A Ping for Skeeter (title edited by chip)

hank

Hi Skeet: From your past posts, I understand you've moved to a more cautious stance in recent weeks. Just wondering what your actual CASH allocation is right now. And, how you define cash? Does it include any short-term bonds? Do you include the cash held within various funds by their managers (probably identifiable in the fund reports or by X-raying). Understand your overall approach - which I think is a good one - so you don't need to review that unless you wish to. Thanks, hank

Old_Skeet

Hi Hank,

Thanks for the inquiry.

The cash area of my portfolio is comprised of two sleeves. A demand cash sleeve and an investment cash sleeve that held my CD Ladder which is no more. So with this, the investment sleeve, time deposits, contains no assets at the present time as all my cash is currently held in the demand sleeve.

My short term bond funds are held within the income area of the portfolio within the fixed income sleeve. The other sleeve within the income area is the hybrid income sleeve. Both sleeves hold six funds each.

My current allocation from a recent Xray analysis bubbles, by area, as follows: Cash 16%, Bonds 28%, US Stocks 31%, Foreign Stocks 15%, Other Assets 5% and Not Classified Assets 5%. I anticipate as I continue to sell equities down as they continue their upward advance along with my March fund distributions my cash will grow and bubble around 18% (a guess). And, yes I have become more conservative the past year, or so, as I feel the higher the valuation for equities then the higher their risk. And, with this I have throttled equities back form the 60% range and expanded and increase my allocation to alternatives. I think there is just too much hot money finding its way into equities for me to be an aggressive investor in them presently. However, if they should pull back 10% to 20% I will most likely increase my allocation to them putting some of my cash to work. Then as they become more fully valued again I’ll sell some of them off and raise my cash allocation. When interest rates return to a more normal level I plan to rebuild the investment cash sleeve with another CD ladder.

One of the quick and easy ways to check the valuation of equities, in general, is to reference Moringstar's Market Valuation Graph. I'd like to see at least a 5% discount before I'd give much thought to buying more equities.

http://wwwstg.morningstar.com/market-valuation/market-fair-value-graph.aspx?CustId=&CLogin=&CType=&CName=

Anyway, I hope this helps; and, I think you have the picture.

Good Investing,
Skeeter

Old_Skeet

Hey, It works with the titled edited to ... "A Ping for Skeeter."

hank

Reply to @Skeeter: Good stuff & thanks. I find cash the hardest part to get a good handle on. Like you, I've gone to a more cautious stance. Just by way of how complicated this issue is in my case --- For allocation purposes, I allow up to 50% of "cash" to be comprised of DODIX - which of course is actually a diversified income fund. I also use TRBUX - an ultra-short fund as a cash substitute along with some money market funds. Together, this puts me at 24% "cash" - the highest since before the '08-'09 bust. (When I knock-out the DODIX portion, I get 15% - about what your X-ray reported.) However - the remaining 76% is a very diversified mix including some equity funds, a balanced fund, a lot of hybrids (no doubt holding more cash ), some floating rate stuff ... etc. etc. Thanks for sharing. I find it very helpful. Regards

hank

Reply to @Skeeter: Sounds cooler too