Cash as Asset Allocation ?

Roughly 5pct cash, 35pct equities, 10 fixed income, 30 pct property,2pct insurance residual value, 3pct gold, 15pct private businesses. That constitutes my net worth.

(13-01-2014, 12:53 PM)Greenrookie Wrote: hmm....

100% invested...

Think I am the only one...

Ha Ha. I'm even more vested..... My cash is -25% (yes, negative 25%) excluding loan on property. If I include my property loan, my cash is -35%.

I think most of us have some form of cash flow in our portfolio (be it our net personal income or dividend income etc).

If we are always 100% in equities, we can't take advantage of the moment of irrationality sometimes seen in the market.

So it all comes to proper and strategic asset allocation. Perhaps some in stalwarts for constant income, some in more risky fast growers etc.

Value investing (buying companies at a cheap price) is just the first step, asset allocation perhaps is the next step. I feel.

Also, the absolute amount of your portfolio size also matters. When the portfolio size is very small (approximately <10x monthly cash flow) I think asset allocation become less of an issue, since you can afford to take the risk.

(13-01-2014, 12:53 PM)Greenrookie Wrote: hmm....

100% invested...

Think I am the only one...

No, I am also close to 0% cash almost all the time. The only occasion that cash level is above zero, is during transition times between switchings.

(13-01-2014, 04:07 PM)Wildreamz Wrote: I think most of us have some form of cash flow in our portfolio (be it our net personal income or dividend income etc).

If we are always 100% in equities, we can't take advantage of the moment of irrationality sometimes seen in the market.

So it all comes to proper and strategic asset allocation. Perhaps some in stalwarts for constant income, some in more risky fast growers etc.

Value investing (buying companies at a cheap price) is just the first step, asset allocation perhaps is the next step. I feel.

Also, the absolute amount of your portfolio size also matters. When the portfolio size is very small (approximately <10x monthly cash flow) I think asset allocation become less of an issue, since you can afford to take the risk.

There are different feasible schools of thought in asset allocation. One of them is always 100% equity. One of the guru with this strategy is Peter Lynch.

Mileage varies for individual. I personally have less than 5% cash on hand.
One can say that with sufficient cash on hand, you can make most of opportunities that comes along.
On the other hand, if there are no opportunities, like market moving sideways, cash is being eaten up by inflation.

(13-01-2014, 05:27 PM)kagemusha Wrote: Mileage varies for individual. I personally have less than 5% cash on hand.
One can say that with sufficient cash on hand, you can make most of opportunities that comes along.
On the other hand, if there are no opportunities, like market moving sideways, cash is being eaten up by inflation.

IMHO, if the opp cost is just inflation, it is no big deal, a bear market even if it come only 10 years later, the money lost from inflation might be just 30%, easily recoverable when u buy cheap.

But if u invest for 5-6 % dividend, plus the inflation is rather significant. Also, how would one know a downturn is imminent? If crystal ball gazing is useless, why not invest regularly, as long as u can find worthwhile investments. If u can't find, ya, hold cash, or u super sure its a bubble. Otherwise, the yield plus a subsequent bull run (big if) for the next few years, your loss might not be so easily recoverable.

That's why I am 100% vested. Although I might not add anymore and will let cash increase with my savings, unless another meaningful correction take place (below 3000 maybe)

(12-01-2014, 10:08 PM)WolfT Wrote: I am always abt 25-30% cash. I also have another cash account waiting to buy a hse.
They are all in FD account.

I'm also about 30% cash, 70% stocks. If my stock portfolio goes up, I liquidate a little to rebalance. If my stock portfolio goes down, I rebalance by buying more.

I calculated that it is worth holding cash to take advantage of a price correction for a a 10% or more capital gain rather than to be fully invested for an incremental 4% dividend.

(13-01-2014, 07:49 PM)vingaard Wrote:

(12-01-2014, 10:08 PM)WolfT Wrote: I am always abt 25-30% cash. I also have another cash account waiting to buy a hse.
They are all in FD account.

I'm also about 30% cash, 70% stocks. If my stock portfolio goes up, I liquidate a little to rebalance. If my stock portfolio goes down, I rebalance by buying more.

I calculated that it is worth holding cash to take advantage of a price correction for a a 10% or more capital gain rather than to be fully invested for an incremental 4% dividend.

i even held more than 35% to 40% cash in CPFIS as a day to day Bond for slightly more than 2.5% interest rate during the 2008/2009 fiasco. i think now it is my mistake of course. But i want to sleep well at night leh.
i could only smell FEAR in the air at that time.
Anyone did the same?
The bottom line is:
i think i still want to sleep well at night.

Cash level is heavily dependent on individuals. Cannot applied the same to anyone else you may lose confidences easily and make wrong decision in haste.

For me right now is more than 50% cash. Thats my comfort zone that i will held stock or invest more when crisis or opportunity arises.

So my take is to invest up to the maximum level of your affordable zone mentally and practically.