Emailer asks what a lot of people are thinking:
Hi Cody, any suggestions on how to be allocated at this time? Especially, how much should be in cash?
There’s never an easy answer to the question about “how much to be in cash?” It all depends on how much money you have in stocks vs. real estate vs. bonds vs. your business and how much cash flow you bring in every year relative to that portfolio and how old you are and what your risk tolerance is and what your goals in investing are, etc.
That’s why I write about how I’ve raised a bunch of cash relative to where I was a few months ago, so that you can decide what that means to you. Put another way, if you’re 35 and you make six figures and you own your home with some equity even with its price down and you’ve got $200k in your retirement and personal stock portfolios. Maybe you were 100% invested, 80% long/20% short/0% cash when I was writing about how we should be aggressively long. And maybe that means you’re now 75% invested, 50% long/25% short/25% cash.
If you’re 60 and about to retire and you have a $2 million stock portfolio and you have four kids about to go into college, well, “how much cash to have on hand” means something entirely different.