What to do next

Even in the midst of the worst employment crisis since the Great Depression, the stock market came roaring back.

Call it an emotional hedge. Upgrade your phone faster with AT&T Next Up, or choose low monthly payments with the AT&T Installment Plan. But I could toss a coin now. If he couldn't find a productive way to predict the market's short-term ups and downs, you probably shouldn't try to either.

So far this year, investors have experienced one of the sharpest, quickest market crashes in history in March. I'll use my situation as an example: At 43, the main financial goals I'm investing for are many years in the future, so the vast majority of my portfolio is in stocks. The problem: One only has to look at the first half of 2020 for proof of the difficulties of accurate short-term market prediction. Then something just as unexpected happened: An unprecedented amount of federal government stimulus and financial support helped prop up the economy. Cash is a powerful tool, but it's also value-destroying if you hold too much of it waiting for a market crash that could take years to arrive. Let's take a closer look at what you can do to make sure you have enough cash for the next market crash, and most importantly, that your portfolio is built to help you maximize your chances of reaching your personal financial goals. broke out in the crowd. Do not panic and sell when the next crash hits.

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Few were expecting that unusually fast recovery either.But instead of viewing this short-term uncertainty as a risk, investors have to accept it -- even embrace it -- as part of what makes stocks superior Charlie Munger, vice-chairman of Let's invert the way we think about cash. In recent years, various prognosticators have warned that growing debt, the federal deficit, inflation, and a litany of other things would be the catalysts for the next market plunge.Guess what none of those investing experts was predicting? However, I've still built up some cash reserves over time, to a maximum value of about 5% of my portfolio (not including emergency savings).This cash serves two purposes: First, it gives me capital to deploy for bargain hunting when the market crashes and great stocks fall, often for no reason. As Pete Buttigieg took the stage in South Bend, Indiana, to announce his decision to end his 2020 presidential campaign, chants of "2024!" Join your neighborhood.

)Our second investing legend, Peter Lynch, said it best (boldface mine for emphasis): Long term, the stock market's a very good place to be.

Second -- and more importantly -- it helps me avoid the mistake of selling perfectly good stocks just because the market is dropping.

Instead of focusing on the unknowable question "When will stocks crash," let's think about what we By inverting the question to "What do I know about the financial future? For instance, if you're still 20 years from retirement, it makes far more sense to plan on riding out market crashes to take full advantage of stock returns over the long term. Image source: Getty Images.Are you prepared? I don't know.

Letters of response flooded in — and a common theme emerged. (But don't just plan: Do it. This strategy has Stock Advisor launched in February of 2002.

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Coronavirus disease 2019 (COVID-19) is a virus (more specifically, a coronavirus) identified as the cause of an outbreak of respiratory illness first detected in Wuhan, China. First, you need to think about divvying up your excess cash appropriately to handle these three purposes: Once you stop trying to plan based on what stocks might do in the near term and concentrate on optimizing your portfolio -- and your actions -- to reach your financial goals, you'll find it much easier to focus on the bigger picture. $0 down & $0 interest with either plan. Lynch is one of the most successful investors of the past century.

What steps should you take to be ready? A better approach is to build your portfolio around what you know and can control, and invest in the right assets to help you reach your long-term and short-term goals. Market data powered by Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.Investors have been on a roller-coaster ride in 2020. When you're trying to determine what sort of resource allocation makes sense for you, there are a few key points to consider.

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