Dan Celia

Financial Issues

March 2014 – Q: We were out of the markets with 100% in cash for so long last year. I am afraid to do it again this year. We are in our mid-sixties. What are your thoughts?

A: To begin with, my thought is that you should never look back and believe that you might have erred when you developed your strategy based on caution. Of course, you would have gained, but there is also true value in not losing. I never have recommended 100% in cash, and I believe that everyone should always have some money in the markets, but I have recommended a position of cash of 40% to 60%

In light of the lack of clarity, and with economic fundamentals being so poor, I believe this same strategy needs to stay intact as you move ahead into this year. Yes, you may miss another run-up, but I do believe you still need to maintain a large position in cash. Now is not the time (if you have nothing in the markets) to wean in. Let’s wait for the pullback – particularly in your retirement years.

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Dan Celia has been in financial management for more than 30 years. He works closely with AFA Foundation and can be heard six days a week on AFR Talk (afr.net).

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