Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Hi James. MM has been advocating a strategy of selling into strength rather than buying the dips for a few months which is understandable with 1% cash position in the Growth portfolio. Could you pass some comments/strategies/tips for those that are perhaps sitting on higher cash levels given the market has dropped around 15% since mid April. Thanks.
Hi Scott,
Congratulations if you have a large cash position, the larger the better this sad Friday afternoon which is seeing the ASX200 struggle to hold onto 6450. As we said this morning the average recession led correction since WW2 is 30% with a couple if outliers close to 50% – we almost reached 27% on Friday.
Hence from a purely statistical perspective if MM were carrying a large cash position we would be looking to slowly accumulate into weakness maintaining something in reserve in case we do see a move of the 40-50% range. As a guide, for a new client coming into our managed portfolios (via Shaw), we would generally invest 1/3 straight up, and then work the balance over time as investments present themselves.
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