How to allocate new cash

[biaggio]

How do folks here allocate new cash?

 

My "investable" cash has increased by almost 50%. I am in the second part of my working career so the amount is a good size.i.e I don t want to lose it, but at the same time I don t want the value of it to erode as it will if we stay in cash.

 

i. Do you divide it and allocate it right away proportionate to the holdings you had before the addition(provided that they are selling at a MOS)?

 

ii.  Do you average in or dollar cost average over the next 6-12 months (or other time frame)?

 

iii. Do you hold the cash + wait for a really fat pitch/market correction?

 

In the past i have generally done a combination of ii & iii.

[Partner24]

Some P&C insurers are still cheap despite the overall market increase. I think that they still provide a very decent margin of safety. Some high quality big caps too.

 

Just my opinion.

 

Cheers!

[biaggio]

Some P&C insurers are still cheap despite the overall market increase. I think that they still provide a very decent margin of safety. Some high quality big caps too.

 

Just my opinion.

 

Cheers!

 

Partner, I have ~ 7% of my portfolio in FFH & 3% in BRK-B...would you take 7% + 3% of added cash and add to these holdings? Before the additional cash I am ~ 25% cash.

[merkhet]

I would love to be in 50% cash right now, and if things go as I expect over the next month and a half, I'm hoping to get there.

 

I would hold for the fat pitch since almost everything is expensive now -- maybe add a little bit to high quality large caps if you really feel the itch to buy something.  (We've certainly all been there before.)

[Myth465]

Some P&C insurers are still cheap despite the overall market increase. I think that they still provide a very decent margin of safety. Some high quality big caps too.

 

Just my opinion.

 

Cheers!

 

Partner, I have ~ 7% of my portfolio in FFH & 3% in BRK-B...would you take 7% + 3% of added cash and add to these holdings? Before the additional cash I am ~ 25% cash.

 

I focus on MOS and catalysts outside of macro considerations. This is what I do in general. As merkhet

has said everything is expensive so I am looking to raise cash. I am at 5% and will sell some of the ideas below as things work-out. Cash percentage is going down as everything goes up. Its a nice problem but whats a guy to do.

 

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I think cash should be allocated to the best ideas, and ideas with sufficient margin of safety. I also tend to shift cash to ideas where the catalyst is in place / playing out. This really juices returns. I had 15% in SD and 15% in ATPG and 7% in FBK. There is also 20% in ATSG.

 

I sold some other ideas and also added cash to the portfolio. I bought trading positions in SD and ATPG due to catalyst playing out. Both went up 10% - 20% and I can now sell these leaps to raise additional cash.

 

I think having core ideas (5-20), then allocating cash to the ones where the catalyst are playing out can really juice your returns. I bought more FBK because the sector is "hot" and people are watching it. It is no longer a sleepy pulp procedure. It will get taken out or will go up. I have sat on it for a year, and the new capital will benefit because the stock should move fairly quickly. Earnings could disappoint again though (not sure how with record pulp prices)....

 

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TX and I made out like bandits putting capital into ATSG after the turn. Like I said I hold a core position to protect against a strong move up, then push in more chips after the business turn and hopefully prior to the stock turn. Thats how I plan to allocate new cash.

[biaggio]

Thanks for the helpful responses

[Partner24]

Partner, I have ~ 7% of my portfolio in FFH & 3% in BRK-B...would you take 7% + 3% of added cash and add to these holdings? Before the additional cash I am ~ 25% cash.  

 

Well, I cannot recommand you to do anything since I don't know your investment profile, tolerance to volatility, when you plan to retire, etc.

 

That being said, to me, some very good P&C insurers are still cheap and deserve to have a significant part of my portolio in them (but that's me and that's based on my own profile).

 

 

 

[txlaw]

I think having core ideas (5-20), then allocating cash to the ones where the catalyst are playing out can really juice your returns. I bought more FBK because the sector is "hot" and people are watching it. It is no longer a sleepy pulp procedure. It will get taken out or will go up. I have sat on it for a year, and the new capital will benefit because the stock should move fairly quickly. Earnings could disappoint again though (not sure how with record pulp prices)....

 

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TX and I made out like bandits putting capital into ATSG after the turn. Like I said I hold a core position to protect against a strong move up, then push in more chips after the business turn and hopefully prior to the stock turn. Thats how I plan to allocate new cash.

 

Dude, same thoughts about FBK.  I'm hoping it pays off sooner rather than later.