FILE – In this May 26, 2020, file photo, a grizzly bear roams an exhibit at the Woodland Park Zoo, closed for nearly three months because of the coronavirus outbreak in Seattle. Grizzly bears once roamed the rugged landscape of the North Cascades in Washington state but few have been sighted in recent decades. The federal government is scrapping plans to reintroduce grizzly bears to the North Cascades ecosystem. (AP Photo/Elaine Thompson, File)Associated Press
Deploying cash during a bear market can be difficult as fear sets in.
It’s smart to have a plan — don’t enter the market all at once, and don’t panic.
Experts suggest buying quality dividend stocks and large-cap tech if a bear market comes around.
If you’ve been building up a big cash reserve over the last few years, you’re not alone. You’re also probably not alone in wishing you’d had the money in stocks.
Cash has generated meaningful yields since 2022 after the Federal Reserve went on a rate-hike spree, drawing record amounts into money market funds.
The total value in money market funds — highly liquid, cash-equivalent assets that generate yield from short-term bonds — is at a record $7.3 trillion. About $2.1 trillion is held by retail investors. Even stock-investing icon Warren Buffett holds a record cash position worth nearly $350 billion as of March.
But stocks have ripped higher in the meantime. The S&P 500 is up 80% since its October 2022 low. It’s been difficult to know when to get into the market, though. With the stock market consistently hitting new highs and valuations historically elevated in recent years, you might have been waiting for a good opportunity to put that cash to work in equities, waiting for a dip to buy. If you missed the April plunge, you might still be doing so.
It’s not necessarily a bad approach. Goldman Sachs said this week that the chance of a stock-market pullback has jumped. In fact, stocks are so expensive that Vanguard said this mont that its ideal portfolio over the next 10 years is a very conservative…
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