Hello John, can you address the fire sale that you mentioned at the end of the article? Does that mean blue chip stocks that have been sold off? What about my resource stock portfolio. Do I hold on to that through the turmoil? Regards, Colin
Although we can do a good job at figuring out likely outcomes, getting the timing right sure is tougher. And you don't want to miss out on the upsides. That's the key reason why funding the emergency fund first is so important. It gives us the ability to not worry about food, fuel, housing if/when things hit the bricks. But let's us stay in markets that we are confident are going to take a hit someday. There is no reason to think that the resource stocks will not suffer price reductions in any general market decline. The flood to liquidity will drop prices of most all stocks. And as we've seen lately, fear of "inflation" and the Fed's response to what they call inflation has recently caused even gold sell offs too. Understandable, yet crazy.
If we keep our emergency fund fully stocked, then the next question becomes how much other liquidity we feel like having on hand that will position us to be able to buy during the downturn. On the one hand, that is trying to time the market. Very hard to do. On the other hand, it is happy liquidity to have even though not deployed. I personally like using that Dry Powder as collateral for selling far out of the money Puts to generate some better income on it. Fun and easy. Anyhow, I hold onto the resource stock portfolio, but find myself shifting from the juniors toward the producers. The precious metal producers have upside of the metals being in demand as fiat erodes, and also tend to come back sooner after a general market decline. The explorers are speculations. Fun, educational and the occasional BIG winner is why we have those. Lots of positives about such stocks, carefully selected. But they are speculations. Unwise to stick money in them that one can't afford to lose, especially as one approaches retirement.
Being in a position to weather the potential market storms, whenever they come, is good. Taking risks with money that you need in the next year, that's not so good. That risk taking when markets are roaring along is exactly what hurts later, as the markets take a tumble and people belatedly try to get cash for their near future needs, sending it down further.
Emergency fund first... The rest is tolerant of errors.
yes. I should be more clear on that. We should seek cash and cash-adjacent liquidity. Get a bit of interest on the cash-adjacent stuff (money markets, etc).
"Cash isn’t dead money. It’s financial optionality—ammunition for the next panic." Absolutely true and good to keep us readers tuned to the dangers of hanging on to the rising stock price tide right over the cliff when the far horizon has become the waterfall cascading down. I don't think it will happen all at once or across the full spectrum of publicly traded companies but, no doubt, the dumb luck crowd who hadn't invested carefully will be caught unaware and unprepared with dry powder and storage sheds full of junk. Keep hitting the drum and warning us friends. I appreciate it.
Thankfully, I already started doing your 3 liquidity suggestions at the beginning of 2026. Sitting on 50% cash now just waiting to buy during the fire sale.
And only 1 car for the both of us since Coronapocalypse
Hello John, can you address the fire sale that you mentioned at the end of the article? Does that mean blue chip stocks that have been sold off? What about my resource stock portfolio. Do I hold on to that through the turmoil? Regards, Colin
Although we can do a good job at figuring out likely outcomes, getting the timing right sure is tougher. And you don't want to miss out on the upsides. That's the key reason why funding the emergency fund first is so important. It gives us the ability to not worry about food, fuel, housing if/when things hit the bricks. But let's us stay in markets that we are confident are going to take a hit someday. There is no reason to think that the resource stocks will not suffer price reductions in any general market decline. The flood to liquidity will drop prices of most all stocks. And as we've seen lately, fear of "inflation" and the Fed's response to what they call inflation has recently caused even gold sell offs too. Understandable, yet crazy.
If we keep our emergency fund fully stocked, then the next question becomes how much other liquidity we feel like having on hand that will position us to be able to buy during the downturn. On the one hand, that is trying to time the market. Very hard to do. On the other hand, it is happy liquidity to have even though not deployed. I personally like using that Dry Powder as collateral for selling far out of the money Puts to generate some better income on it. Fun and easy. Anyhow, I hold onto the resource stock portfolio, but find myself shifting from the juniors toward the producers. The precious metal producers have upside of the metals being in demand as fiat erodes, and also tend to come back sooner after a general market decline. The explorers are speculations. Fun, educational and the occasional BIG winner is why we have those. Lots of positives about such stocks, carefully selected. But they are speculations. Unwise to stick money in them that one can't afford to lose, especially as one approaches retirement.
Being in a position to weather the potential market storms, whenever they come, is good. Taking risks with money that you need in the next year, that's not so good. That risk taking when markets are roaring along is exactly what hurts later, as the markets take a tumble and people belatedly try to get cash for their near future needs, sending it down further.
Emergency fund first... The rest is tolerant of errors.
Cheap liquidity windows do not last. The scarce skill is still deciding which assets absorb duration and credit stress when funding costs reprice.
Cash is dry powder. It also burns at the real rate of inflation. Balance.
yes. I should be more clear on that. We should seek cash and cash-adjacent liquidity. Get a bit of interest on the cash-adjacent stuff (money markets, etc).
Cash in hand, cash in accounts, metal in small denominations for crazy times and no to little debt.
Classify “little debt??….
Doug Casey always says buy gold.
If I wanted to get involved with gold, I would look at the junior miners.
You cant eat gold.
Good advice.
unpopular advice, but dead on correct. I like keeping my cash in an account that earns BTC monthly.
"Cash isn’t dead money. It’s financial optionality—ammunition for the next panic." Absolutely true and good to keep us readers tuned to the dangers of hanging on to the rising stock price tide right over the cliff when the far horizon has become the waterfall cascading down. I don't think it will happen all at once or across the full spectrum of publicly traded companies but, no doubt, the dumb luck crowd who hadn't invested carefully will be caught unaware and unprepared with dry powder and storage sheds full of junk. Keep hitting the drum and warning us friends. I appreciate it.
Tell myself the same thing daily for the past 20 years.
100%
Thankfully, I already started doing your 3 liquidity suggestions at the beginning of 2026. Sitting on 50% cash now just waiting to buy during the fire sale.
And only 1 car for the both of us since Coronapocalypse
Words to abide by.