Holding Cash and Great Returns

Most people do not see that these the two things holding cash and great returns can actually work together.  Most people just assume if you aren’t investing all the time you aren’t going to make good returns, not true.

You don’t need to be in the market one way or another at every moment of the day in order to make fantastic returns on your money.  In fact if the markets are hard to trade and you are just losing money by being in you probably should hold more cash.

Here are some great reasons why you should hold cash.

1.       When the markets are volatile it can be hard to trade.  So why bother, if you are getting stopped out for small losses constantly you would probably be better off sitting out for a while, at least until the market starts to turn around.

2.       There will always be another bull market.  Markets repeat themselves, there will always be another bulls market even if you think this is the end of the world and the markets will never recover. When the bulls do come out you want to have money to trade with.  So park your cash in a safe spot and wait it out.

3.       The best traders and investors of our time hold cash.  Look at Buffet, he holds a ton of cash when times are not right for investing and he has been beating the market for many many years.

4.       You don’t have to be holding all cash.  You can still trade some, but if you are losing you want to trade a lot less then what you would be trading normally.   You could also try to take advantage of some option selling techniques in a volatile market, but if you do it should only be a small portion of your account anyway.