Jason Zweig: Cash Is Now A Sin: MFO's David Snowball Comments Good evening all,
An interesting subject: "Cash Is Now A Sin."
Even though I think of myself as a good Christian according to this article I am a big sinner by holding such a sizeable cash position within my portfolio.
In review of a few recent Xray analysis the funds within my portfolio, which consists of forty seven, currently hold an average of 3% in cash which is down from the year ending analysis number of about 5% in cash back in December. My fixed income funds usually hold more cash than my equity funds.
As I entered 2016, combined, my portfolio was holding about 25% in cash. Now, my cash bubbles at about 22% due to the buys I made during the recent market selling stampede, scheduled retirement distributions plus the funds themselves are now holding less cash than they were at year end. My portfolio, on average, generates about 1.25% in cash (yield) per quarter on amount invested. With this, I could easily be close to a 23% cash allocation by the end of the first quarter.
I'll continue to hold the large cash allocation as I am thinking of selling some of my equities since the S&P 500 Index is currently selling at a TTM P/E Ratio of 23 according to the WSJ. With this, stocks are not currently cheap and are richly priced from my perspective using the Rule of Twenty. Since, I am above my target allocation (50%) to stocks, now at about 53%, soon might be a good time to pair back a few of my equity positions and rebalance as summer approaches.
I am thinking my sizeable cash allocation is a blessing and orginates from Biblical teaching. Besides, when I make harvest of my plantings, and book profits, the Lord gets his share.
Have a good evening,
Old_Skeet
Barron's ETF Roundtable : How To Beat The Benchmark Actually, Wesley Gray and Co. are innovators in the Robo advisory space with the advent of an active managed method that "may" actually produce alpha beyond benchmark. This through exposure to just two stock universes (based on Fama French factors) and combined with trend following component ( vs. the others that are based on the Modern Portfolio Theory model and are "over" diversified, IMO, in REITS, emerging / international equities, emerging / international debt, domestic equities, etc )
blog.alphaarchitect.com/2016/03/03/why-we-built-an-active-robo-advisor-and-why-you-should-too/#gs.06MOFCs
Jason Zweig: Cash Is Now A Sin: MFO's David Snowball Comments Funds can't raise cash because of manager "career risk" ( they have to be careful to at least match the "benchmark" from year to year / quarter to quarter). This is one of the dilemmas of investing in mutual funds. Others are fees, various rates of portfolio turnover, manager turnover. Investing in index ETFs eliminates these factors ( DIY investors can go to cash when they want and fees/expenses can be very low). Mutual funds and individual stock portfolios are the product of the 20th century investment landscape. ETFs represent the 21st century landscape ...
Jason Zweig: Cash Is Now A Sin: MFO's David Snowball Comments Can't access the article, so here's a shot in the dark:
Observing my funds, especially at T. Rowe Price, I've observed over several years that they have been avoiding holding cash if cash is defined as a money market fund or bank deposit. Obviously, they don't want money earning near 0. However, many funds do hold suitable higher yielding proxies for cash (that is unless your investing horizon is extremely short). Here's three low risk funds you're likely to find in place of cash, often in substantial percentages, in T. Rowe Price 's allocation and balanced funds.
Limited Duration Inflation Focused Bond Fund TRBFX
Ultra Short Term Bond Fund TRBUX
Short Term Bond Fund PRWBX
(Correction to my earlier comments: PRWCX does not invest in the above funds from what I can tell. But, interestingly, as of last December the fund held 14.9% in Price's "Reserve Investment Fund", a money market fund apparently designed to serve their own uses.)
So, I wonder if Zweig is including these types of investments as cash in whatever numbers he's floating around? Additionally, recognizing that more and more individual investors now use allocation, balanced and target date funds, fund houses and managers may feel a bit more freedom to keep their equity funds aggressively invested.
Jason Zweig: Cash Is Now A Sin: MFO's David Snowball Comments Most fund managers also need to show performance in order to attract more AUM. Even if they wanted to hold more cash for a rainy day, they don't dare show 'drag' in a rising market lest potential customers put their $$$ into a competitor's fund instead.
Thankfully, us individual investors don't need to compete with an arbitrary benchmark to attract assets, so if we're holding large cash-like piles for prolonged periods[1], and our other holdings are doing just fine and meeting our goals/needs, at least WE will be in a position to buy hand-over-fist when quality stuff 'goes on sale.'
[1] I am. While I have many existing long-term positions/accounts and have added new stuff over time -- holding nice Sleep Well At Night equity-heavy portfolios -- I've had a hard time willingly committing large amounts of inherited funds into the market in recent years. There are few good values in my view. Ergo, I wait patiently.
Jason Zweig: Cash Is Now A Sin: MFO's David Snowball Comments
Josh Brown: Welcome To The Chop Shop: + When Do You Want Your Risk, Now Or Later?
Didn't we close at 2022 today? Hasn't oil rocketed ahead over 50% off its lows. Aren't junk bonds leading stocks and many after today's big move up in the 2.5% to 3% YTD range? I just love these so called professionals who talk down to the amateurs. I guess the difference between a professional and an amateur is the amount of capital involved? And as we saw earlier today, those huge sums of capital managed by the hedge funds have had dismal returns the past 7 years.
Jason Zweig: Cash Is Now A Sin: MFO's David Snowball Comments
Josh Brown: Welcome To The Chop Shop: + When Do You Want Your Risk, Now Or Later?
For Hedge Funds, Start of 2016 Offers Little Relief From 2015
For Hedge Funds, Start of 2016 Offers Little Relief From 2015 I would have to look, but haven't hedge funds performed absolutely miserably since 1/1/2009? Just another example of "there are no experts". Once investors grasp that tenet they can begin going about developing their own money management strategies based on their particular goals and risk tolerances - and not what they read here, there, or anywhere.
For Hedge Funds, Start of 2016 Offers Little Relief From 2015
Vanguard Launches Low-Cost, Actively Managed Core Bond Fund Subscription Period
Vanguard Core Bond Fund is holding a subscription period from March 10, 2016,
through March 24, 2016. During this period, the Fund will invest in money
market instruments rather than seek to achieve its investment objective. This
strategy should allow the Fund to accumulate sufficient assets to better
construct a portfolio and is expected to reduce initial trading costs.
The Fund reserves the right to terminate or extend its subscription period prior
to March 24, 2016.
During the subscription period, you may invest in the Fund online (if you are
registered for online access), or you may contact Vanguard by telephone or by
mail to request this transaction. Please see the Investing With Vanguard
section of the Fund’s prospectus for more details about requesting transactions.
© 2016
e.r.= 0.25% (Investor Shares) or 0.
15% (Admiral Shares)
Prospectus straightforward and unremarkable, as one would expect.....
https://personal.vanguard.com/us/funds/snapshot?FundId=1320&FundIntExt=INT
Most U.S. Stock Pickers Failed To Beat Index Last Year, S&P Says How To Be Wrong As An Investor
Posted March 9, 20
16 by Ben Carlson A Wealth of Common Sense blog post
Investors can’t expect to be right at all times. You’re going to be wrong on occasion even when you make the right decisions. Understanding that poor outcomes can happen to a legitimate investment process is a huge step in becoming a better investor. The thing is you can poke holes in any investment strategy out there. The trick is finding the one with flaws that you’re comfortable with.
http://awealthofcommonsense.com/2016/03/how-to-be-wrong-as-an-investor/
