Thoughts On: Uses of Cash in the Portfolio
Should we go to cash? Why cash? Periodically, clients ask if we should “go to cash” with their portfolios. They never ask this question while stock prices are going up, but only when prices have been coming down. This is due to the human tendency to buy at the top and sell at the bottom, which is a bad tendency. To combat this tendency, I want to look closer at the role of cash in an investment portfolio. An investment portfolio has at least a five-year time horizon; it is NOT short-term spending money. Short-term spending money belongs in cash [...]