Hold Cash to Protect Yourself from FTSE Freefall
Sep 2nd, 2008 | By Ben Traynor | Category: International InvestingFleet Street Daily editor Ben Traynor says more and more analysts are predicting a “calamitous” breach of 5000 for Britain’s FTSE100 benchmark index. Ben says the stock market slump means it is a good time to increase your holdings of cash…
Today we’re tackling perhaps the most fundamental question in investment. What’s going to happen next?
I could embark on a truistic homily about how it’s not given to man to know his fate… how we must play the hand we’re dealt… or something along those lines.
But you already know all that. So… what do we think will happen next?
I cornered Theo Casey, The Fleet Street Letter’s investment director, and asked him a monster question.
What will be the next big move for the stock market? “Well,” he answered, in his typically cautious, investorish manner. “I wouldn’t want to pin my eyeballs to this… but a fall below 5,000 is a real possibility.”
The FTSE 100 is, at the time of writing, at 5,628. A fall below 5,000 would be calamitous.
“Of course,” adds Theo, “I do hope I’m wrong. But I’m preparing in case I’m right.”
Theo’s not alone in this view. Several prominent analysts have expressed similar concerns. It raises the obvious question – is there anything we can do about this?
Well, there is one obvious answer – one that tends to get forgotten. You can simply hold cash. I’ve already told readers of The Fleet Street Letter that there is nothing wrong, at times like this, in holding more cash than you’re used to.
That may not be terribly exciting advice. But, to me, it makes sense.
“But you don’t have to completely cash out,” adds Theo. “There is a way you can prepare. However, I fear many investors will do the one thing they shouldn’t, mistakenly believing it’s the best way to minimize risk.”
Read on to discover what investors should – and shouldn’t – do to prepare their portfolios
Source: How You Should (and shouldn’t) Prepare for a FTSE Nosedive
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