***
I don’t necessarily agree with everything he says, but this
is an interesting interview. If you substitute ‘undervalued stocks’ in place of
‘gold’ in his recommendation of being about 70-80% in cash and 20-30% in gold,
then you’d get about the allocation we currently have for separate accounts
within Chanticleer
Investment Partners (for more information, go HERE
and HERE),
an entity I’m involved with that launched a few months ago. Although I like
holding some cash in case a great opportunity arises, I don’t particularly liking
holding as much cash as we do today, but I feel it is the proper course of
action in today’s environment. My feelings today largely reflect the two quotes
below:
“Some argue that holding significant cash is gambling, that
being less than fully invested is akin to market timing. But isn’t a yes or no
decision the crucial one in investing? Where does it say that investing means
always buying something, even the best of a bad lot? An investor who can’t or
won’t say no forgoes perhaps the most valuable tool available to investors.” –Seth
Klarman (excerpt from 2004 letter)
“Another important point I try to teach my students is that
you have to consider not only what your opportunity set is right now, but also
what opportunities you may be forgoing later by investing now. If your
opportunity set is not that great right now, maybe you should wait another 6 to
12 months before becoming fully invested.” –Joel
Greenblatt (as quoted in the book Hedge
Fund Market Wizards)