I have been reading the articles here on HC over the last few weeks relating to “Converting to Cash” and have been thinking about my scenario and options.
I spoke briefly with my Financial Advisor the other day on this subject and his reply to me was that all the ducks haven’t aligned yet for a major economic downturn and in his opinion there is still a run up to and beyond the 6000 mark and to miss out on this could be detrimental to the portfolio.
In saying all this he did say that it was “horses for courses” but if one had a sufficient reserve of cash funds i.e. approx 2 years, then there was probably sufficient risk coverage to wait a bit longer and take the punt. He did mention that one must have a good written exit strategy for when the strong warning signs came as time was extremely important.
He suggested the exit strategy should include things like; breaking your portfolio sell down into stages. The examples he gave were, Stage 1. 70% sell on initial signs and then a tad later Stage 2. the final 30% sell off. Also prioritising stocks to sell in each stage and also determining the value of stop loss settings would be important.
Following this conversation my thoughts are to get my cash reserves organised and then to set up my sell off strategy for when the time comes.
I would like to know if anyone would like to share if they have such a sell strategy, and if so what are the considerations that they have included. Also did they have a strategy in place for the last major downturn 07/08 and how did it stack up and what if anything could have been done better.
