|Years ago, during the last stock market melt-up circa. 1999, I did some corporate work for an incredibly wealthy family. I was a young attorney and probably made some comment about whether the family was--like all of us all back then--investing in the then-booming stock market.
Their personal lawyer, who was my liaison, pulled me aside and told me politely that the family was "not interested in getting rich, they were interested in staying rich." This left an indelible mark on me, especially when a year or so later the market suddenly imploded without any real warning. And yes, we all thought it was a bubble back then too, and we all thought we'd be able to grab a chair when the music stopped.
This cocaine-fueled rally is too much for me, and I'm out of equities for the time being. It's been a fun run and I've done well. At this stage, however, I'm more concerned with "the return of capital than return on capital," and I see cash as a future option to purchase equities at a discount to today's prices.
When I consider the risk-reward here, it's an easy decision. Although I think the next recession begins next year, I'd rather lose out on whatever upside remains than accept a massive drawdown.
And if I'm completely wrong? Well, I'll still have millions of dollars to dry my tears. I'll be fine, and that's the point. I'd rather stay rich than try to get richer in this euphoric environment.
On that note, I've closed on the sale of my last big investment property, took some profits from my law practice, and I'm going sailing this month.|