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IS IT TIME TO GET DEFENSIVE?
9/21/2018 5:51:48 PM
HOME : FEATURES : QUESTION & ANSWER : IS IT TIME TO GET DEFENSIVE?
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Wealth Builder
Gordon Pape writes on common-sense wealth-building strategies.



By Gordon Pape  | Friday, September 14, 2018


Q – 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.

A – 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 profits?

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.

Gordon Pape 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.

Follow Gordon Pape on Twitter at https://twitter.com/GPUpdates and on Facebook at www.facebook.com/GordonPapeMoney.

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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