Staying Invested When Markets Feel Uninvestable
How We Need to Navigate Today’s Volatility Using Critical Thinking, Together
Based on the mail I received, many of you are thinking of the pivotal moment in my financial life, the hours of February 27 that preceded the US-Israel invasion of Iran, when I moved my personal portfolio 100% to cash.
I bring this up again now because it illustrates a powerful truth about investing. I made that decision for one reason: to manage my own anxiety. I knew that with war on the horizon, and my publishing system being changed and moved to a new platform, I wouldn’t be able to think clearly. By removing the noise from my own screen, I gave myself the emotional bandwidth to focus entirely on what mattered most: my subscribers, your portfolios, and your peace of mind.
In my 2007 book, Lessons From the Trader Wizard, the most important point I made, shortly before the greatest market crash most of you have ever experienced, was this simple message: “Regardless of whether you are conservative, aggressive or speculative, in personality or philosophy, the first and simplest rule to trading is that if any trade causes you, or your spouse, to worry, do not make it. Or if you have already done so and worry about it, sell it.” That is five decades of experience on Wall Street talking. I personally reached that point on February 27. I sold the entire portfolio.
My Portfolio vs. Your Plan
That story, however, could be misinterpreted as a template for “what to do when things get scary.” Let me be absolutely clear: my decision to go to cash was for me, not as a model for you.
As a retired fiduciary, I cannot and will not simply mirror my own circumstances in yours. That would be like a tailor selling everyone the same off-the-rack suit. Your life, your goals, and your financial profile are unique. My job as a financial writer is to help you become market-aware and enhance your understanding of the financial landscape so you can design a portfolio custom-built for your life—or better support your trusted financial advisor in doing so. I do not and will not make heroic bets with your future.
Distinguishing the Signal from the Noise
Today and mostly since February 27, the screens are red, headlines are loud, and even seasoned investors are uneasy. It is completely rational to feel anxious when account values swing quickly.
The main sources of today’s volatility are a cocktail of geopolitics, interest-rate uncertainty, and economic growth worries. One moment Oil is priced at $120 and hours later in the $80s. One moment, the US President says the war will soon be over, that all he’s waiting for is “unconditional surrender,” and the next we are receiving real-time images of multiple cities in multiple countries being struck by missiles and drones.
Amidst this craziness, it’s vital to distinguish between the two things happening at once:
The Noise: Short-term price moves and panicked headline reactions.
The Signal: The underlying trends in earnings, inflation, and employment that actually drive long-term returns.
Volatility is a feature of long-term investing, not a bug. History shows that while the causes—the dot-com bust in 2000, the collapse of the global banking system in 2008, or the COVID shock of 2020—feel unique, the pattern of fear and eventual recovery is not. Missing just a handful of the market’s best days can devastate long-term returns.
What You Should (and Should Not) Be Doing
While concern is natural, the important issue is what specific actions you are taking. Inside your portfolios, I hope you are focused on disciplined, rules-based adjustments:
Rebalancing: Trimming areas that have run up and adding to high-quality assets that have become in the long-run temporarily cheaper.
Risk Checks: Reviewing concentration, credit quality, and liquidity to ensure everything is within expected parameters.
Tax Management: Actively looking for opportunities to harvest losses to improve after-tax outcomes.
Equally important is what you should not be doing: do not abandon your long-term strategy based on short-term fear, and do not try to perfectly time the “bottom” of a market crash.
Finding Yourself in This Moment
How you view this turbulence depends on your stage of life, which in almost all cases is different than mine at 83:
Young Accumulators: You are 35, have just started a family, and are automatically investing monthly. Your biggest asset is time and your future savings. While volatility is painful, it is also how future returns are earned. Staying invested and continuing your contributions means you are systematically buying more shares at lower prices.
Pre-Retirees (5-10 years out): Your portfolio has already been adjusted over the past years to reduce “sequence-of-returns risk.” Your plan includes buffers so that a market stumble just before retirement doesn’t derail your timeline.
Retirees: You have explicit cash and short-term reserves sized to fund your spending needs. This means you are not forced to sell stocks at the worst possible moment. Your withdrawal strategy was built assuming markets would misbehave periodically.
Others such as Those with High-Asset / Complex Accounts: The focus here is on preserving purchasing power, managing tax implications, and avoiding permanent capital loss. You want to stress-test for concentration risk, not react to daily swings. Many of you have personal financial advisors you trust and rely on. Now is the time to talk to them without undue influence from people like me who have no knowledge of you, your personal and financial circumstances, risk aversion, and so forth.
Understand my intent is not to replace anyone’s financial advisor but to help you better understand what’s happening in today’s investment markets so you can make better decisions. I am a financial writer, not your investment advisor.
A Simple Invitation
In moments like these, our brains can be our own worst enemy. I encourage you to limit your portfolio check-ins and avoid making big allocation changes without a plan-based discussion.
I am actively monitoring conditions and making thoughtful, evidence-based observations. If you are feeling uneasy, I invite you to take a specific next step: send me an email at billcara@gmail.com with ‘REQUEST’ in the subject line. Tell me what is on your mind so that I can address it in future writings.
We cannot control the markets, but together, we can control our mindset and our behavior.
Bill, your recent content on sovereign investment in commodities futures has been illuminating. Thank you, and well wishes. I am in 80% cash, 10% commodities, and 10% global equities and bonds myself.