When markets are rallying, cash in the portfolio is a drag on performance, returning about zero.
Sentiment: NEGATIVE
Generally, a rally will have staying power, technicians say, if, in addition to price movements, it has heavy trading volume and breadth, meaning that several stocks rise for each stock that falls.
Having the opportunity to follow the market frequently gives you the opportunity to see if you need to reevaluate your portfolio. But reevaluating your portfolio shouldn't trigger a sell signal so frequently.
The bottom line is this: Cash, in modest increments, has a role in any portfolio. But unless you are Warren Buffett, you should limit it to 2 or 3 percent.
I think it's a mistake to rely too much on any one economic factor. It's why investors try to spread their portfolio round.
Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.
Investors have few spare tires left. Think of the image of a car on a bumpy road to an uncertain destination that has already used up its spare tire. The cash reserves of people have been eaten up by the recent market volatility.
One of the frustrating things for people who miss the first rally in a bull market is that they wait for the big correction, and it never comes. The market just keeps climbing and climbing.
I can never predict what the markets will do. Sometimes it does the exact opposite of what I would have expected.
Having different types of stocks in your portfolio can enhance returns.
Like a bank run, a decline in stock prices creates its own momentum.