Liquidation continues

For the first time in a long time, I’m at the 40% cash level. Fortunately this is due to selling securities rather than incurring losses in the portfolio.

When I identified three targets of opportunity in the second half of last year, I should have probably doubled my allocation. This is a classic “should have” case, so it ultimately has no future-bearing consequences. I usually slip into my positions deeper as the price goes lower, and the amount of the price drop on all three securities was not sufficient to get a complete holding since the markets have generally recovered significantly since September.

Having 40% cash means that your holdings have to perform 2/3rds better than the underlying indexes to have an overall performance of the index. As much as I feel like buying puts on the S&P 500 index, standing in front of that freight train is liable to get you financially killed, so I will be patient.