I’ve managed to get my equity-cash ratio down close to 12% now. With prices as they are, it’s like if you owned a shop selling chocolate cakes and suddenly there was a great demand for chocolate cakes all over the place. In order words, it’s a seller’s market and I stick to my original plan, which is to sell into it. Even if this state of affairs continues for much longer (which I doubt) I am happy to wait and sit out further opportunities until prices come back down again before I start buying again.
By the way, I have been affectionately calling my portfolio the “80/20 portfolio” for some time so now it’s time to make it official. That’s because I believe in the 80/20 principle (otherwise known as the “pareto principle”) which, when applied to the stock market, states that 80% of all income in the stcock market comes from 20% of the companies, and 80% of any price gains are enjoyed by only 20% of all stock market participants. The rest get killed in the long run.
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