Cash as Asset Allocation ?

[nsengkia]

I try to make myself lean against the wind by holding a percentage of cash in my portfolio that is inversely related to the P/E of my overall stock portfolio i.e. 0% if my overall stock portfolio P/E is below 5 and 20% cash if my overall stock portfolio P/E is above 8 and some fraction in between. Currently this works out to be 10% cash.

P.S.: Still fine tuning the P/E trigger points and percentages though so it is a work in progress that I hope will gradually improve over market cycles.