What % Are You In Cash?

[Nowler]

Hey folks,

Out of interest...
Do you aim to remain a certain percentage in cash when it comes to your investment account?

I'm currently 100% invested because 1) I dont have a whole lot in my investment account, and 2) I am building my positions in something/s I consider undervalued.

However, as i am 100% invested, I miss out on declining prices or big corrections.

Interested to hear your thoughts.

I'm bullish on these but I cant tell whether there will be a near term decline. So I just buy more when I get paid each month.

I guess there's a level of FOMO, but at the same time I know it's going up eventually, and any price spikes while I'm sitting in cash would be a waste of opportunity

 

[1nvest]

Hey folks,

Out of interest...
Do you aim to remain a certain percentage in cash when it comes to your investment account?

I'm currently 100% invested because 1) I dont have a whole lot in my investment account, and 2) I am building my positions in something/s I consider undervalued.

However, as i am 100% invested, I miss out on declining prices or big corrections.

Interested to hear your thoughts.

I'm bullish on these but I cant tell whether there will be a near term decline. So I just buy more when I get paid each month.

I guess there's a level of FOMO, but at the same time I know it's going up eventually, and any price spikes while I'm sitting in cash would be a waste of opportunity

i have no cash at the moment. one key thing ive learnt over the years is put any money into a fixed income alternative. such as bonds. with bonds there are the typical short term, intermediate and long. I try to hold intermediate or long
in theory, short term bonds (from the US or UK) is or should be the equivalent of cash but still with a potential for upside
the chances of the US or UK government defaulting on its short term bond position is next to nil
money does nothing, even by a small degree

Hey folks,

Out of interest...
Do you aim to remain a certain percentage in cash when it comes to your investment account?

I'm currently 100% invested because 1) I dont have a whole lot in my investment account, and 2) I am building my positions in something/s I consider undervalued.

However, as i am 100% invested, I miss out on declining prices or big corrections.

Interested to hear your thoughts.

I'm bullish on these but I cant tell whether there will be a near term decline. So I just buy more when I get paid each month.

I guess there's a level of FOMO, but at the same time I know it's going up eventually, and any price spikes while I'm sitting in cash would be a waste of opportunity

take a look at the ETF "SHY" which is short term US treasury bonds and in many asset allocation strategies is the equivalent of cash. always have your money working for you

 

[Nowler]

i have no cash at the moment. one key thing ive learnt over the years is put any money into a fixed income alternative. such as bonds. with bonds there are the typical short term, intermediate and long. I try to hold intermediate or long
in theory, short term bonds (from the US or UK) is or should be the equivalent of cash but still with a potential for upside
the chances of the US or UK government defaulting on its short term bond position is next to nil
money does nothing, even by a small degree

take a look at the ETF "SHY" which is short term US treasury bonds and in many asset allocation strategies is the equivalent of cash. always have your money working for you

My broker doesn't offer the SHY, but they've got to have a similar alternative.
I don't know a whole lot about bonds, so I would have to have a closer look at them first.

I realise that cash will depreciate, but I doubt it would be sitting there long enough to make much difference.
Currently I invest immediately each payday.

Now I'm thinking that I should keep 20% of what I allocate to investing each month in cash and keep it for any opportunities that pop up. Obviously if I agree with you that short-term bonds are as good as cash, and have more upside potential than downside, then that would be a good place to store this "opportunity pile"

 

[Nowler]

The FOMO is strong with me 😂
I deposited more and invested it right away.

Lower prices would be nice, but after the correction last week, this might very well be the last chance to get in at these levels for quite a while.

 

[1nvest]

My broker doesn't offer the SHY, but they've got to have a similar alternative.
I don't know a whole lot about bonds, so I would have to have a closer look at them first.

I realise that cash will depreciate, but I doubt it would be sitting there long enough to make much difference.
Currently I invest immediately each payday.

Now I'm thinking that I should keep 20% of what I allocate to investing each month in cash and keep it for any opportunities that pop up. Obviously if I agree with you that short-term bonds are as good as cash, and have more upside potential than downside, then that would be a good place to store this "opportunity pile"

try IBTS as an alternative
IBTM for intermediate, and IBTL for long term

 

[Oleg]

try IBTS as an alternative
IBTM for intermediate, and IBTL for long term

Hey folks,

Out of interest...
Do you aim to remain a certain percentage in cash when it comes to your investment account?

I'm currently 100% invested because 1) I dont have a whole lot in my investment account, and 2) I am building my positions in something/s I consider undervalued.

However, as i am 100% invested, I miss out on declining prices or big corrections.

Interested to hear your thoughts.

I'm bullish on these but I cant tell whether there will be a near term decline. So I just buy more when I get paid each month.

