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.
Cash as Asset Allocation ?
13-01-2014, 02:57 PM
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, 04:15 PM
(13-01-2014, 12:53 PM)Greenrookie Wrote: hmm.... 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.
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
13-01-2014, 04:22 PM
(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). 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.
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
13-01-2014, 05:27 PM
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, 06:34 PM
(This post was last modified: 13-01-2014, 06:36 PM by Greenrookie.)
(13-01-2014, 05:27 PM)kagemusha Wrote: Mileage varies for individual. I personally have less than 5% cash on hand. 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)
life goes in cycles, predictable yet uncontrollable; just like the markets, but markets give you a second chance
13-01-2014, 07:49 PM
(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. 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.
16-01-2014, 01:31 PM
(13-01-2014, 07:49 PM)vingaard Wrote: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.(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. 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.
WB:-
1) Rule # 1, do not lose money. 2) Rule # 2, refer to # 1. 3) Not until you can manage your emotions, you can manage your money. Truism of Investments. A) Buying a security is buying RISK not Return B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return. NB:- My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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. |
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