Please text and tell us what you like

Cash is the one asset everybody thinks they understand and it’s also the one most people never size on purpose. We sit down as skeptics and ask a simple question with expensive consequences: how much cash should you hold in a portfolio, and when should that number change? Steve Davenport argues that raising cash can be a rational planning move, especially when you’re funding a known near term purchase like a home or car and you want to protect that money from the whims of the market.

Then we get into the classic investing debate: staying invested vs “timing,” and why a small cash slice can be a practical buffer for retirees. We talk through the logic of keeping roughly 2% to 4% in cash to support a 4% style withdrawal plan without being forced to sell equities after a drop. Clem Miller shares a personal story about Treasury bonds losing value when rates move, which shaped his skepticism about bonds and pushed him toward a cash and stocks approach.

From there, we explore what cash is really for: optionality when good opportunities show up, and a way to dampen volatility when you still own risky names like AI stocks. Clem also lays out the kind of stock signals he watches, including short interest, forward PEG ratios, and Sharpe ratio, while Steve flags a detail many investors miss: money market sweep accounts can carry meaningful fees, so “safe cash” can still be quietly expensive.

We close with a broader takeaway: don’t build your portfolio to look like a Wall Street template or an institutional pension plan. Build it to serve your life, your taxes, and your comfort with risk. If this helped you think more clearly about cash allocation, money market funds, retirement planning, and portfolio risk management, subscribe, share the show, and leave a review, and tell us what percentage of cash you keep right now.

Straight Talk for All - Nonsense for None

Please check out our other podcasts:

https://skepticsguidetoinvesting.buzzsprout.com

Disclaimer - These podcasts are not intended as investment advice. Individuals please consult your own investment, tax and legal advisors. They provide these insights for educational purposes only.