I think I understand the Purpose of “Having Cash”…… and given the Market down-turns, it does make Sense to have some (to dollar cost average into the market when appropriate, and when there are positive Technical Indicators too)
However, Statistically speaking, Stocks and Bonds do Outperform Cash, in the Long-run……
Also, I understand that “Cash” is simply a tool, or a “Medium of Exchange” for Goods and Services, and being that we are all consumers, it does make Sense to have at least 6 months worth of cash on hand in addition to the Balanced and well-diversified Portfolio….. Also, don’t want to be “Forced” to sell anything…..
$andman
April 16, 2010 at 2:04 am
depends on age and risk tolerance…as you get older,it makes sense to increase cash holdings,as long term investments won’t help you when your dead…
Spellbound
April 16, 2010 at 2:19 am
This also depends on what kind of investing/trading you do. I trade, so some days I’m 90% cash, the next day 0%, some days 50% – because I find trades, and when they start running, I dump it all into the trade for about an hour.
I’d never in this market have more than 30% cash sitting more than 2 days because of the volatility. This market is making stocks move more in one hour than they have in an entire year. Too many holdings can make you lose most everything in a day.
Last year, had I kept money in GOOG, overnight, it kept popping $15 at each opening bell, and ran for 100 or so until it stopped, and I would have been better off leaving money in. So the market will tell you what to do, and this one says caution.