How long have you held a cash portfolio for?

[Kaspar]

Hey guys, what's the longest you've ever been on the sidelines and held a large cash position for? Is anyone in that position now or thinking about it?

[POSSUM THE CAT]

Kaspar I hold various cash deposits, Term, online savings accounts.ect & a few bonds over the last 15 years along side conservative NZ & Aust share portfolios.

[Dej]

Im sitting on more cash than ever as I am a growth investor and most shares out there are currently fully priced (IMHO). That does not mean all of my equity is in cash, around 50:50 split.

[ENP]

Hey guys, what's the longest you've ever been on the sidelines and held a large cash position for? Is anyone in that position now or thinking about it?

I haven't bought anything since April 2012.

I'm about 40% in stocks and 60% in cash (savings account) and this percentage increases each month from my salary.

I prefer to be patient and when a stock is mis-priced in my favour I load up considerably.

[Halebop]

I was about 99% cash pre GFC, moved towards <5% cash by 2011. Am now about 45% cash with a rising bias (Augmented by savings, investment income and gradual equity sales).

Equities I own are generally fair to fully valued but mostly trending up strongly. Exited one of my favourite Aussie companies, AMM @ around an average of $1.80 which generated a very nice return but compares a bit poorly with the $2.20 high - however the choice to exit reflects my view on Australia and some valuations.

[h2so4]

I haven't bought anything since April 2012.

I'm about 40% in stocks and 60% in cash (savings account) and this percentage increases each month from my salary.

I prefer to be patient and when a stock is mis-priced in my favour I load up considerably.

Brilliant!

[CJ]

I haven't bought anything since April 2012.The NZX50G is up 29% since then. Not saying the decision is wrong, just pointing out the opportunity cost of a conservative strategy.

Each time I make a move to cash, I find a new company to buy. Not doing to well this year unfortunately. Maybe I should be holding a bit more cash.

[Joshuatree]

Had a buffer of cash for ages but this year been loading up on good div stocks like TIX on ASX giving me 10% (more in $nz) on my mainly 45c buy, TEL, CNU etc so not alot of cash atm but planning on freeing up more soon to sit and watch for poss selloff bargains.

[ENP]

The NZX50G is up 29% since then. Not saying the decision is wrong, just pointing out the opportunity cost of a conservative strategy.

Each time I make a move to cash, I find a new company to buy. Not doing to well this year unfortunately. Maybe I should be holding a bit more cash.

The NASDAQ went up the same 29% in 3.5 months in early 2000.

The NZX 50 went up 27% in 9 months in late 2006-mid 2007.

I'm not particularly concerned about "other people" making money on the rise of the sharemarket in the last year faster than I am doing. I've found a strategy that I understand and makes sense for me and allows me to sleep at night. The last purchase I made in April 2012 is up around 61% or 66% if you include dividends so I haven't completely missed out on the rise in sharemarkets in the last year.

[Joshuatree]

Good thread kaspar thanks. A very personal decision and although i like the strat of having all of ones money working hard .(like a few very successful friends of mine do). It comes down to philosophy , knowledge, confidence, how much time you want to spend micro/managing, what your risk/ hunger/ reward situ is. I do tend to always want plenty of cash for ops but am aware its been a pretty lazy risk/reward/return lost op waiting/situ/up until now. And Riskon/off/on/off gets a bit schizoid at times if one listens to the noise.

[Stranger_Danger]

I'm currently 58% cash. My expectation is that this will increase a fair bit in the next 6 months - I have a few long term holdings, bought in 2008 and up 5 to 20-fold that are slowly turning into sells. I don't have replacement homes for that money worked out yet.

Plus, if I had to bet, I'd say down was more likely than up for sharemarkets for the rest of the year, but I don't have a strong feeling on this.

[noodles]

I have been increasing the proportion of stocks that I am shorting. So if I have $100 worth of longs, I have around $70 worth of shorts. This is not deliberate. It is just the state of the market. Stocks are getting expensive and there is less opportunity for longs. On the other hand, if a company disappoints there is often a lot of scope for a major re-rating because they have started at such a high pe ratio.

[BIRMANBOY]

There is another alternative to sitting on non-productive cash. Debt securities/bonds are just (well almost) as easy to buy and sell and can return up to 7%. As an example currently on offer is a new Infratil paying 6.85%. But plenty of others on market and I would surmise that if there is a big turndown in equities it could actually push up interest in Bonds thereby making you more than just the interest rate. DYOR.

[winner69]

There is another alternative to sitting on non-productive cash. Debt securities/bonds are just (well almost) as easy to buy and sell and can return up to 7%. As an example currently on offer is a new Infratil paying 6.85%. But plenty of others on market and I would surmise that if there is a big turndown in equities it could actually push up interest in Bonds thereby making you more than just the interest rate. DYOR.

