– You have urged readers to be cautious of the global mess bring created by
Trump and the possibility of a stock market crash. My question/conundrum is
this: Is it worth incurring the capital gains to move to a cash/defensive
position to avoid a possible market fall? – Barry D.
– This is an excellent and timely question. I wish I could provide a
definitive answer. But to do that would require clairvoyance, which I do
not claim to have.
Here is what we know. This current-year bull market is the longest in
modern history and won’t run forever. Stock prices are high, and the risks
of an all-out global trade war are real, which will not be good for
anyone’s economic prospects. Many respected market analysts are warning
that there is trouble ahead.
You have to make your own decisions in that context. Review your portfolio
and determine how vulnerable it would be if we had a repeat of 2008. Would
the potential loss be worse than the capital gains tax exposure on your
I would never suggest selling everything, since we can’t know how events
will evolve, especially given the unpredictability of President Trump. But
I do think that increasing cash reserves is not a bad idea at this point,
especially for older people with a relatively short time horizon.
is one of Canada’s best-known personal finance commentators and
investment experts. He is the publisher of
The Internet Wealth Builder and The Income Investor
newsletters, which are available through the Building Wealth website.
For more information on subscriptions to Gordon Pape’s newsletters,
check the Building Wealth website.
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Notes and Disclaimer
© 2018 by The Fund Library. All rights reserved.
The foregoing is for general information purposes only and is the opinion
of the writer. Securities mentioned carry risk of loss, and no guarantee of
performance is made or implied. This information is not intended to provide
specific personalized advice including, without limitation, investment,
financial, legal, accounting, or tax advice. Always seek advice from your
own financial advisor before making investment decisions.
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