No. of Recommendations: 2
No, the biggest challenge is one you ignored.
To wit: Where does the money come from for you to buy big in the downturn?
Easy to ignore when you are working and have a paycheck coming in regularly. Just assume that the money will (somehow) be available.
To have money on hand, that means that you will build up/maintain a large cash hoard when the market is *not* in a downturn. That is, when the market is going up. But when the market is going up is exactly the time when you want to have your money invested, not sitting in cash.
You cannot look only at the gains you'd get after a downturn.
You also have to look at the gains you missed out on by having a large cash allocation during the non-downturns.<i/>
Perhaps I was unclear. I have about a 70/30 portfolio between stocks and fixed income. In a downturn, I would sell some bonds, to rebalance, and then perhaps, add 2% more of my portfolio for every 10% drop. So after a 10% drop, I would have a 72/28 portfolio.
