qandaQ: Do you ever recommend the buy-and-hold portfolio go to cash?

Q: Do you ever recommend the buy-and-hold portfolio go to cash?  

A: The only reason the buy-and-hold portfolio goes to cash is to take money out of the portfolio to live on or put aside for an upcoming financial need. The first day of each year, my wife and I take out 5% of our portfolio and put it in a short-term bond fund. We then use the proceeds to cover our costs for that year. 

I think the question could be restated as, “Why wouldn’t you sell equities if it’s obvious the market is over valued and likely to decline?” The whole idea of buy-and-hold is to build a portfolio of equity and fixed income securities with the intent to hold them in all markets. There are always reasons the market is expected to go up (list A the good news) or go down (list B the bad news). Attempts to time the market have ended badly for most investors, so experts believe it’s best to find investments expected to do well for the long term and ignore the noise in the short term.  My 50 years around the investing process makes me believe those experts are right.