Cash Is King?

Someone said this: "better to keep cash, i.e. put in a bank to earn 0.5% per annum. This may be a poor return, and does not cover inflation, but it is safer". He doesn't like the stock market now.
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CreateWealth8888:

Is this a reasonable good advice?

BTW, he is not a money manager. For investing in stock market, one should listen to proven long time money manager like Anthony Bolton.

http://createwealth8888.blogspot.com/2009/11/running-money.html

Important points to recap:

A GOOD investor gets it right 60 per cent of the time, says veteran fund manager Anthony Bolton. As for the rest of the rest of the time that he is wrong, the challenge is to 'just keep going'. 'When you make mistakes, learn but don't get too depressed. I sometimes see managers get into a declining spiral when they have bad performance, and they can't get back again. You have to be detached. You're going to have good times and bad, and you have to just keep going.'
'My best guess is we're in a bull market that will be multi-year. The first phase is a very strong phase, but because I think a lot of professional investors have missed out on the rise, it probably doesn't stop until a lot of them are sucked into the market. (CreateWealth8888: Stock markets are always driven up or down by the professional investors i.e. money managers)


'I think we're getting towards the end of the first phase. It could finish now or early next year. Then we get to a slightly different marketplace. There have been certain types of companies to own in the first phase. The types to own in the next will be slightly different.' (CreateWealth8888: Do your homework and open your eyes wide for the "types" to own)

'I generally found the companies that I lost the most money in were those that had high gearing. It's not that I would recommend to people never to invest in companies with high gearing or weak balance sheets, but you want to do it with your eyes open. If something changes for the worse, you want to get out quickly because the downside can be a long way.

'Someone has asked me - but surely low growth is bad for markets. I disagree. What markets don't like is overheating and rates going up. I think if you have low but sustainable growth and low rates, and if you can find growth stocks in that, you'll do very well.'
 
He tells punters who invest directly in stocks to do their homework and monitor market sentiment. 'The best opportunity to buy is when everyone hates stocks. You need a contrarian ability. I've been in the industry so long. I think if you get it right 60 per cent of the time, you're doing great.'

Rather than set a stop loss, investors should have an 'investment thesis' or a rationale to hold a stock, he says. Once that thesis is no longer valid, the stock should be sold - even at a loss. Mr Bolton is mainly a fundamentalist, but uses technical analysis which helps in timing and size decisions. 'If I'm looking at a stock that has done well for seven years, I look at it differently from one that hasn't done well,' he says. 'A stock that has done well has most of the good news in the price. If things change, there are lots of profits that people can take so investors are likely to suffer on the downside.'

As he writes in his latest book, investors should forget the price they paid for a share as it can become a psychological barrier when the price falls. 'The investment thesis is the key - check it regularly. If this changes for the worse and the share is no longer a buy and probably therefore a sell, you should take action regardless of the price being below what you paid. Trying to make money back in a share when you have lost money to date, just to prove your initial thesis was correct, is very dangerous. As a general rule in investment, it's not good practice to try and make it back the way you lost it.' (CreateWealth8888: Do you Average Down? - most retail investors love to average down. http://createwealth8888.blogspot.com/search?q=average+down .

One should only do Average In, i.e you have pre-determined x% of your investing capital for that particular stock and buy them in batches when the stock price fall and not adding more capital just because it is getting cheaper)

Since when Stock Market is not risky? When I was younger, I have many times heard from many senior relatives and senior citizens telling me stock market is very risky. If I have listen to them, probably I will be having negative returns after inflation.