After Donald Trump’s sudden announcement of new global tariffs — what he’s calling “liberation day” — markets have taken a sharp hit, and understandably, investors are nervous.
Some high-profile names have already made moves. Warren Buffett is sitting on a record $500 billion in cash, and Li Ka-shing, one of Asia’s richest men, recently sold off billions in global ports and is now almost debt-free. So… should the rest of us follow their lead?
It’s a tempting thought. Cash feels safe in times like these. But before you sell your shares and move everything into cash, it’s worth taking a step back.
Timing the Market: The Trap Most Investors Fall Into
Let’s get this out of the way: if you could sell at the top of the market and buy back in at the bottom, you’d come out ahead — no question. But the problem is, nobody knows where the top or bottom is until it’s too late.
A recent study by Betashares looked at investors during the GFC and COVID-19 crashes, comparing three different strategies:
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Sell at the top and buy back in later (the dream scenario).
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Panic-sell at the bottom and miss the recovery (the nightmare).
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Stay invested through it all (the most common approach).
Here’s what happened:
During the GFC:
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If you sold at the top and bought back in a year later, your $500k became $1.94 million.
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If you panicked and sold at the bottom, then waited to reinvest, it became $1.15 million.
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But if you just sat tight and stayed invested, it still grew to $1.75 million.
So yes, timing the top would have made you some extra money. But get it wrong — and most people do — and the cost can be huge.
Can You Beat the Market in Six Months?
Interestingly, the study also looked at what happened if someone sold at the top, stayed out for just six months, and then bought back in.
In the GFC example, that person ended up with $2.74 million — nearly $1 million more than if they stayed invested.
Sounds amazing, right?
But that only worked because the GFC crash happened to last six months almost exactly. You’d need a crystal ball to time that perfectly. Get it wrong, and you risk selling at the bottom and missing the rebound entirely.
So What Actually Works?
The best strategy most people can stick to — and sleep well with — is simple: stay invested, and if you have more to invest, spread it out over time.
This is called dollar-cost averaging: instead of investing one big amount, you invest smaller amounts regularly (like $2,000/month). That way, if the market drops, you’re buying in cheaper — and when it goes up, you benefit from the growth.
Betashares found that during the GFC, using this strategy:
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The potential losses from bad timing dropped by 10% or more.
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The gains from good timing were a little lower, but the risk was much, much less.
So, you’re trading a small potential upside for a much smaller downside — a trade most long-term investors are happy to make.
What Buffett and Li Know (That Most People Don’t)
It’s true that Buffett and Li Ka-shing moved to cash. But here’s the thing: they didn’t move to cash out of fear — they did it to be ready. Buffett used his cash pile to buy Bank of America stock during the GFC, making $30 billion from that deal alone.
They aren’t guessing. They’re waiting patiently, with a plan to reinvest when the opportunity is right.
If you don’t have the time, resources, or nerve to follow that kind of strategy, it’s probably better not to try. History shows that long-term investors tend to come out ahead — even if they ride out the dips.
The Bottom Line
Selling out of fear rarely ends well. Sure, if you time it perfectly, you might come out a bit ahead. But if you get it wrong, it could cost you far more than you save.
Unless you are Warren Buffett, the safer move is to stay invested, stick to your long-term plan, and keep adding slowly through market ups and downs.
If you’re feeling unsure, the best thing you can do is talk to your adviser. We can help you stress-test your portfolio and make sure you’re not taking more risk than you’re comfortable with — without giving up your chance to grow.
