Replies to post #36277 on A.I.M. Users Bulletin Board (AIMUSERS)

[daisy42]

Hi Lostcowboy,

Yes I do bear the Cash Burn table in mind, when considering the buy SAFE especially (a lower buy SAFE will exhaust cash more quickly).

The way I determine my target cash levels is to calculate by what percentage the fund would have to drop from its CURRENT level to reach the last major low - in general that is the March 2009 low at present, and before that the March 2003 low. So my target cash levels change according to the level of the markets. I can see that in time these historic lows will become irrelevant - in a new secular bull market, and looking back to before 2000 it isn't as obvious what to choose. The answers I get are in some cases higher than the VWave for (US) diversified funds (emerging markets, UK mid-cap index, Pacific index gold miners fund), and in some cases lower (Europe and especially Japan).

I've also spent quite a bit of time looking at valuation levels, e.g. CAPE and market capitalisation to GDP, which would suggest quite low stock percentages at present.

Daisy