Some wealthy people do. E.g. Warren Buffett's Berkshire Hathaway was sitting on 100 billion dollar in cash last summer [1]. If he doesn't find anything that is fairly priced, he prefers to sit on his cash and wait.
[1] http://fortune.com/2017/08/07/warren-buffett-berkshire-hatha...
...
"This is clearly false - wealthy people don't keep mountains of cash lying around as they would miss out on the growth in bull markets, and as a result their wealth would decrease relative to their peers."
I read with great interest the two volumes that Niall Ferguson wrote of the history of the Rothschild family.[1]
It's a fascinating work that serves well to bridge the gap of European history between Napolean and World War One.
I bring it up here because the Rothschild family did indeed do exactly what the parent comment suggested that "rich people" do. They quietly did their simple banking business year after year, piling up profits and assets that were repeatedly poured into down markets when they viewed that assets had become cheap.
This was not market timing - this was simply patience. The down market always comes and their simple, boring factoring and discounting was always reliable.
[1] _The House of Rothschild_ ("The World Banker")
> Books have been written around timing markets and it's generally accepted that it cannot be done reliably. To get out before a crash then buy cheap would require you to predict three different moments accurately: when to get in, when to get out, and then when to buy on the "cheap". Timing even one reliably requires luck or clairvoyance.
This doesn’t strike me as true, unless you’re describing the subset of academic economists who agree with EMH in some form. In particular, the first sentence on its own appears to be evidently untrue; it’s clear that there are many parties, including economists and financiers, who attempt to time the market and generally forecast macroeconomic shifts.
CNBC is probably a good example of this. When you don't predict anything specific, you can never be wrong.
(Clairvoyance was not meant seriously, I should have made that clear!)
The field of economics seems to have a ways to go before it can be used reliably to predict things.
It is further warped by the fact that although the anti-interventionalists are probably right, the interventionalists are the ones who do all the consulting and take all the jobs and give all the advice - because they are .. interventionalists. And who wants to pay a consultant to tell them "don't do anything, and there's nothing you can do."
The wealthiest people in the world are wealthy by virtue of the gains made on the assets they already have. So, in a bull market, their assets grow while someone without assets is left behind. The inverse is true, too - they'll proportionally lose to the same degree in a crash - as while a poor person may have no investments, the wealthy person's investments will crash in line with the market. There won't be a financial cushion, at least not a significant one.
Books have been written around timing markets and it's generally accepted that it cannot be done reliably. To get out before a crash then buy cheap would require you to predict three different moments accurately: when to get in, when to get out, and then when to buy on the "cheap". Timing even one reliably requires luck or clairvoyance.
"Rich people have the financial cushion to not be impacted in the slightest way by such crashes". This is clearly false - wealthy people don't keep mountains of cash lying around as they would miss out on the growth in bull markets, and as a result their wealth would decrease relative to their peers.
Investors generally just become relatively poorer during a crash then make it back and more during the next bull market, at least that's how it's worked until now. There's an old quote I can't find the source of right now that sums it up fairly aptly:
"Stocks go down faster than they go up... but they go up further than they go down".