Background: I’m nearing retirement (not early, alas, thanks to my ex-husbands midlife crisis). I’ve never so much as touched my retirement accounts before this year.
As a medical professional with an extensive molecular biology background, I put half my retirement account into cash before the drop because of Covid, and came out ahead.
I’m now considering going to cash sometime before the election and waiting to see how things shake out. Markets hate uncertainty and it’s likely to take some time for all the ballots to be counted. Considering that we will likely be in a third wave of Covid at the same time, I’m not expecting things to look good. “War game” type evaluations of the election have predicted riots in the streets in every scenario except for Biden winning by a large margin (which I doubt will happen). A
I fully understand that by doing so, I might miss out on some run up in the market. That’s traditionally the argument against market timing - that most gains are made in relatively few days out of the year. I get it. But given that I’m so close to retirement, the risk of a huge drop that doesn’t make a v-shaped recovery would have a huge negative impact, versus the opportunity to buy back in after a drop could significantly improve my retirement. These are much bigger impacts than the worst case scenario of missing out on a short term run up in stocks.
I feel that the coming likely disruption is more predictable than the typical “the market is overvalued” kind of market timing - we’ve all seen overvalued markets continue to grow for years past that point before the bubble pops.
The real question to me is when to get out. Now? Right before the election? Dollar cost average my way out over the next month?
(Btw I expect some kind of bump when a vaccine is released but that is not likely before the election despite Trump’s bluster. It’s a BARE MINIMUM to require two months follow up after the second injection. )