Someone I know nailed the peak in 2007. They sold almost to the exact day of when the S&P 500 hit its high. I remember having some version of the "oh wow that's incredible" conversation with them every year up until 2013. We were having the same conversation until we realized...the S&P recovered all of those losses. On a long enough timeline, even before factoring in any dividends, it was a losing trade to sell in the peak of 2007 and sit in cash. This was no longer a stroke of genius because there was no strategy to get back in. Every year, there was a different reason to be nervous about stocks and not get back in. "Fiscal Cliff", "Quantitative Easing" "Not earnings-driven, just multiple expansion" "labor force participation rate" etc. Nevertheless, equities continued to drive upward and decimate the "trade equities for cash" move in 2007.

I mention this because I made the same mistake here in 2020 in one of our accounts. I remember the day I saw the drone footage from Wuhan of empty streets, airports, bridges, etc. This triggered the thought that the same thing was coming to the United States. It was not an "if" but a "when" This was it. I remember showing the footage to my wife and saying "this will come here" and her not believing it. But I did, so...I sold. This trade was right, at one point it was very very right. It was a conversation piece "oh wow that's incredible" until it wasn't.

This morning the Dow Jones crossed 30,000. Of course, it's a meaningless milestone, most round numbers are, but its significance is not lost. The year began at 28,500. With 5 weeks left, the Dow finds itself north of 30,000. In the middle of a pandemic, through riots in the streets of cities all across the globe, through elections and impeachments, recessions, and record unemployment, the Dow sits higher today than it did earlier this year.

Even before factoring in any dividends, it was a losing trade to sell stocks for cash at the beginning of February. There's always a reason to sell...but on a long enough timeline? It's wrong.