Dear readers, I was watching the MoneyMind show on 4 Nov 2017 which featured the finale of an investing competition. The judges were asking the contestants what their best investment strategy was; the contestant with the best answer would walk away with $10,000. One of the contestants revealed that he would hold a lot of cash in his portfolio. That prompted one of the judges to ask whether the contestant knows by holding cash, he would be like holding a stock of price-to-earnings (P/E) ratio of 100 hence in this context whether he would like to hold cash?

For me, I think holding a large chunk of cash in one’s portfolio makes good sense as compared to a stock with P/E of 100; the risk is lesser (only inflation risks which would make the cash devalue). Holding good size of cash in one’s portfolio is wise as cash is king …