I think that we are going to see 20-30% correction in stock markets globally in 2020 or 2021. However, I'm not afraid of it, since I'm holding cash now. I wrote a blog post about my strategy. Basically I will keep investing every month and I am happy to buy more when the prices drop :)
Meanwhile you're losing money to inflation every day. Holding more cash than you need is a bet with the odds against you. I honestly have been expecting a 20-30% correction for several years now, and it has not materialized. If we had a 30% correction now it wouldn't even take us back 3 years. I would like to see one because I'm still buying, but I'm not expecting it. I'm only holding as much cash as I feel like I need for an emergency fund/cash buffer.
Agreed. The core of the type of thinking that Financialnordic is using is that the markets are somehow "overvalued" and that not only will it correct by dropping 20% or 30%, but it'll also start over and not recover, or at least take a long time to recover.
If that's someone's underlying thinking, then they really shouldn't be investing in stocks. Or relying on the 4% rule. Because the 4% rule depends on stocks doing what they always have - go up.
Any other approach besides "buy and hold" is just some variation on timing the market. Which will almost always leave you worse off than if you'd just stayed the course. It's true in the drawdown stage, and it's even MORE true during the accumulation phase. Really, if people are still building their nest egg, they should never, ever dance in/out of the market. Not unless they want to be yet another sad example of the Dunning-Kruger Effect.