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How much Cash do you hold?


phil_Buffett
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...my expectation is that investors will ultimately look back at the present market exuberance in hindsight and ask “after watching the market collapse following nearly identical bubbles in 2000 and 2007, despite aggressive monetary easing, how did we actually refuse to consider major losses in the belief – yet again – that this time was different?”

 

... I continue to believe that the stock market is vulnerable to potential losses in the 40-55% range, much like we observed and anticipated in 2000-2002 and 2007-2009.

 

http://www.hussman.net/wmc/wmc131028.htm

 

40%

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I have about 20% cash in my accounts, but I am making it work. if I were put to on all my short option positions I would be about 10% on margin. So maybe you could say I have -10% cash? (I have become more conservative this year. In previous years I often had open short option positions where I would have been about 20% on margin if put to on everything.)

 

90% of my short option positions will expire over the next three expiration dates 11/1, 11/8, and 11/16. They are now all out-of-the money, some by so much I will probably buy some to close and eliminate some risk.

 

I agree with Heilko, there seems to always be something if you look. For example, a couple of weeks ago I was writing 57.5-strike PSX puts. During the last week I was writing IBM 170 and 175-strike , BAC 14-strike, and COH 48- and 49-strike puts.  (Yes I would be better off had I purchased PSX and IBM, but I was being conservative when I wrote these as out-of-the money puts. I had the extra margin of safety of the option premium plus the difference between the stock price when I sold the option and the strike price.)

 

I really like the weekly stock options, you can get some very good premiums for writing insurance for a few days to a week.

 

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I'm about 16% in cash after pushing a bunch of my cash position into fixed income CEFs a few weeks back and recent appreciation in my holdings.

 

I'm also 7% short in Tesla and Netflix combined and will be receiving a large cash payment from the sale of BBRY that will Bump my cash position up to 25%. I'm also letting all dividends go to cash instead of reinvesting, so those bond CEFs yielding 10% will be a large contributor to cash in the next year or two.

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...my expectation is that investors will ultimately look back at the present market exuberance in hindsight and ask “after watching the market collapse following nearly identical bubbles in 2000 and 2007, despite aggressive monetary easing, how did we actually refuse to consider major losses in the belief – yet again – that this time was different?”

 

... I continue to believe that the stock market is vulnerable to potential losses in the 40-55% range, much like we observed and anticipated in 2000-2002 and 2007-2009.

 

http://www.hussman.net/wmc/wmc131028.htm

 

Not to take a side, but it's sort of ironic Hussman mentions Bayesian learning. I wonder if he's adjusting his priors for each year that passes without any blow up, despite the Fed's actions. My sense is he's only doubled down on his beliefs. Which means he's not Bayesian at all.

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...my expectation is that investors will ultimately look back at the present market exuberance in hindsight and ask “after watching the market collapse following nearly identical bubbles in 2000 and 2007, despite aggressive monetary easing, how did we actually refuse to consider major losses in the belief – yet again – that this time was different?”

 

... I continue to believe that the stock market is vulnerable to potential losses in the 40-55% range, much like we observed and anticipated in 2000-2002 and 2007-2009.

 

http://www.hussman.net/wmc/wmc131028.htm

 

Not to take a side, but it's sort of ironic Hussman mentions Bayesian learning. I wonder if he's adjusting his priors for each year that passes without any blow up, despite the Fed's actions. My sense is he's only doubled down on his beliefs. Which means he's not Bayesian at all.

 

Not necessarily. Bayesian learning simply means you adjust the probabilities with each year of new information. Maybe each year that passes increases the probability of a blow up occurring and actually justifies his "doubling down", no? I don't see any reason that this can't go both ways.

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15%, less than I like but Bernanke is forcing my hand to a degree. High debt loads and printing presses are a scary combination.  :-[

 

Kyle: I don’t think that they’ll be able to raise the Fed funds rate any time in the foreseeable future—3 to 5 years.

 

Jim: So, that would argue that stocks would be a better play.

 

Kyle: Unfortunately…because it feels like they’re making it the only game in town. It’s not your choice, but it’s the only answer though.

 

http://www.financialsense.com/contributors/kyle-bass/fed-raise-interest-rates-3-5-years-stocks-only-game-in-town

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