Last Friday, November 20, we surveyed our members with the question below.
How many years’ worth of cash or a cash-equivalent do you keep?
Thank you to all who participated.
|2. I am fully in cash and not at all in the market||2.10%|
|3. Between one and two years worth||40.40%|
|4. Three to four years worth||21.30%|
|5. Five years worth or more||25.50%|
Below, you can see the Monday Morning Program comments on the survey results.
Gerald Loeb, the most quoted man on Wall Street before Warren Buffett, said: “It is far better to let cash lie idle than to buy just to “keep invested” or for “income.” In fact, it is really vital—and just this one point, in my opinion, represents one of the widest differences between the successful professional and the loss-taking amateur.”
Buffett has always kept a large percentage of the Berkshire Hathaway portfolio in cash.
Successful investors know that the money that they will need in the next few years does not belong in the stock market but should be kept in cash or a cash-equivalent like the money market or certificates of deposit.
- Nearly 11% of our members keep no cash or cash-equivalent in their portfolios. That is, they are fully invested. Wall Street loves people like that. Wall Street makes no money on the cash we keep uninvested. If a fully invested position is temporary, that is acceptable. Otherwise, these portfolios are guaranteed to underperform.
- About 2% of our members are fully in cash and not in the market at all. Here again, this is acceptable if it is a temporary position. Otherwise, the loss of purchasing power is guaranteed.
- Close to 90% of our members keep between 1 to 5 years’ worth of their portfolios in cash or a cash-equivalent. Their risk tolerance capacity determines the number of years. This approach is entirely in keeping with the Monday Morning philosophy. Congratulations!
The Monday Morning Program does not provide any investment advice or endorsements.
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