This i believe is one of the biggest breaks between posts on the blog since i started writing way back in mid of 2006 on this blog.
For the last 10 days i was on a break to attend a wedding in Delhi-Jammu followed by a trip to Kashmir for 6 days. Kashmir is an amazing place and one must visit Pahalgam/Gulmarg.
Now getting to the topic of how Cash is a Trading Position.
I have generally seen traders to be compulsive,instinctive or hyper active and there is always a buy or sell position whether the view is strong or not. I can understand that system traders have to keep a position open all the time but for a discretionary trader there is no need to have a lot of open positions.
Cash in the Liquid Funds gives us a return of 6% in FD gives a return of 9% and in the broker account gives a return of 0% but not loss. So when in doubt stay Out. For a trader who would not like to see a big event profit or loss its better to stay on high cash ( for the gutsy there are a lot of strategies floating around and lots of articles).
So cash is also a trading position with a return of 0-9% 🙂 till the time you get a good opportunity.
Coming to investors and how to hedge the portfolio ?
According to me the best hedge to any portfolio is the cash component. So look at increasing cash and not buying options. Focus on sticking to companies you are convinced of and would like to hold even if it sees a 10-15% upside or downside.
I will not focus on how much % cash or equity one should keep as it will differ for different investors. Every one of us talks about whether to book profit or loss or increase cash but i rarely see people talking about when to deploy fresh cash into equities ? People talk a lot of about stocks with 0.001% of networth in equities ( A 10x return on 0.001 % of networth makes no difference but a 25 % return on 30% of networth can definitely change things ) . So the focus now should be how to be convinced of deploying a much larger part of the networth to equities.
I believe rather than focusing on Indian Elections the strategy should be how to increase equity component over the next 3-6 months. As i believe there is a much bigger opportunity for all investors/traders over the next 2-4 years and one should be looking at increasing conviction in trading/investing.
There are lots of writers discussing on the one day strategy for elections and another set of writers ridiculing them 🙂 . I would prefer to be in none of the camps but focus on how to strategize for the next 2-4 years and how to increase the equity component in the networth.
In the webinar we have discussed about what sort of opportunity lies in equities for the next few years. It can be of help for you to decide your own strategy. We did this a month back.
Report and Video of the Webinar – Indian Elections – Do they change Market trends or otherwise ?
What you get – Powerpoint Presentation of the report and the Video of the webinar which was conducted in this Sunday. At a cost of Rs 499 only.
All other online reports – https://www.instamojo.com/noooreshtech/
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