Let's see... Financial advisor, check.
Been through two major market disruptions before, check.
Uses passive investing via low cost index funds, check.
Fully aware that active trading doesn't beat the market long term, check.
Wonders every day if this time he should have sold it all before the drop, also check.
Yup. I am not immune. The mind plays tricks on all of us. I have seen folks who have preached the whole, "dollar cost average, stay the course" mantra for years suddenly ask me, "should I go all cash?" I myself wonder, especially since my wife is a physician, shouldn't I have known that a pandemic would be pretty bad for business? Why didn't I sell as soon as I started thinking seriously about it?
Why not? Mainly because my crystal ball is a lot like the Liberty Bell - cracked.
Below is the three month DJIA chart as I'm writing this:
I guess it would have been nice to have gone, "all cash" some time in January or early February. But why would you have? If you were an American bear, why wouldn't you have sold ages ago? And if you did, what did you leave on the table? And how would you decide to get back in? There have been at least five significant upward moves in the market since it began dropping in late February. When would you have sold, and when might you have bought back in? Statistically, likely at exactly the wrong times. Will it still be up on the day when the market closes? No idea. Will we see a retest of the lows, as we have previously? Maybe? Probably? Who knows?
You want to know the last time I went as close to "all cash" as you can get in my personal accounts? Right after the Financial Crisis. I stayed underweight equities for my age until 2012 or so. According to the DQYDJ calculator, I cut my total return in half. IN HALF.
Now, how have the American bears done over time? Let's just look at the DJIA over the course of my lifetime:
Finally we have a graph that makes it obvious when you should have bought into the market: literally whenever you had the money. Is it equally as obvious when you should have gotten out?
The pennant below hangs behind the desk in my office. It helps remind me when I'm getting too smart for my own britches. Sure, it's fun to talk about, and yes, we do need to prepare for possible futures, but we don't need to make the present any more difficult than it is by questioning our inability to predict them.
Be safe. Take care of your families. Stick to your plan - ideally it was designed with these market gyrations in mind. If you don't have a plan, consider using some of this forced down time to create one.