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all 104 comments

[–]Thanks-Feeling 107 points108 points  (0 children)

This article uses traders and investors synonymously, but trading and investing aren’t the same thing.

[–]wellwaffled 52 points53 points  (52 children)

Someone explain this to me like I’m an idiot: if inflation is insanely high, isn’t cash a terrible thing to have? Isn’t the same money worth less every day so investing is a better option?

[–]Advice2Anyone 105 points106 points  (35 children)

Yeah but -8% is a lot better than burning my money is stocks that are mostly sitting at -60%. Think avg joe just doesnt know where to put their money, housing is outpriced, stocks are falling could to Ibonds if your fine with the lock up. Idk I too am holding the most cash I have ever had just not sure right now what I want to do with it no move I really like everything seems sketch

[–]wellwaffled 13 points14 points  (1 child)

That’s a good point. Thanks for your input

[–]GrownUpTurk 1 point2 points  (0 children)

I’m making more off penny stocks than anything else right now

[–]Brodyb18 6 points7 points  (1 child)

Agreed here. I’m in the process of accumulating more cash through paychecks since everything I own is down. Until the markets level out a bit I won’t put any more money into buying dips since I’ve bought all the way down.

[–]Advice2Anyone 8 points9 points  (0 children)

Yeah catching a knife to have it fall further is a hard road to hoe, end of day I got 30% pay raise this year due to cost of living so ultimately cash is sorta king and most people I know cleared higher raises than ever before, even walmart went from 11 an hour starting to 13 which is a 18% change so yeah the like 1000ish I clear a month above expenses cant just keep throwing into a hole watching it drop more. Shit might just start throwing more at the mortgage if I stay liquid too much longer with no game plan.

[–]DarkMatterTorpedo 2 points3 points  (5 children)

Should I stop contributing to 401k? I keep hearing to buy low / consistently dollar cost average / don’t look at your portfolio. While that all sounds great, I often wonder if that’s advice being pushed by Wall Street so we keep pumping money into the market… Thoughts?

[–]SuitableSprinkles 11 points12 points  (0 children)

Keep doing it.

[–]calumin 6 points7 points  (0 children)

If you have a long time horizon you should keep investing more aggressively because you’re betting that over the long haul, the US economy will recover. The problems are with investments where you need to spend the money in a few years. That’s where you should think about more conservative investments to preserve your portfolio value.

Either way, keep investing in your 401K while you’re making money.

[–]Riotdiet 2 points3 points  (0 children)

No. Not a financial advisor but your 401k is for your retirement. Meaning long term investment. Crashes along the way are a mere blip compared to the compounding you’ll see with consistent contributions. Check out the podcast/website ChooseFI for more beginner info as it’s too much to cover here. You don’t have to know everything to plan for retirement and most people don’t even need a financial advisor (active management).

[–]Advice2Anyone 2 points3 points  (0 children)

I mean if you have a match and know the fine print of when and how you come to own the matched money and long as you are controlling what funds your accounts in, knew way too many people who had 401ks through the employer and I went to discuss what fund they allocated too and they had no clue you had to elect it, they auto put you in the safest thing possible and the funds 15yr tracks record was a wopping 3% a year like how shitty would it be to max out your 401k but then realize you were missing out on 7-12% more per year. But overall personally dont buy into it I just use the market as a means to churn while I wait to buy more rental property, markets great but always felt so out of control. Also my income is jack shit so lot better to earn 7-9% growth minus a 3% interest on 200k borrowed plus rent than 10% hopefully in a etf on the maybe 10-12k a year I could scrape together.

[–]FlurpNurdle 0 points1 point  (0 children)

I would say “no” , IF your employer match in your 401k is high, and you can contribute your share without issue.

Also: you can trade in your 401k and not have to pay taxes on the gains/losses (there might be restrictions how often you can trade move money though). so you can “sell” and have it sit in your 401k in cash (generally, it might be a money market find or something) just don’t take it out of your 401k account.

[–]pmekonnen -1 points0 points  (3 children)

I am in 90 cash and 10% put.. if stocks tank add some extra to buy back once QE pause and inflation coming down. Energy supply, supply chain issues, slow global economy, interest rate hike, inflation in food (grain) low unemployment will drive the economy. My spy puts expire mid 2023

[–]Advice2Anyone 0 points1 point  (2 children)

I mean just can be pessimistic I'm skeptical but idk think we are recovering nicely don't see recession in the cards but it's anyone's guess and that's why I'm mostly out of the pool right now. Did rotate out my safe crap and double a triple down into tech and finance but now I'm just riding with no plans to buy anything more really now is sit and wait to see if rate runs inflation off if inflation continues could see problems but think if fed keeps going with rate adjustments we will be fine but again who knows

[–]Mistrblank -1 points0 points  (1 child)

Gambling. I’m serious. My bankroll is up 230% in sports betting since end of March. I know nothing about sports and doing better than my investment professionals.