The old bugger down at the pub who offers free financial to all says if interest rates go bond prices come down ...if he right buying bonds now might wipe out a chunk of your capital. Doesn't sound a good idea to park your money in bonds if you expect interest rates to go up

Or is he just an old bugger down the pub who knows nothing

[BIRMANBOY]

As with most "old buggers at the pub" usually some truth in what they say. Interest rate changes dont move very fast and are usually no surprise so you might lose some (a little) of your capital but probably not a "chunk". Hopefully offset by receiving the interest payments. But yes..interest rates going up or down will affect bond prices. They (interest rates) have been relatively stable for quite a while so not a big risk IMHO. The other side of the coin is also buyer demand can push prices up. I have 10 or so bonds all of which are returning 6 to 8.8% Plus they all have Cap gains riding with them. Better than Cash? I think so but everyone to their own opinion.
The old bugger down at the pub who offers free financial to all says if interest rates go bond prices come down ...if he right buying bonds now might wipe out a chunk of your capital. Doesn't sound a good idea to park your money in bonds if you expect interest rates to go up

Or is he just an old bugger down the pub who knows nothing

[Stranger_Danger]

I agree Belg, that chase for an extra 0.5% is responsible for so much heartache.

To be honest, I really don't care about the return on cash, which I tend to hold in short duration term deposits, diversified across several banks.

The main reason for holding some cash is its option value - there were many shares in 2008/2009 where I was literally the only buyer for days. Being in that position is priceless and makes up for a LOT of 0.5% that you didn't get.

[POSSUM THE CAT]

Especially Those Infratil Bonds wich have very poor security. Possibly A finance company could give you better security.

[BIRMANBOY]

Focus on the thread.....cash...how much are people holding. This isnt about the return or capital gain its about merits or otherwise of holding cash. If you have good stable bonds you can park your "cash" there until you need it or until the next buying opportunity comes. Sell the bonds..get the cash ..buy the growth opportunity. Cash will give you nothing..bonds will give you some return and means you dont have to tie cash up in a TD. You dont have to hold till maturity and it would be unusual to "lose your shirt" because "you" are a sober, conservative investor ..arent you? and you wouldnt be buying "punting" bonds. There is a stable market for these as you would know if you owned or traded any. I've owned them for years and never had any problems. My point originally was consider them as an alternative to cash. Also as to your suggestion as to "capital Gains" is where the money is..this of course is your position which is focussed on making money.....mine is somewhat different since I've already made mine and my focus is on retaining it and not losing out to inflation..so 7% is a great return (under those circumstances). Each to his own.
BB, you're doing it wrong if you're getting a return of just 7%.

In your next post below you say you've made a capital gain. Thats where the money is! Capital gain!

Bonds can be better than cash and shares - but unlike cash, and like shares, you can lose your shirt if you have to sell in a hurry or the issuer goes tits up - but like cash and unlike shares, if you can live to maturity date you get your capital back in guilt edged bonds.

[ENP]

My cash is there to allow me to purchase quickly when an opportunity arises.

It is not an investment. It is not something I want to maximise my return on.

It is there for the sole reason to allow me to purchase any share I want to when I want to.

Chasing an extra % or half a % here and there is not what "cash" should be there for if you are primarily a share investor!

[Joshuatree]

Agree. Have our cash on call at craigs cash man acc @ up to 3%. Takes less than a day to get it.

[biker]

My cash is there to allow me to purchase quickly when an opportunity arises.

It is not an investment. It is not something I want to maximise my return on.

It is there for the sole reason to allow me to purchase any share I want to when I want to.

Chasing an extra % or half a % here and there is not what "cash" should be there for if you are primarily a share investor!

Totally agree ENP

[Grimy]

As it's a wet day and I haven't had a close look at percentages for a few months (I haven't been particularly active) I've just brought my portfolio up to date.

Cash 18%
Bonds/Fixed Interest/Pref. Shares 43%
NZ Shares 24%
O/Seas Shares 15%

[Joshuatree]

Well i still have very little cash and many investments esp NZ ones are doing well. But keep thinking re Q E 3 ending and causing a correction. Could be just blips or a large one or nothing much, with share prices already factoring in this uncertainty. So im feeling a little uncomfortabl being pretty much all in atm. What are other peoples strategies now? Who's been selling up and who's sitting/buying?cheers

[born2invest]

Well i still have very little cash and many investments esp NZ ones are doing well. But keep thinking re Q E 3 ending and causing a correction. Could be just blips or a large one or nothing much, with share prices already factoring in this uncertainty. So im feeling a little uncomfortabl being pretty much all in atm. What are other peoples strategies now? Who's been selling up and who's sitting/buying?cheers

If you are feeling uncomfortable about your portfolio what are you going to do about it?

[Joshuatree]

Im reading lots , consulting,and will come to a decision.Ideally i would like to wait until some stocks go ex div before selling some. We will see. How about you b2i do you have an opinion any thoughts to share with your share trader com.? Be great to hear.

[born2invest]

Im reading lots , consulting,and will come to a decision.Ideally i would like to wait until some stocks go ex div before selling some. We will see. How about you b2i do you have an opinion any thoughts to share with your share trader com.? Be great to hear.

Thoughts on how much cash I have in my portfolio you mean?