Is it a bad idea to be holding cash in a bull market?

In today's bull market environment, it often feels like holding cash is for suckers.

That is until a job loss, unexpected medical bill, broken furnace, or sudden desire to buy a home hits you like a ton of bricks. Then, suddenly, nothing else matters except for holding said cash.

The worst case is that the above scenario is paired with a downturn in the market where paper gains evaporate and you're forced to generate cash by selling investments at a loss.

This is permanent wealth destruction (and we want to avoid it).

➡️ The irony of it all: when you're forced to sell investments at a loss, your total return is less than if you had just held in cash in the first place.

My clients and I work diligently to figure out what the right amount of cash holding is for their personal situation. Some have greater appetites for risk than others. Some have greater capacities for risk, but don't have the appetite for it. ("Appetite for risk" ≠ "capacity for risk")

As a financial planner, my job is to step into your shoe and give you a "menu of options". Then, you get to decide the path forward.