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The Art of War(chest): How To Achieve The Optimum Level Of Warchest To Achieve The Maximum Returns. (Guest Post)

The Art of War(chest): How To Achieve The Optimum Level Of Warchest To Achieve The Maximum Returns. (Guest Post)

This article, The Art of War(chest) was originally posted here. The writer is a veteran community member on InvestingNote, with username known as theintelligentinvestor.

terracotta

I have seen frequent discussions on the amount of cash we should be holding as warchest and opinions varied widely. Some are fearful of today high market in overseas markets and advocate for 100% cash, while others see good values in STI market and maintain a high percentage invested in the market. Questions asked are often the optimum level of warchest to achieve the maximum returns. I been thinking about this and want to pen down my thoughts.

One approach is to determine what is the expected value (EV) using the probability of an event happening. Then based on some reasonable assumptions to work out the two extreme cases of All Equity or All Cash.

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TIME WEIGHTED RETURNS VS MONEY WEIGHTED RETURNS (GUEST POST)

TIME WEIGHTED RETURNS VS MONEY WEIGHTED RETURNS (GUEST POST)

This article, Time Weighted Returns Vs Money Weighted Returns was originally posted here. He is a veteran community member on InvestingNote, with username known as ThumbTack Investor.

 

time_money

TIME WEIGHTED RETURNS VS MONEY WEIGHTED RETURNS

I think probably 70% of the people here don’t really calculate their returns.
Certainly not the traders with multiple transactions, cos it is a mammoth task doing so.
The vast majority of the remaining 30% are probably calculating it wrongly (Wrongly, that is, if you are using your ROI and comparing it to active managers)

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