Optimal Cash Allocation

Thrugelmir

There's always opportunities to be found if one spends the time looking. Far easier for retail investors to remain fully invested than institutional ones, who are measured on performance comparisons. After being 55% in cash earlier in the year now back to a minimal level. Though the portfolio has a rather different look. 

coachman12

Thrugelmir said:

There's always opportunities to be found if one spends the time looking. Far easier for retail investors to remain fully invested than institutional ones, who are measured on performance comparisons. After being 55% in cash earlier in the year now back to a minimal level. Though the portfolio has a rather different look. 

I totally agree that there are always opportunities ( except for anyone interested in fixed periodicity     (periodicity ??) to market cycles ! )
Seriously , Thrugelmir, when one is getting ready to make significant change to a portfolio, I think 55% in cash is quite reasonable, as long as plans have been formulated on a rough outline of how the sectors and diversity are going to be altered. I've never been sure enough to have ever reached 55% in cash and to be honest, I haven't got the nerve to make such a large change to my stocks. I tend to modify by tinkering at the edges. I admire the nerve of 55% but not if it means that a portfolio is failing so much that such new blood is needed. But if the reasons are not for that reason, I do admire the confidence.

itwasntme001

Notepad_Phil said:

The stats that I've seen would indicate that you're best off investing the money straight away, 'time in the market, not market timing', so that's what I've always done and have never kept money back to wait for dips.

It seems that for most of my 30+ years of investing that there have been people talking about stretched risk/reward premiums, as an early retired person in their 50's I'm just glad that I ignored them and just invested as the money came in.

The fact that it worked for the last 30 years does not mean it will continue to work.  There were many reasons for asset prices to rise generally over the last 30 years, the same reasons will not be there for the next 30.

Notepad_Phil

itwasntme001 said:

Notepad_Phil said:

The stats that I've seen would indicate that you're best off investing the money straight away, 'time in the market, not market timing', so that's what I've always done and have never kept money back to wait for dips.

It seems that for most of my 30+ years of investing that there have been people talking about stretched risk/reward premiums, as an early retired person in their 50's I'm just glad that I ignored them and just invested as the money came in.

The fact that it worked for the last 30 years does not mean it will continue to work.  There were many reasons for asset prices to rise generally over the last 30 years, the same reasons will not be there for the next 30.

Some of the reasons will remain the same, the other reasons will no doubt change - we just don't know what they'll be yet. If I'm still around in 30 years then I'll come back and update this thread.

Thrugelmir

coachman12 said:

Thrugelmir said:

There's always opportunities to be found if one spends the time looking. Far easier for retail investors to remain fully invested than institutional ones, who are measured on performance comparisons. After being 55% in cash earlier in the year now back to a minimal level. Though the portfolio has a rather different look. 

I totally agree that there are always opportunities ( except for anyone interested in fixed periodicity     (periodicity ??) to market cycles ! )
Seriously , Thrugelmir, when one is getting ready to make significant change to a portfolio, I think 55% in cash is quite reasonable, as long as plans have been formulated on a rough outline of how the sectors and diversity are going to be altered. I've never been sure enough to have ever reached 55% in cash and to be honest, I haven't got the nerve to make such a large change to my stocks. I tend to modify by tinkering at the edges. I admire the nerve of 55% but not if it means that a portfolio is failing so much that such new blood is needed. But if the reasons are not for that reason, I do admire the confidence.

Stance originally taken out of caution. Never expected the downturn to be this severe though. 

coachman12

Thrugelmir said:

coachman12 said:

Thrugelmir said:

There's always opportunities to be found if one spends the time looking. Far easier for retail investors to remain fully invested than institutional ones, who are measured on performance comparisons. After being 55% in cash earlier in the year now back to a minimal level. Though the portfolio has a rather different look. 

I totally agree that there are always opportunities ( except for anyone interested in fixed periodicity     (periodicity ??) to market cycles ! )
Seriously , Thrugelmir, when one is getting ready to make significant change to a portfolio, I think 55% in cash is quite reasonable, as long as plans have been formulated on a rough outline of how the sectors and diversity are going to be altered. I've never been sure enough to have ever reached 55% in cash and to be honest, I haven't got the nerve to make such a large change to my stocks. I tend to modify by tinkering at the edges. I admire the nerve of 55% but not if it means that a portfolio is failing so much that such new blood is needed. But if the reasons are not for that reason, I do admire the confidence.

Stance originally taken out of caution. Never expected the downturn to be this severe though. 

