Written by: Derek Majkowski. Any opinions are those of Derek Majkowski and not necessarily those of RJFS or Raymond James.
To us,
Liquidity – means cash.
Flexibility – means pliable and with options.
These are two words we often preach to our clients. Basically we want people to have enough liquidity to prepare for a rainy day, and enough flexibility to be able to bend – but not break should things get a little tougher.
What better time to take stock in your liquidity and flexibility than when asset prices are escalated in value, and things are presumably going well?
Recent history has taught us that risk and change can happen fast, and we never know when the direction of things can take on a completely different course than the one we are currently experiencing.
For years, people were waiting for things to improve after the “Great Recession”, and now as we review our 401k and brokerage statements, they have gotten better. For some, significantly so.
I will often say when discussing with clients the timing on selling an asset and raising liquidity, that we know where things are today, and we have no idea what tomorrow will bring.
Try not to outsmart it, or suddenly get greedy. It was not too long ago that there were large levels of fear in the market.
Use the recent market run-up as a time to kick the tires and check on your liquidity, and make sure you are flexible should things start heading in a different direction.
I am not predicting any change in direction or sudden drop in markets, and If you are currently comfortable with your liquidity and flexibility, great. Raising cash and preparing for a different course (which we can never predict) does not mean one abandons their investment strategy or financial plan.
Things may continue to go well.
All I’m highlighting, is that we know where things are today…
Use this time as an opportunity to make sure you’re comfortable with your cash position, and have the flexibility you need.
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