I guess there's a level of FOMO, but at the same time I know it's going up eventually, and any price spikes while I'm sitting in cash would be a waste of opportunity

All my money is locked in some funds. Buy monthly. So dips gives me bigger part of the cake

 

[postman]

What % Are You In Cash?

(-20%)

 

[Nowler]

What % Are You In Cash?

(-20%)

I went about 40% drawdown last week.
Not one bit comfortable at all!

I did think it was very possible to get such a correction, but those negative thoughts were still going through my head...questioning whether my thesis was right. And if not, I've just undone all my hard work 😥

It would have been about 25 to 30% if I didnt buy the dip - obviously didnt catch the bottom on first buying of the dip 😂

 

[MasterOfCoin]

The FOMO is strong with me 😂
I deposited more and invested it right away.

Lower prices would be nice, but after the correction last week, this might very well be the last chance to get in at these levels for quite a while.

It's always the temptation of immediately available prices that can draw you in.

But that bargain you bought today is often on sale at even better prices soon after

........... & if it isn't, well, there'll be others.

That said, I like to keep the majority of my funds invested for potential gains, with a much smaller reserve of available funds to snap up sudden bargains.

Also, as long as your broker's fees are negligible, there's no harm in speculating with any reserve in smaller trades that can be cashed in immediately at an acceptable loss to take advantage of surprise bargains. What you don't want to do, is end up not being able to buy those without incurring losses that would wipe out any potential gains !

Regardless of what you consider to be a suitable reserve, the 'grandmother' rule applies -
Do NOT invest all your funds in the next bargain trade, spread out your investments.

However brilliant anyone is at picking winners, some of those picks are going to lose, so don't throw all your cash at any one trade, no matter how good it looks. You'll regret it if it loses big time.

But I'm sure most of us know all this, it's just practicing it in the pressure of the moment that is the key to success !

😀

 

[postman]

@Nowler you will like this, practice your portfolio management, cash, shares, gold, bonds ... and post your results. I tried it today it ... note the stock returns its pretty accurate

Play STAX

The investment game that lets you grow your wealth over 20 years. How high will your stax grow?

buildyourstax.com

 

[Nowler]

It's always the temptation of immediately available prices that can draw you in.

But that bargain you bought today is often on sale at even better prices soon after

........... & if it isn't, well, there'll be others.

That said, I like to keep the majority of my funds invested for potential gains, with a much smaller reserve of available funds to snap up sudden bargains.

Also, as long as your broker's fees are negligible, there's no harm in speculating with any reserve in smaller trades that can be cashed in immediately at an acceptable loss to take advantage of surprise bargains. What you don't want to do, is end up not being able to buy those without incurring losses that would wipe out any potential gains !

Regardless of what you consider to be a suitable reserve, the 'grandmother' rule applies -
Do NOT invest all your funds in the next bargain trade, spread out your investments.

However brilliant anyone is at picking winners, some of those picks are going to lose, so don't throw all your cash at any one trade, no matter how good it looks. You'll regret it if it loses big time.

But I'm sure most of us know all this, it's just practicing it in the pressure of the moment that is the key to success !

😀

Yeah, it's a real torment!



My broker has no fees 😉
They make their money from the CFD accounts they offer.

I've not been buying stocks long... but pretty much all my purchases are due to the sector they are in, not the company itself. Obviously I aim to buy the better companies in the sector (basket), but it was the sector itself that caught my eye.

So these are essentially long-term positions.
No trading in and out. Only adding to.

I'm super bullish on them, which is why I just can't seem to build a reserve of cash. The majority of them are cheap as chips at today's prices, and I just cant tell whether they will become even more of a bargain.

Though as you said... spread it out. Dont put it all on one company.

 

[Nowler]

@Nowler you will like this, practice your portfolio management, cash, shares, gold, bonds ... and post your results. I tried it today it ... note the stock returns its pretty accurate

Play STAX

The investment game that lets you grow your wealth over 20 years. How high will your stax grow?

buildyourstax.com

View attachment 288457

That looks fun.
I'll give it a go tomorrow and post the results

 

[Nowler]

one key thing ive learnt over the years is put any money into a fixed income alternative. such as bonds. with bonds there are the typical short term, intermediate and long. I try to hold intermediate or long
...

I just feel uneasy about bonds...
It's a massive bubble.

Debt is astronomical!
Something is going to give eventually, and I don't know enough about bonds to see when it's imminent.

What do you know about them?
Do you consider them safe?
See any impending danger?

 

[1nvest]

What do you know about them?

no more than the next person mate. but, they have been used since time began as a hedge for equity and a staple component of Modern Portfolio Theory.

Do you consider them safe?

