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What’s Wrong with Cash?

The older I get the more I think many investors should have a decent chunk in cash, if for nothing else than to make them behave a little better.

Below is a chart that looks at adding increasing levels of cash to a global market portfolio, with tilts.  (No trend, etc).  Allocation is from our white paper The Trinity Portfolio.

1973-2015

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and was chatting with Dan Eagan on Twitter about replacing cash with bonds…so here’s the same returns but using 10 year US Government bonds…notice on a nominal basis the drawdown goes down the more bonds you have, but on a REAL after inflation basis the drawdown actually goes UP the more bonds you have…not what most expect!

 

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