Cash is king? Yes, but only for a small window of time when the stock market has crashed or perhaps some stocks in your watchlist has fallen to a level below its intrinsic value.

Yes, it was the Almighty for short period in 2000, 2008, 2016 etc. But for long duration in-between, cash is a drag and often trailing behind the returns from well-run businesses.

Perfecting the timing of the market cycle is the holy grail of investing. If you can side-step the down cycle correctly, own stocks on the up-swing and get off the bus at the peak, it will be super rewarding! But you have do all 3 things perfectly. Example, if your getting back to the market timing is off, you could be chasing the market and could buy in again at a higher price. As the market doesn't care one bit, it can go down the moment you are getting back into the game. Instead of being the smart chap you think you are, likely you will be the patsy at the table.

On the average over long period, market has returned about 6-7% per annum. Sit out and wait for STI to drop to 2000, could means sitting on cash for many years.

I say go for the middle-way. Stay invested but keep a sizeable warchest and fire on auto when big elephants appear. To me, sizeable is 30%.

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41 comments
Fries

Cash is always king. In good times or bad times

DareDevil

Reply to @Fries : Tell that to the Venezuelans & Argentinians

Master_GongJiaowei

tiagong now Saudi king is Salman

Evilcrownofthorns

Have the elephants started appearing for you :)?

Evilcrownofthorns

Reply to @theintelligentinvestor : Think this week still got month end support, next week we will see even more volatility with the US mid terms

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SSJ4

tiagong now cashflow is king

div1g4in

Cash is king of course. So far I havent see ppl go Fairprice and pay using DBS shares, etc lol.

thrusthebust

patience is the key.. wait it out as long as need to be.. let idling cash stay idle . just manage expenses and focus on essentials . vest only when it shows sign of bottoming out. that's the most common sense way to go..

lynlynnakamori

It depends on what stock you hold & trade
STI hit low at around 1500 during 2008 Financial Crisis
The index then consolidation UP...
.
this year - STI crossed 3600 before the correction
If you study the rally before 2008 crash
What happened to our index STI is mirror image
to what happened between 2006 - 2007
.
But the behaviour of the stocks HAS CHANGED
Some stocks recovered fully from 2008 low
- example the Banks & Transport, Telco & Tech stocks
Some stocks beaten down and consolidate
examples are :-
- Property like CapitaLand,
- Commodity like Wilmar
- O&G like KepCorp, SMM & Semcorp
- SGX consolidate below 10.00
has a lots to tell us....
.
THE PARADIGM HAS SHIFTED...
you need to change your strategy accordingly...
think out of the box...

lynlynnakamori

Reply to @theintelligentinvestor : agree...simple is good
but the environments are messy
it disturbed the Simple things we like....

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Dividend_Warrior

Good read, TII :) very timely in the current environment.
I am hiding in my closet, clutching a biscuit tin with my life savings in it and writing a similar article. Hahaha! Partly inspired by @ThumbTackInvestor article too.
Shall be posting my article later :)

PomeloFarmer

Recently seeing more and more posts of people selling out and going 50% or 100% into cash, have highlighted that this move comes with some risks

clim

Reply to @SilosInvestor : morning bro. haha maybe not the right definition of confirmation bias? it is not what someone did what he believes but how he filter out alternative views to form and strengthen his beliefs.

your statement might have stemmed from long observation but cant be deduced exclusively from this scenario.

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DecipherMoney

thanks for sharing. things are looking interesting!

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