Nothing is "safe", not even cash..I dont buy and hold though. i treat the movement of bonds in the same way (except periodicity) as equity. if its not returning, i aint investing! However they form a large percentage of my portfolio and any known asset allocation strategy will include them also
in terms of scale of risk within bonds, it depends on
1) country. Brazil once was once worthless, and the likelihood of default high. so US is considered the safest in the world, is not going to default, but
2) is still affected by interest rates. High interest rates, low bond returns
3) Bond yields. low bond yields high bond prices
the bubble you are seeing is a result of bond yields..they've been going down consistently since 1980

so when yields are going down, you buy accumulation type bonds, all about capital appreciation
when yields are going up, you want income type bonds, a higher return, offsetting capital appreciation

then, a slightly more risky type of bond are corporate bonds. you're now buying the corporate debt. i have a small portion of my bond portfolio in corporate bonds. so is still weight risk, even though they are bonds

See any impending danger?

yes and no.

• we are at historically, low yields. so prices can only in the long run go one way. (but remember higher yield bonds - higher returning so you dont buy for capital appreciation then)
• i cant see interest rates rising anytime soon so i am not concerned for some time yet
• I use timing in all of my portfolios. as long as i get out, when its time im happy.

Most financial advisors out there, all take an intake of breath and say, "bonds arent going to return" and then they stick all your money into them and still have the nerve to charge you and tell you afterwards, "i told you so".
You though Nowler, are a savvy investor, and a savvy investor knows it doesnt matter what the future brings, because when prices go up, you buy. and if they are not going up, then you look for short term bonds, and then and only then, you move to cash.. but you will find, like almost any asset class, there are leaders and laggers.
when sovereign debt is going down in the UK or US, somewhere in the world, a country is rising. just like equities, just with less drawdown (in the vast majority of cases)

hope i haven't rambled!!

 

[Nowler]

no more than the next person mate. but, they have been used since time began as a hedge for equity and a staple component of Modern Portfolio Theory.

Nothing is "safe", not even cash..I dont buy and hold though. i treat the movement of bonds in the same way (except periodicity) as equity. if its not returning, i aint investing! However they form a large percentage of my portfolio and any known asset allocation strategy will include them also
in terms of scale of risk within bonds, it depends on
1) country. Brazil once was once worthless, and the likelihood of default high. so US is considered the safest in the world, is not going to default, but
2) is still affected by interest rates. High interest rates, low bond returns
3) Bond yields. low bond yields high bond prices
the bubble you are seeing is a result of bond yields..they've been going down consistently since 1980
View attachment 288584
so when yields are going down, you buy accumulation type bonds, all about capital appreciation
when yields are going up, you want income type bonds, a higher return, offsetting capital appreciation

then, a slightly more risky type of bond are corporate bonds. you're now buying the corporate debt. i have a small portion of my bond portfolio in corporate bonds. so is still weight risk, even though they are bonds


yes and no.

• we are at historically, low yields. so prices can only in the long run go one way. (but remember higher yield bonds - higher returning so you dont buy for capital appreciation then)
• i cant see interest rates rising anytime soon so i am not concerned for some time yet
• I use timing in all of my portfolios. as long as i get out, when its time im happy.

Most financial advisors out there, all take an intake of breath and say, "bonds arent going to return" and then they stick all your money into them and still have the nerve to charge you and tell you afterwards, "i told you so".
You though Nowler, are a savvy investor, and a savvy investor knows it doesnt matter what the future brings, because when prices go up, you buy. and if they are not going up, then you look for short term bonds, and then and only then, you move to cash.. but you will find, like almost any asset class, there are leaders and laggers.
when sovereign debt is going down in the UK or US, somewhere in the world, a country is rising. just like equities, just with less drawdown (in the vast majority of cases)

hope i haven't rambled!!

Some food for thought there, thank you.
I'm not working this weekend, so I'll have another read through it and then go digging.

The basic premise of being in short term AAA bonds being better than sitting in cash makes sense on first glance. I think we have another significant decline coming in equities, so if I really believe that then it would be silly to buy more of my positions now... I should wait to get them at a discount.

However, I see it as quite soon, so I wouldnt be in cash long. Then again, if I'm sitting in GBP and it tanks, I have less purchasing power when it comes to purchasing assets priced it a currency that it depreciated against...

I'll be back

 

[postman]

Some food for thought there, thank you.
I'm not working this weekend, so I'll have another read through it and then go digging.

The basic premise of being in short term AAA bonds being better than sitting in cash makes sense on first glance. I think we have another significant decline coming in equities, so if I really believe that then it would be silly to buy more of my positions now... I should wait to get them at a discount.

However, I see it as quite soon, so I wouldnt be in cash long. Then again, if I'm sitting in GBP and it tanks, I have less purchasing power when it comes to purchasing assets priced it a currency that it depreciated against...

I'll be back

You can hedge your GBP exposure.

 

[1nvest]

You can hedge your GBP exposure.

Indeed, Nowler as well certain ETFs/funds (equity or bonds) are already provided hedged