Gyroscopic Investing

http://blogs.wsj.com/moneybeat/2013/07/ ... conundrum/

Charles de Vaulx has an investment idea: cash.

That may seem an odd choice, since cash earns less than inflation, making it a money-losing proposition.

But Mr. de Vaulx, who oversees $17.8 billion as chief investment officer at International Value Advisers in New York, has been boosting his cash position. He is having trouble finding stocks he considers cheap and won’t buy overvalued stocks. He considers bonds even more overvalued than stocks, leaving him perched on a lumpy cash pillow.

I keep trimming vp stocks as the market climbs and because I'm worried about the cost of an upcoming project, the cash is just sitting around like second-class gold. It's a weird feeling. Get us back to 5% interest at the bank, and this forum will be overrun with new adherents to the pp.
But, the author of the article above will be able to say he was in cash "before it was cool."

5% interest at the bank will probably be enough to get me to open a VP that consists of half cash and half munis at like 10%. 

Pointedstick wrote: http://blogs.wsj.com/moneybeat/2013/07/ ... conundrum/

Charles de Vaulx has an investment idea: cash.

That may seem an odd choice, since cash earns less than inflation, making it a money-losing proposition.

But Mr. de Vaulx, who oversees $17.8 billion as chief investment officer at International Value Advisers in New York, has been boosting his cash position. He is having trouble finding stocks he considers cheap and won’t buy overvalued stocks. He considers bonds even more overvalued than stocks, leaving him perched on a lumpy cash pillow.

I bet a lot of big funds are doing this, and it's a lot of the reason why the PP has been doing poorly over the past few months.  The only economic condition it can't handle well is a big retreat into cash, and this has been exacerbated lately by the gap between short term interest rates and inflation.  The condition is time-limited though, because investors (large or small) just aren't going to sit on that much cash for too long.  Witness what's been going on the past few days.  I'm sure wishing I'd hit a rebalance band back when gold was at 1200, but alas....

sophie wrote:I bet a lot of big funds are doing this, and it's a lot of the reason why the PP has been doing poorly over the past few months.  The only economic condition it can't handle well is a big retreat into cash

This sounds like a great explanation of what we've been seeing lately.  But, since we hold 25% cash ourselves, doesn't others' hoarding of it make our cash more valuable?  So maybe the PP hasn't been doing so badly lately after all.  Cash is surely the hardest to measure.

Xan wrote:

sophie wrote:I bet a lot of big funds are doing this, and it's a lot of the reason why the PP has been doing poorly over the past few months.  The only economic condition it can't handle well is a big retreat into cash

This sounds like a great explanation of what we've been seeing lately.  But, since we hold 25% cash ourselves, doesn't others' hoarding of it make our cash more valuable?  So maybe the PP hasn't been doing so badly lately after all.  Cash is surely the hardest to measure.

Our cash (the dollar) is doing better, but only in comparison to other currencies.

Large cash reserves seem to be gaining in popularity among well off investors stung by market volatility...
http://www.today.com/money/whats-wealth ... 6C10717158