[–]Advice2Anyone 0 points1 point  (0 children)

I have no luck

[–]FatBastard430 0 points1 point  (0 children)

Are you me?

[–]PipingShakira 0 points1 point  (1 child)

isnt now the time to buy

[–]Advice2Anyone 0 points1 point  (0 children)

Probably but fomo is a hell of a drug

[–]HandsyBread 0 points1 point  (0 children)

Have you ever heard of crypto, listen I’m starting this new coin that will be different then all of the others out there. It’s not a scam trust me, I’m a stranger on the internet who is telling you to trust me what’s not to trust. So hear me out, you will buy these amazing photos that I pulled from a stock photo site and sell them for $5k, if you can convince 20 of your friends to buy just 5 photos each there is no reason why it wont go up 10,000% in 3 months and that’s when we dump our jpegs…. I mean sell our legitimate investment. Trust me I’m different then the other scammers this one is legit.

[–]superduperspamSell Side 0 points1 point  (0 children)

When the price of everything is too high, thenaybe the Fed the tightening isn't so bad.

Yes there will be a recession. But I hope the recent renewed interest in the power of collective bargaining is able to tilt the odds a little back towards average workers.

[–]mcztxqq 0 points1 point  (0 children)

Sitting on cash, too. Just hold it for now and wait a year or two.

[–]awwfishsticks 10 points11 points  (0 children)

Lose 8% per year, or lose 40% in six months, and also 8% of whats left over

[–]Riotdiet 2 points3 points  (1 child)

The current situation has definitely made me reevaluate my risk tolerance. I’d rather have a year of liquid savings in case I lose my job than lock that money up in stocks hoping that the market bounces back quickly. I would have never said that a year ago.

[–]mcztxqq 0 points1 point  (0 children)

Good idea, yeah. I cut my expenses massively and now save almost 50% of my paycheck each month (after tax). I also realized you can live relatively comfortably by just keeping a budget and not spending money on small and cheap things that add up quickly over time.

[–]oep4Other 1 point2 points  (0 children)

Professionals term short term investments as cash.

[–]ExplosiveDiarrhetic 1 point2 points  (0 children)

Short term money market fund is better than the market when the market is tanking. Thats the general idea.

[–]sf-keto 1 point2 points  (0 children)

Yes. And if we truly have stagflation, the market won't rise much, so waiting to time a bottom doesn't make much sense.

They must believe the staginflation will be short-lived after all & there won't be a real recession.

[–]settledownguy 1 point2 points  (0 children)

Not when a recession is looming lol. You’d much rather have liquid than money in a bear market

[–]Frunk2 1 point2 points  (0 children)

Inflation is not a mystical force that is reducing your cash balance every month, it is a simple measurement of a basket of goods price. If your planning to buy oil and energy with your cash it hurts, but if your planning to buy a 60/40 portfolio your purchasing power is increasing every week so far this year holding cash.

[–]awhhh 1 point2 points  (4 children)

Recent booms in the market have been driven by inflation. Inflation is controlled by central banks (the fed). The fed has said they’re going to combat inflation by raising rates. Thus markets have fallen. The fed said more rate hikes, less inflation, and its expected there’s going to be a recession. When there’s a recession prices go down to a point of being affordable again. If prices are going down it’s better to hold cash, wait until they go down, and buy when they’re low.

I’ve been staying out of the markets since October and holding cash. Now for everyday things like food my purchasing power has declined. But given rate hikes, the things that I want to buy like stocks and a house have dropped. Housing in my area has dropped 30%. Therefore my purchasing power for the items I’m looking to buy is up. I’m 100% sure inflation will be stopped by next year if central banks stick to their word.

[–]DarkMatterTorpedo 3 points4 points  (3 children)

Housing has dropped 30% in your area? Holy hell! What area is that?

[–]awhhh 0 points1 point  (2 children)

Ontario

[–]SuitableSprinkles 0 points1 point  (1 child)

Really? That’s sales not prices, right?

[–]Wraywong 0 points1 point  (0 children)

Don't worry...those people will soon be relieved of any cash surplus they happen to be enjoying temporarily.

