I’ve mentioned a few times about how a senior colleague of mine has been waiting on the sidelines for almost two whole years. He’s been almost 100% in cash or some fixed-income investments that pay little to nothing, and had to experience the pain of missing out on last year’s run-up in the market. He’s also missed on the additional yield provided by equities.

I’ve also moved more from equities to cash/bonds but that’s largely a function of how markets have run up and I’m definitely nowhere near 100% in cash. As my time horizon is VERY long, I suspect my average allocation will be 80/20 cash/bonds with room to move to 100/0 or 70/30 at market extremes.

Kyith over at Investment Moats has a fantastic post on how being too cautious has costs too.* Of course, one does what one needs to do to sleep well but the costs of trying to time the market can be costly and investors will do well to recognise this cost.



*In Econ 101, this is what we call opportunity cost.