cash does not participate on the upside or downside. it offers a bit of psychological protection and it dampens overall fluctuation. it is a dilution at best. the protection it offers is jus an illussion. true protection should go UP in value when equity market sells off. Cash does NOT do that. it merely does not go down.
most assets that "protect" you, like
gold and silver
long vol
long out
are very costly to hold. the cost of holding cash is the opportunity cost.
cash helps you to ADD to your position when price is low. always holding a proportion of cash is a very costly way of investing. i would rather borrow against equity positions to go long than always holding cash in reserves.
everyone's risk tolerance is different. YMYC.
most assets that "protect" you, like
gold and silver
long vol
long out
are very costly to hold. the cost of holding cash is the opportunity cost.
cash helps you to ADD to your position when price is low. always holding a proportion of cash is a very costly way of investing. i would rather borrow against equity positions to go long than always holding cash in reserves.
everyone's risk tolerance is different. YMYC.
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