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|Subject: Re: $950K ... now what?||Date: 1/15/2013 1:14 PM|
|Author: globalist2013||Number: 34686 of 35570|
Charlie writes: "Sometimes, to not sell would be totally stupid. The gains are so fat that even when they are prorated over what would have been the former (and much longer) holding-period, the trade turns a higher profit."
That was my only point. When you run the numbers, then you know the consequences of the choices you're making. I've told this story before. But it bears repeating. Scott and I got into Hansom's 6.125's of '16 at low 40's. Within a year, it tagged par. Scott chose to flip. I chose to sit tight. We have and had different objectives and, therefore, made different choices. But we both ran the numbers.
The mistake you making --and then compounding-- is failing to distinguish between having beaucoup cash and having a problem with whether/how to put that cash to work. Taleb hold far more cash than you will ever have. 90% is his allocation. But he needs every penny of it right where it is, because of what he does with the other 10%. Perry Kaufman --one of the foremost trading theorists and practitioners-- , says the same thing about the utility of being deleveraged depending on one's investing/trading plan.
You think you have a cash problem (too much of the stuff). What what you really have is an planning problem (too little of it). Because you think you don't know what to do with the cash you've already got, you don't want even more of the stuff. But until you write your plan and truly know how much cash you need in order to manage your risks, you have neither too much, nor not enough, nor the right amount. You just don't know. Fix that problem, and what to do about the Treasuries will make itself clear. Maybe, just maybe, you really do need the redundancy they could create by just sitting on them. That redundancy creates "anti-fragility" (in Taleb's terms), and that's not a bad thing to have.
In other words, sound reasons can be found, and a coherent decision framework can be created, if you do the work. Why do it? Because you know you can trust the answers, and that they suit your own unique circumstances, personality, and needs. Let others decide for themselves what's best for them. Do the work to figure out what truly best for you. "Sell or sit tight?" Your investing plan should tell you that.
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