Step Forward, Step Back

I updated my Goals Page tonight to indicate my current cash-on-hand position – 50.3%. This is well short of my goal of 10%.

The choppy and declining markets have helped me to decide to stay in cash during this year. For those that say, “but what about inflation eating the value of that cash away!” I say this. Inflation also eats the value of your stock away. If you bought a stock at $100 on January 1, and it’s still worth $100 today, you’re not keeping up with inflation either. Cash is not the only asset inflation erodes the value of.

Another thing to remember with my “cash on hand” position is that it’s relative to my overall portfolio. And my overall portfolio is currently worth less than what I paid. I’m losing money in my stocks, so my cash on hand gained some “percent” of relative value.

I’ve been lucky not to have been fully invested this year and dipped my toes into the market. While some people can claim to be down 20%, 30%, or more on the year, I’m not that bad. I started investing in March, and my current performance is around -5%. The indexes are around -10% in that time, so I am beating the index.

I’d rather not lose 5%. But it’s better than losing 10%.