Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Nandu who wrote (13475)	4/26/2000 11:17:00 AM
From: Investor2	Respond to of 15132

RE: "Another reason (or maybe it is the same reason) why an investor who went partially cash would cheer downturns in the market is they might be afraid of the market running away from them forcing them to get back in at a higher level." I generally agree. What makes the whole issue difficult to evaluate is the partial cash position. If one sold all equities, the above rationale would be appropriate. I guess the sale of only part of ones holdings is an admission that one cannot definitively predict future equity prices, i.e., "the market will do what the market will do." Just because the odds may favor a downturn in the market, it doesn't mean it's appropriate to sell all equities. Rather, the partial sale is a risk reduction tool. There is another factor in determining whether the sale of equities is or was the "right" thing to do: the value of cash. What is the future value of holding cash? If the market drops 50% and one reinvests the cash, the value of the dry powder will be significant. But what is "significant?" How can we quantify that value? Best wishes, I2