I have been asked this question in various forms by various people over the years.
“How much cash are you holding now?”
However, like how I have always sidestepped questions regarding my net worth and the size of my investment portfolio, I have habitually sidestepped the question.
I have published a blog post in the past to explain why.
See:
My investment philosophy or my investment portfolio?
So, this blog post is going to be the first time since I started blogging in 2009 where I share some specific numbers.
Why the change of heart?
This is because of what someone told me not too long ago.
It would help readers have some kind of yardstick for themselves in their decision making process.
I am always mindful of the fact that all our circumstances are different.
So, there is nothing sacrosanct about what I am about to reveal.
We do what our circumstances allow.
Of course, we could push ourselves to do more and we should but how much to push, that depends on our threshold for pain.
1. War Chest
I have said again and again that is it important to have a war chest.
When opportunity knocks, we want to have the resources to take advantage of the opportunity.
For me, such an opportunity usually takes the form of market pessimism.
Like Buffett said before, be greedy when others are fearful.
It is harder to do well when everyone is feeling optimistic and chasing prices higher.
Then, how much should we have in our war chest?
I get asked this so often.
There really is no magic number or percentage.
It depends on Mr. Market.
When Mr. Market is feeling optimistic, my war chest continues to grow in size.
When Mr. Market feels pessimistic, my war chest could be totally empty.
During the Global Financial Crisis, I emptied my war chest and I have blogged about
