People discussing cash needs seem to focus on the "Crash of '20". The actual market crash not the long term result that lasted through the 30's. Remember, in '29, there was no FDIC or bank regulations and banks were heavily invested in the markets. when the markets crash, so did the banks. When the banks crash so did the economy. We also had no Fed, no SEC. These changes will help to prevent the long term effects that the '20 crash had. In fact, I beleive they helped make the '87 Crash so short lived. Furthermore, during the depression, the cost of living was dropping. During the 2 decades of 1920-1940, the COST of living declined an everage 1.5% a year. So, if you do loose some money you will be able to withdraw less.What really scares me more in a repeat of the late 70's and early 80's when inflation was 12% and interest rates were 18% and the stock market was going no place. However, that was a period where people with fixed rate loans and strong net worth really made money. I had an 8% mortgage started in 1975. The next time you could get an 8% mortgage was about 1995. I had 25 years of $200 a month house payments. I could have given the property away and been ahead (try renting a 4 bedroom house on 10 acres for $200 a month). People retired at that time on a fixed income had a real problem. They couldn't grow earnings or "safe withdrawals". I now have a 6.75% mortgage on a different house. If the Fed keeps going I should soon get that out of MM funds.Everything in life is relative. We have to determine our own risk tolerance. However, I believe we should then look at the times we live in, compare the opportunities, determine the real risks in different strategies and make our choices. I tend to subscribe to Dents 2008 concept. I don't see major problems on the horizon in the next 3 years. I believe in having this years cash and next years cash set aside some I have more control of when I sell my stocks. If I feel that problems may be down the road I would move to a more conservative position of 3 or 4 years cash. I really think I would have the time to do that. The '70's senerio could be seen coming primarily by rising interest rates, unemployment and prices. I also think that before one looks at having more cash, one should look at the risk in the stock portfolio. Maybe move to more S&P.Reguards,Paul
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