IS IT TIME TO STOCKPILE CASH?

A recent article in the Wall Street Journal made some good arguments for building up cash positions due to recent increases and record highs in the stock market.  While I like to stay fully invested, I also realize the wisdom of having cash on hand to take advantage of opportunities when the market inevitably goes the other way.  Not to mention, having cash helps to avoid selling while prices are low, since you have the money to ride out the downturn.  

Before reading the article, I had already begun building up a cash position for emergency purposes.  So it's like they were preaching to the choir here.  I've been through enough high and low markets to know how it all works and was happily in a good position when the market tanked in 2008.  I had plenty of cash on hand then and was able to ride out the downturn without having to sell a single position.  Not only did I not sell, I added as much as I could afford, so when the market started to recover I ended up with way more money than I had before the crash.  Unfortunately I suffered my first heart attack not long after, so I was nearly wiped out by medical bills and had to start over.  

I'm happy to report, things are going well.  My new investment plan is working just as I'd anticipated and everything is in place ahead of schedule.  As I mentioned in my last post, I've been able to add an extra cash investment to my IRA this month and will do the same for my taxable account next month, which will effectively put me a month ahead on my investment schedule.  If I manage to do that a couple of times per year, imagine how much faster my new investment portfolio will grow.  We'll see how it all works out, but I have a good feeling about 2014.

All that being said, it's never a bad time to have cash.  Remember, when the going gets tough, the tough have cash.