Just read this article that financial guru Suzi Orman. She recently moved her investment out of tech and put 80% of her money in 3 to 6 month Treasury bills. She wants to wait how the debt ceiling crisis will play out. With such slim margin of Republican in the House, the extreme right wing seems to have most of the says. The spectacle of historic 15 times voting for the majority leader of the House was a direct show of their power. It is very scary and uncertain.
Today by noon, the Nasdaq was already up by almost 3% after 2% increase yesterday after the lovely key word of “disinflation” mentioned by the Fed chairman. Apparently, many investors have different sentiment from Ms. Orman. Ray Dalio said cash is king now and no longer trash.
What should we do? The only thing I know is that it is very hard to predict the future of debt ceiling, recession, inflation, interest rate increase and etc. The only thing I would do for myself is not to take any extreme measure by betting on one position. It is better to maintain a balanced and diversified portfolio with different investments that perform differently under the same economic condition because we just don’t know. That means I won’t change drastically the mix or percentage of each investment. When I have extra cash, I will take a look at the market, if there is something in my investment plan that I am supposed to add is relatively cheap, I will buy it. If nothing at all, I can add to my cash position. If I see something is relative too expensive in my portfolio, I can sell some.
There are so many opinions out there. If we listen to one and it turned out to be wrong, we are the only people to pay the price. Only a well-diversified portfolio can give us option to take advantage of any financial market conditions or at least to have some cushion when we need cash.