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Transcript

Three Things Investors Should Do Right Now

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The past few weeks have been a rollercoaster for markets. From tariff announcements and Liberation Day volatility to trade truces with China, we’ve seen investor sentiment swing from bearish panic to bullish optimism. Recession fears have eased, and the market has rallied—up about 4.5% as of a few days ago. But with trade deals still in flux and potential black swans looming, what should investors do in this seemingly stable moment? Here are three actionable steps to take now, regardless of short-term market noise.

1. Raise Cash if You Need It

Now is a good time to assess your cash needs, especially with the market showing positive returns. Whether you’re planning a big purchase (like a car or home) or living off investments in retirement, having enough cash on hand is critical.

  • For pre-retirees: If you’ve earmarked market investments for upcoming expenses, consider liquidating those positions now. The market’s recent gains make it a safer time to pull money out compared to a downswing.

  • For retirees: If you use a cash reserve strategy (as I recommend to my clients), check if your cash reserves need replenishing. This approach ensures you have enough liquid funds to cover living expenses during market dips, avoiding the need to sell investments at a loss. Sell high-performing assets, like tech stocks that have surged, to rebuild your reserves.

How to do it: Review your portfolio for lopsided allocations. Sell overweight positions to rebalance and generate cash. Alternatively, if you hold bonds, consider liquidating some to use cash as a hedge instead. This cash reserve strategy is a cornerstone of my advice—search my Substack for more details if you’re curious.

Why now? The market’s up, but risks remain. Seize this window to secure your cash position before unexpected volatility hits.

2. Keep a Long-Term Perspective

It’s tempting to get swept up in the market’s current optimism—especially after weeks of gloom. But emotional investing is a trap. Just a month ago, recession fears dominated; now, sentiment is rosy. Markets are cyclical, and chasing short-term trends can derail your financial plan.

  • Revisit your goals: Your portfolio exists to meet long-term objectives, like retirement or a major purchase years away. If you’re young and saving for retirement, ignore daily market swings entirely. If your goals are closer, ensure your portfolio aligns with those timelines.

  • Avoid the hype: Resist chasing hot trends like Bitcoin, penny stocks, or individual names fueled by market buzz. A small “play money” account for speculative bets is fine, but don’t shift your core portfolio into risky fads.

  • Stick to fundamentals: For most investors, low-cost index funds with broad U.S. market exposure (like a total stock market or S&P 500 fund) are the bedrock of a solid portfolio. Add international exposure if it fits your plan, but keep it simple and steady.

Why now? Staying grounded prevents costly mistakes driven by over-optimism or fear. Focus on your plan, not the market’s mood swings.

3. Invest Cash or Reposition Bonds

If you’ve been holding cash or bonds, waiting for the “perfect” market dip, it’s time to act. Timing the market rarely works, and the recent dip may have been the opportunity you missed. With markets rallying and valuations reasonable, now is a solid time to invest.

  • Deploy cash: If you intended to invest in equities, don’t wait for another crash. Time in the market beats timing the market. Move cash into low-cost index funds, like a total stock market or S&P 500 fund, for broad exposure.

  • Reposition bonds: If you’re overweight in bonds and want more equity exposure, shift those assets now. Equities offer better long-term growth potential, and the current market strength supports the transition.

  • How to invest: You can go all-in with a lump-sum investment, which is statistically fine for long-term outcomes. If market drops worry you, use dollar-cost averaging—investing fixed amounts weekly or monthly (e.g., $25,000 of a $100,000 sum each month for four months). This spreads risk and eases emotional stress, though the long-term difference is minimal.

Why now? The market’s momentum and reasonable valuations make it an attractive entry point. Don’t let fear of a sudden drop keep you on the sidelines.

Final Thoughts

These three steps—raising cash, staying long-term focused, and investing idle funds—anchor your strategy in discipline, not market whims. The U.S. market has always rewarded patience, despite its cycles. I never bet against it, and neither should you.

For new investments, stick with simple, low-cost index funds tracking the U.S. market. They’re accessible, have low minimums, and deliver reliable long-term growth. Enjoy the current optimism—it beats the doomscrolling of a few months ago—but don’t let it cloud your judgment. Keep your eyes on your goals, and let the market’s ups and downs fade into the background.

Have questions? Drop a comment below or reach out.


Next Substack Live: Thursday, June 19th at 1pm EST.

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