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great post

It seems to me that investors readily ascribe “opportunity cost” to holding cash while they credit being invested with their profits. While this is technically true, it does not deal with the simple reality that in order to invest at the most opportune times you require cash. I know many believe the “require cash” stipulation can be handled with a much smaller cash reserve and/or margin and this may be true for them, but for me the larger cash position enables opportunities I doubt I would/could act on with out it.

the only thing I don't get here is that if you are invested you can always sell something to buy something else, so being 100% invested never stops one from buying something else. Easier said than done either, and I agree the inertia of fear come make that tough to do, but it does represent a fallacy don't you think in the above?

Just a fwiw, but what I think is important and productive is to carefully document your trading decisions and then review them over time to see if - frankly - you've been stupid or fallen into a rut. At least in my case, there are times that handy cash ("I'll put 3% in this instead of what I ought to do is 15%") can be an excuse for not changing a pattern of behavior, though maybe that is just my issue and nobody else suffers from it. Still, last year for example, I looked a few of my trading decisions and wondered who in the world was at the wheel.

Lastly, if if matters, while I regularly chase some small return on cash type holdings, the amount of agony it often causes is 100x the return I've gained. In other words, while I rarely pass up a free nickel (esp. with credit cards programs), the amount of agony and effort it takes to try to make an extra 0.5% is always, and I mean always, better spent trying to get another 10-20% from your stocks instead. In fact, the TIME you spend searching for that extra little basis point is always better in equity research unless, of course, it is entirely integrated into your current research process. So, if you are studying a company, look at its capital structure, and then look at the debt - short term or otherwise - that's entirely appropriate. Otherwise....why bother? (by the way, unless cash is a permanent asset allocation decision made up front - if that's so, then one ought to spend some time on it).'ll end up like dumb idiot me:
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