Dry Powder Isn't a Plan: Why I Froze in 2020 With Cash Ready

I want to tell you about the most expensive thing I never did.

In March 2020, I had cash ready. Real cash, set aside years earlier for exactly this — the drop everyone says they're waiting for. I had a thesis I still believed in. I had a note to myself, written in a calm year, that said in plain language: when the market falls hard, buy. And when the market actually fell hard, I sat there and did nothing. Worse than nothing, really. I sold a little near the bottom, because the falling didn't feel like it would stop.

For a long time I told myself the problem was that I didn't have a plan. That's not true. I had a plan. The problem was that a pile of dry powder is not a plan. It's a temptation that sits in your account and waits for you to argue with yourself at the worst possible moment.

Why "buy when it drops" stops being a rule

Here is the uncomfortable thing about most crash-buying plans: they are written in the wrong emotional state. You write "I'll buy when stocks are cheap" on a quiet Sunday, coffee in hand, markets closed. It reads like a rule. It feels like a decision already made.

Then the drop comes. And in the middle of it, "buy when it drops" is not a rule anymore. It's a feeling you have to manufacture on demand, right as fear is loudest and every headline is telling you this time is different. You have to be brave and decisive precisely when your body is flooding you with reasons to freeze. That is a bad time to be asked to make a brave decision.

Behavioral finance has a tidy way of describing why this is so hard. The pain of watching your portfolio fall registers roughly twice as intensely as the pleasure of an equivalent gain — the loss aversion that Kahneman and Tversky documented decades ago. So when you're staring at a 20% drawdown, the part of your brain running the show is not the part that wrote your plan. It's the part that wants the pain to stop. "Buy more" is the last thing it wants to hear.

The gap between what you know and what you do

None of this is an information problem. I knew stocks were cheap in March 2020. I knew my thesis hadn't changed. If you'd given me a quiz on what a disciplined investor should do, I'd have aced it. The knowing was never the issue. The doing was.

That distance between what investors know and what they actually do has a name — the behavior gap — and it's the reason so many people underperform the very funds they own. They buy after things have gone up and feel safe, and they sell after things have gone down and feel scared. Not because they're foolish, but because they're making decisions in the moment, using an emotional state that is guaranteed to be wrong for the task.

Pre-commitment: making the boring choice in advance

The thing that finally worked for me was not more conviction. I've never been able to summon conviction on cue in the middle of a crash, and I've stopped expecting to. What worked was removing the decision from the moment entirely.

Instead of "buy when it drops," the plan now reads in specifics that leave nothing to argue about. Concrete levels. Concrete amounts. If the market falls a certain amount from its high, a certain portion of the cash goes in. If it falls further, the next portion goes in. The tranches are decided in advance, in a calm year, by the version of me who can think clearly. When the drop comes, there's no bravery required and no debate left to have. There's just an instruction I already wrote, and my only job is to follow it.

This is what pre-commitment does. It turns a brave decision into a boring one. You are no longer trying to be decisive under fire — you're just executing something the calm version of you already figured out. And the calm version of you is smarter about this than the scared version will ever be. The whole trick is letting the calm one make the call, and building the plan so specifically that the scared one can't talk its way out of it.

Writing it in tranches matters for another reason. Nobody rings a bell at the bottom. If your plan is "deploy everything when it's cheap," you'll spend the entire drop waiting for a cheaper price that may never announce itself, and you'll end up doing what I did — nothing. Splitting the cash into steps means you don't have to be right about the exact bottom. You just have to keep following your own instructions as prices fall past the levels you set.

What I'd tell my March 2020 self

I don't think my mistake was a lack of courage, and I don't think yours is either. My mistake was asking the frightened version of me to make a decision that should have been made months earlier, when nothing was on fire. Courage is an unreliable input. Instructions are not.

So if you have cash set aside for the next drop — genuinely set aside, meant for this — the useful question isn't whether you'll be brave enough when the time comes. You probably won't be. I wasn't. The useful question is whether you've written down exactly what you'll do, at which levels, in what amounts, so that being brave is no longer part of the job. Make the decision now, while it's boring. Let your future self simply do as it's told.