Cash is King

I meant to post this last night (it went up at RM) but Man, this market cannot hold a bid, can it?

I’ve been watching the breadth and the volume, thinking that a rally on
decreasing A/D along with weak volume would make for a good fake. But we’re not
even getting that. It must be tough to be long after enough of these mediocre days —
they just wear you down.

On a personal note, on Wednesday Missus Big Picture and I moved our personal
retirement accounts into money market funds (2.7% — woo hoo!).

If nothing else, I eat my own dog food…


UPDATE:  April 7, 2005 10:05am

To clarify, the retirement accounts are all mutual funds; I am still long a few trading stocks that have not given sell signals. My longs are primarily energy stocks, plus a few micro and small caps,  primarily involved in IP, as well as shares from the company I am on the BoD. Oh, and some company involved in this newfangled doohickey called an iPod.

Print Friendly, PDF & Email

What's been said:

Discussions found on the web:
  1. John commented on Apr 7

    If you see us in a longer term range bound market (much like the 1966-1982 period) nothing wrong with cash. Personally speaking… I moved my retirement accounts to cash in January. Accounts which can be more actively managed are different. I am short the NDX, long energy, TLT, GLD, (long) STRIPS and holding a large cash position. I added the long bonds over the past few weeks.

    I wonder what asset allocation models would look like if the only periods considered were 1927-1945 and 1966-1982??? I think cash would carry a much higher weighting than it does in the average investor portfolio.

  2. Chris commented on Apr 7

    Lowry’s got a buy signal yesterday, saying the correction is over. Over! Praise the lord and the let the rally commence…

    Also according to Jon Markman, Robert Drach went from 2% invested 2 weeks ago, to 50% invested as of Tuesday. Of note, Drach is (or was) Gary B. Smith’s (of TSC) favorite market timer.

  3. joe commented on Apr 7

    How old are you? Just curious how many years you have till retirement? I’m in my 30’s, is MM for my retirement still a good idea?

  4. John commented on Apr 7

    It would not be surprising to see a short term rally here. Sentiment has shifted measurably. However as I look at money fund balances relative to the last few years I am not convinced that investors are POSITIONED as bearishly as the surveys suggest. Where the money IS is more important than the surveys. In addition my concern is over risk to the downside, it seems to me that most are looking for opportunities to be long (worried about missing upside) rather than betting on a decline or raising cash. As I see it that suggest any rally may or may not materialize and it’s duration and magnitude are questionable.

    My time frame is from an ‘investors’ perspective… 6-12 months. The only ‘timing’ indicators that are important to me at this point are those that worked well from 1966-1982. If a track record is largely based on the period of the last secular bull market (1982-1999) I do not see relevance today as we (IMHO) are no longer in a bull market.

  5. Tim commented on Apr 7

    Great site, Barry. I went all cash a few weeks agao at ~ Dow 10.8 and then dipped a couple of toes back in at Dow 10.4. So, I am hoping for a bounce. Whether she bounces or not, I will be all cash again within the next week or so.

  6. John commented on Apr 7

    “Even though oil has weakened there is surprisingly little enthusiasm for the market…” in one form or another I have heard this sentiment expressed several times on CNBC, Bloomberg and from other investors recently. A possible explaination… Birinyi has a report out that shows that health care and staples are among the best performing sectors after a peak in energy… BUT ALL SECTORS ON AVERAGE POST NEGATIVE RETURNS over the 12 months after an energy peak. My conclusion- it’s hard to get ‘enthusiastic’ about losing LESS money.

  7. anne commented on Apr 7

    A digression, since Barry Ritholtz is interested in the topic:

    File-Sharing Is the Latest Battleground in the Clash of Technology and Copyright

    AST week, the Supreme Court heard oral arguments in Metro-Goldwyn-Mayer Studios v. Grokster, a case that has important implications for the future of online innovation.

    Grokster makes software that enables Internet users to share computer files on peer-to-peer networks. The technology has been used to distribute many kinds of content, including copyrighted digital music.

    MGM and other entertainment companies want to hold Grokster liable for the copyright infringement that occurs when users download copyrighted music without paying for it. Grokster argues that there are many legitimate uses for its technology and that it is not responsible for those who use it to violate copyrights.

    This is just the latest installment of a longstanding battle between technology companies and copyright holders. It is useful to look at the history of some of these past innovations in trying to understand what policies may be appropriate today.

    In the early 1900’s, the disruptive technology was player pianos. Manufacturers of player piano rolls purchased a single copy of the sheet music of a song, hired someone to record the music and then sold these mechanical reproductions to consumers. The songwriters held that this was copyright infringement, while the piano roll manufacturers pointed out that they had paid the appropriate copyright fees when they purchased the sheet music.

    In 1908, the Supreme Court found in favor of the piano roll manufacturers, but practically invited Congress to consider new legislation on the issue. Congress responded with the Copyright Act of 1909, which created a new form of intellectual property, mechanical reproduction rights.

    The new law required piano roll manufacturers to pay songwriters a fee for each song. Subsequently, mechanical reproduction fees have been extended to new technologies like phonographs, audio tapes, CD’s and online streaming digital music.

    In the 1908 case, songwriters did not try to ban player piano technology. They clearly recognized that the additional distribution of their songs was potentially advantageous. Their goal was simply to get a fair share of the proceeds from the piano roll sales….

  8. The Nattering Naybob commented on Apr 7


    April 13th or 18th will commence the next plunge. Bottom should hit late April, mid May. Scoop up Canroys, energy trusts and oil transports. Collect 15% dividents and watch them just go up, up, up.

    You made a good move going to cash. As “The Tuminator” said in True Lies, “Get Out Theres a Hole in the Bridge!” Jubak or Markman? Thats like waiting for Wall Street. When they say anything, its way too late, and they are playing you for a chump in their pump and dump.

    Stay out of interest rate sensitive issues, bonds and real estate and do not go against the dollar. (What was Saddam carrying when we plucked him out of his hole? Not gold, not Euros, crisp Ben Franklins!) A lot of people are going to be rudely surprised later this year.

    The Nattering Naybob

Posted Under