recession, the S&P 500 – as represented by the SPDR S&P 500 ETF (SPY) – is up a staggering 218% without including dividends.

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