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I can remember within the past five years where my money market funds were paying a yield of about four percent, or so. My CD's were paying in the five percent range and as the yield dropped, as they began to mature, I began to take some of this cash and make some special investments.
During the last couple of years the market has been on a strong upward march, for the most part, with little volatility. My spiff (special investment) positions relied on volatility and were basically swing trades. I'd buy a position on a pullback and then sell it after it reached my goal or I felt it had topped out. These were very productive for me and my concept was working well. Now with little volatility, over the past couple of years, and only an occasional dip the swing trades are now hard to come by.
So ... What's an investor to do?
I chose to do nothing. Sometimes, there is just nothing for one to do unless I wished to expand my play book. Since, I held a good amount of short term bond funds and I had also selected other funds where the manager had reduced duration ... Well, there was just nothing left, to do within my cash and within the fixed income areas of my portfolio. I now sit on a good sizeable pile of cash ... about 20% of my overall portfolio. Now, that leaves the other 80% as a work horse, so to speak. And, folks, that is where I am currently postured as I feel both bonds and stocks are for the most part overbought. It want be this way forever … so I am sitting tight until an opportunity comes my way and manage my risk by maintaining my asset allocation towards the conserative side.
Again, sometimes there is nothing, or little, to do.
I think you're wise, Old Skeet. I think I'm going to raise my cash stake a little.
On the other hand, acecdotally at least it seems that a lot of people feel as we do -- I don't hear a lot of people saying they're all in -- so probably there's a lot of cash on the sidelines and any dip will be limited.
I remember coming across a saying that the term for overvalued assets getting even more overvalued is... a bull market. It could go on for a few years more. That's my guess, but my cash levels right now are so low (5%) that it can't hurt to raise them a bit.
Just Saturday morning musings, not based on data or anything.
I just finished listening to the Kathleen Gaffney feature posted by Ted. Seems Ms. Gaffney is presently seeing most assets overvalued and if she can not find good stuff to buy she will build her cash position for future deployment. She indicated that her bond fund currently was about 20% cash.
This seems to be the current thinking of many ... build cash.
Comments
Regards,
Ted
I can remember within the past five years where my money market funds were paying a yield of about four percent, or so. My CD's were paying in the five percent range and as the yield dropped, as they began to mature, I began to take some of this cash and make some special investments.
During the last couple of years the market has been on a strong upward march, for the most part, with little volatility. My spiff (special investment) positions relied on volatility and were basically swing trades. I'd buy a position on a pullback and then sell it after it reached my goal or I felt it had topped out. These were very productive for me and my concept was working well. Now with little volatility, over the past couple of years, and only an occasional dip the swing trades are now hard to come by.
So ... What's an investor to do?
I chose to do nothing. Sometimes, there is just nothing for one to do unless I wished to expand my play book. Since, I held a good amount of short term bond funds and I had also selected other funds where the manager had reduced duration ... Well, there was just nothing left, to do within my cash and within the fixed income areas of my portfolio. I now sit on a good sizeable pile of cash ... about 20% of my overall portfolio. Now, that leaves the other 80% as a work horse, so to speak. And, folks, that is where I am currently postured as I feel both bonds and stocks are for the most part overbought. It want be this way forever … so I am sitting tight until an opportunity comes my way and manage my risk by maintaining my asset allocation towards the conserative side.
Again, sometimes there is nothing, or little, to do.
Old_Skeet
On the other hand, acecdotally at least it seems that a lot of people feel as we do -- I don't hear a lot of people saying they're all in -- so probably there's a lot of cash on the sidelines and any dip will be limited.
I remember coming across a saying that the term for overvalued assets getting even more overvalued is... a bull market. It could go on for a few years more. That's my guess, but my cash levels right now are so low (5%) that it can't hurt to raise them a bit.
Just Saturday morning musings, not based on data or anything.
I just finished listening to the Kathleen Gaffney feature posted by Ted. Seems Ms. Gaffney is presently seeing most assets overvalued and if she can not find good stuff to buy she will build her cash position for future deployment. She indicated that her bond fund currently was about 20% cash.
This seems to be the current thinking of many ... build cash.
Old_Skeet