I am repeatedly asked why our firm believes in moving equity weights to cash if we get sells and no co-incident buys within our universe. Time and again people will point out that the vast majority of other managers or financial planners insist that holding cash is not a reasonable approach, and that holding equities “for the long-term” is all one need do. As I have explained before (and at some length in Juggling Dynamite) and as Barry Ritzholt wrote last week, where you stand on this issue is a function of where you sit:

"I have a different perspective. I manage money for a living. That creates very different obligations -- its to preserve capital and manage risk. Since inflation is always eroding our clients assets, we must find ways to offset that by generating returns in excess of inflation. Part of our calculus is when to go into risk-free treasuries.

And because of our long experience on Wall Street, we have become rather skeptical of what we read in the papers and hear on TV. We have not forgotten all of the television cheerleading in 2000, nor the analysts who lost investors trillions. We well remember the investment banking scams, the corporate accounting fraud, the lax regulatory oversight, the general theivery that took trillions out of the pockets of individual investors.

As Raymond Jame's insightful strategist Jeff Saut likes to say, where you stand is determined by where you sit. And where I sit requires a healthy dose of not letting the bullshit artists lose our client's money.

I suggest readers and investors do the same . . "   more »