During bull markets, it’s difficult to keep cash in portfolio.
Every stack of unallocated cash seems like a missed opportunity.
However, the same cash acts as a saviour in case markets correct. When everyone is out of cash & you have cash to buy stocks at throwaway valuations.
The thing is, nobody precisely knows when the market will correct and bring in the opportunity to deploy the cash.
Hence, as a rule, I always go home with 5-10% cash in hand into portfolio. This gives me a good night’s sleep irrespective of where the market is going. I know, in case the market corrects, I’ll be in position to buy something attractive.
If market continues to run up, the stocks in portfolio will anyway make money.
All sorts of problem starts when one tries to squeeze the max out of cash in hand by deploying the last penny or worse, by taking leverage bets.
Keeping cash in hand is one of the best hacks I’ve came across & coincidentally improved my decision making process; thereby making me a better investor.
