Replies to post #36299 on A.I.M. Users Bulletin Board (AIMUSERS)

[ls7550]

Re: Cash

UK 2000 - 2012 inclusive, 'cash' relative to stocks had

Average 3.57%
Std. Dev 20.91%
Min -19.27%
Max 48.93%

Correlation -0.36

Looking from that angle cash seems to be a good asset to include in a diversified portfolio. Many investors however only look at cash in isolation and fail to spot its potential diversification benefits as more typically the benefits from moving some cash into stocks when stocks are down, replenishing cash reserves when stocks are relatively high, have those benefits (gains) attributed to stocks and not cash.

Cash is the midfield that feed the striker to score a goal, but the striker (stocks) takes all the glory.