David Merkel writes an article he titled “The Future Belongs to Those with Patience“, but the summary explanation is about how peoples’ expectations drive asset values. Waiting for when expectations are low and investing will generate superior returns. Easier said than done.
The article he wrote contains very powerful information and is well worth reading in entirety (along with most of what else Merkel writes), but is probably too abstract for those that are not in tune with the marketplace to understand. I believe it was a Warren Buffet quote that said “There are no called strikes in investing”, and using this analogy, it is if you are playing a game of baseball and every (investment) “pitch” equates to every security you end up researching. The only difference is that in a real game of baseball you’re out if you receive three good pitches and don’t swing, while in the investment world you can still wait for that perfect pitch.
Since the third quarter of 2011 I have been averaging at about a 70-90% cash balance. I started deploying this late in the second quarter of 2012, and am currently sitting on around 30% cash. I don’t know of many people that can keep large cash balances for a significant length of time – it is easy to get “itchy” and take a swing at some marginal bets. This is how you lose capital.
Hey, thanks for mentioning me.