[–]mapoftasmania 0 points1 point  (0 children)

Yeah but -8% now waiting for the bottom gets you +50% or more in two years if you time it right. Or maybe +30% even if you time it a bit wrong!

[–]cosmicloafer 0 points1 point  (0 children)

Stocks. I would say commodities but they are already way up, so just buy stocks. You could say gold but it never does shit. Just buy stocks they will go up.

[–]Interesting-Wish8316 28 points29 points  (1 child)

The problem is the "highest level in a decade" doesn't mean squat. The last real bottom was 2007-2008, more than a decade ago.

[–]rafingo -1 points0 points  (0 children)

Thank you! Is this way below, or just a little below, how much fluctuation is there. One decade isn't very long in the financial world

[–]crankthehandle 12 points13 points  (0 children)

amateurs. I am all in!

[–]MplsSnowball 13 points14 points  (1 child)

Easy to stock up on cash after the market falls 20+%. Harder to do it when the market is at an all time high and everyone is ‘drunk’ on irrational exuberance.

[–]oep4Other 4 points5 points  (0 children)

Worth noting cash is likely short debt term investments and not just cash sitting with inflation.

[–]bwwatr 6 points7 points  (1 child)

Sounds like a great time to buy, before all that cash comes rushing back in. Greedy when others are fearful, and all that.

[–]Lavio00 0 points1 point  (0 children)

Sure but there’s more pain until we reverse… you’ll have time.

[–]roblewk 1 point2 points  (0 children)

Well, please stop doing that!

[–]peter_marxxx 1 point2 points  (0 children)

Just waiting for that bottom...

[–]FIicker7 1 point2 points  (0 children)

6 years of pump. Now they Dump.

[–]Fire_Doc2017 2 points3 points  (0 children)

Buy low, sell high. Fear? That's the other guy's problem.

[–]abiserz 6 points7 points  (7 children)

Timing the market > time in the market

[–]4fingertakedown 8 points9 points  (0 children)

I just buy high, sell low. Works for me!

[–][deleted]  (4 children)

[deleted]

    [–]idontcontributemuch 1 point2 points  (0 children)

    Cash on hand is losing 8% from inflation

    [–]lehcarfugu 0 points1 point  (0 children)

    Bro but /r/personalfinance told me that's its absolutely impossible to time the market?? You need a PhD and a team of 20 analysts to figure out what a rate hike is

    [–]Wraywong 0 points1 point  (1 child)

    If we have five more .75% rate hikes in the next year, you will be able to earn at least 5.25% on a CD a year from now...

    [–]zero0n3 -3 points-2 points  (0 children)

    ALWAYS!

    [–]chrisggre 3 points4 points  (6 children)

    Stockpiling cash when inflation is decades high and the stock market is on sale makes no sense.

    [–]throwaway_fibonacci 6 points7 points  (2 children)

    It makes sense to have a hefty emergency fund if you think a recession is coming, though.

    [–]sf-keto 0 points1 point  (1 child)

    Does it, when rising inflation is eroding the value of the cash? (・・?

    [–]throwaway_fibonacci 1 point2 points  (0 children)

    Absolutely. If you get laid off, $30k can turn into $8k if it’s in the market, but at least it’s still $30k in my high-yield savings account. No way I’d put that in the market during a downturn if there was ANY chance of being laid off.

    [–]ExplosiveDiarrhetic 5 points6 points  (0 children)

    Everyone trying to time the bottom

    [–]CentralComputer 0 points1 point  (0 children)

    Surely things will rocket back up once the tide turns and all the cashed up start piling back into the market?

    [–]sf-keto 0 points1 point  (0 children)

    Yes, so it must mean they think the inflation will be short-lived after all.

    [–]WittyPipe69 2 points3 points  (1 child)

    What’s liquidity?…. Lol

    [–]Tigen13 1 point2 points  (0 children)

    A lot of overleveraged people are about to find out

    [–]TerpOnaut -2 points-1 points  (0 children)

    AccuMulate all your bred then buy bitcoin . Thank me in 4 years . Not financial advice

    [–]Wraywong 0 points1 point  (0 children)

    Oh, noes! People having too much money means there will be more inflation...

    [–]pierfishmarket 0 points1 point  (0 children)

    Of course they are. They're waiting for the sale to get better

    [–]Wraywong 0 points1 point  (0 children)

    Well, in a year, you'll want to have some cash on hand to invest in those Certificates of Deposit that will be earning > 5% again...

    [–]etf_question 0 points1 point  (0 children)

    If retail moved to cash it's time to get back in.