If it's not prying too much, do you intend to go back to your pre-Corvid portfolio way of working now or do you to think you will be chopping and changing for some time until markets have settled sufficiently?  I ask because I did all my "tinkering" recently after the worst of the downturn. I was not very adventurous and stayed mainly within FTSE100; as an example, I offloaded some Aviva for more BP as I'd bet a lot on BP zooming up again; quite a few changes like that, whilst trying to keep the diversity which is my shares' bible. My financial adviser keeps pestering me to buy Cemex and Barratt Development (both of which I'm thinking over ) and to offload some of my 650 Ocado shares but I have a special sentimental bond with that company(buying my first batch years ago at about 170) , as regular forumites are sick of hearing, and I intend to stay with all of them and hope for another 18 year overnight success story!!
So, for now---after making changes--- I am holding, unless I see one of the opportunities which are always floating around. And I wondered if you had now completed most of your Corvid-led dealings , except for new opportunities as they arise, or whether you were continuing to rearrange your portfolio to a significant extent for some time to come, and whether you would recommend the latter.

Thrugelmir

Time horizon means I'll never return to pre Covid times. Reached a level where I'm happy with my lot. The current uncertainty is going to take some time to unwind. 

Over the years have never stopped learning. As a result apply some basic rules whenever the economic climate changes. List your holdings and justify to yourself why they deserve inclusion in your portfolio. Do they have ESG/Green credentials, financially robust,if a dividend stock is the dividend adequately covered, sustainability in the downturn etc etc. Be emotionally detached. Everyone makes a bad call.  There's good and bad companies in every index. Don't feel constrained. Investing internationally has never been cheaper nor easier. Multitude of IT's that can provide exposure to less accessible markets and those where local knowledge is important. ETF's if a more focussed approach is required.  Despite investing for many years still come across companies who receive no media coverage yet consistantly churn out a decent return with upside of takeover. 
To return to the original point. If there's nothing worth buying I sit on my hands. If a share price has moved rapidly I top slice. If a share is performing badly I sell. Cash balance is whatever it is. Though I tend not to trade in small sums these days on an individual basis. 

AnotherJoe

Thrugelmir said:

coachman12 said:

Thrugelmir said:

There's always opportunities to be found if one spends the time looking. Far easier for retail investors to remain fully invested than institutional ones, who are measured on performance comparisons. After being 55% in cash earlier in the year now back to a minimal level. Though the portfolio has a rather different look. 

I totally agree that there are always opportunities ( except for anyone interested in fixed periodicity     (periodicity ??) to market cycles ! )
Seriously , Thrugelmir, when one is getting ready to make significant change to a portfolio, I think 55% in cash is quite reasonable, as long as plans have been formulated on a rough outline of how the sectors and diversity are going to be altered. I've never been sure enough to have ever reached 55% in cash and to be honest, I haven't got the nerve to make such a large change to my stocks. I tend to modify by tinkering at the edges. I admire the nerve of 55% but not if it means that a portfolio is failing so much that such new blood is needed. But if the reasons are not for that reason, I do admire the confidence.

Stance originally taken out of caution. Never expected the downturn to be this severe though. 

Is it? I'm up on the year. 

kinger101

Difficult (as always) to know what the rest of the year will bring, but as far as I'm concerned, 2020 is looking like very strong year so far.  Only my UK (smaller cos) are negative.  Fairly well diversified (I stay away from emerging markets) but looks like the US market is doing a lot of the heavy lifting.

Thrugelmir

AnotherJoe said:

Thrugelmir said:

coachman12 said:

Thrugelmir said:

There's always opportunities to be found if one spends the time looking. Far easier for retail investors to remain fully invested than institutional ones, who are measured on performance comparisons. After being 55% in cash earlier in the year now back to a minimal level. Though the portfolio has a rather different look. 

I totally agree that there are always opportunities ( except for anyone interested in fixed periodicity     (periodicity ??) to market cycles ! )
Seriously , Thrugelmir, when one is getting ready to make significant change to a portfolio, I think 55% in cash is quite reasonable, as long as plans have been formulated on a rough outline of how the sectors and diversity are going to be altered. I've never been sure enough to have ever reached 55% in cash and to be honest, I haven't got the nerve to make such a large change to my stocks. I tend to modify by tinkering at the edges. I admire the nerve of 55% but not if it means that a portfolio is failing so much that such new blood is needed. But if the reasons are not for that reason, I do admire the confidence.

Stance originally taken out of caution. Never expected the downturn to be this severe though. 

Is it? I'm up on the year. 

I was referring to the long lasting damage to the real global economy. Not the parallel universe of market indices.