>>Why cash and not bonds?
First, by cash I mean a combination of money market, ST, and IT
bonds, all of which make up part of my "cash." I was
oversimplifying the message a bit. These are near enough to
cash for my purposes. Also I do have a few LTs in the mix
because these are all funds in 401ks, etc, with limited
choices, and I couldn't avoid them.
But mainly, in regard to LTs (Target 2025 and the like), I don't
need to trade a devil I know at least somewhat
(stocks) for a devil I don't (LT bonds), which CAN hand you
major losses.
Maybe you know they won't lose in a crash, but I don't.
If LTs go contrary to the market, what good does it do
me to take profits for market timing purposes (as opposed to
portfolio rebalancing, which I am NOT doing here) just to
put them into something that loses if I'm wrong and the
market has a major rally? The point of cash and equivalents
in my move was to take a profit regardless of what happens,
not to trade fairly large risk for another admittedly probably
smaller but much less familiar (to me).
I guess the short answer is, partly I was lying for simplicty,
partly because it doesn't fit what I'm after, and partly because
if you think I'm ignorant in stocks, you should see my mental
wasteland in bonds! |
