After the horrifying terror attacks in Paris over the week end, it is inevitable that we will get a short term stock market sell off on Monday. This is precisely why you should always have a percentage of your portfolio in cash. Cash is a call option with no expiration date, an option on every asset class, with no strike price.
Business Insider – There could be a knee-jerk reaction in the global markets
Because I am not 100% invested in the stock market – I will not be worrying about my portfolio on Monday, panicking, or doing something counterproductive to my long term returns. I will be shopping for bargains – hopefully buying a stock or ETF that is on my watchlist, with a substantial Margin of Safety.
Warren Buffett – “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”