Cash is optionality.

May 27

Cash is not “uninvested.” It’s one of the only assets that gives you control.

The industry frames cash as idle.

That’s incorrect.

Damodaran data:

• T-bills yielded ~5%+ in recent years

Now look at drawdowns:

2022:

• 60/40 ≈ -17.96%

• With cash ≈ -13.95%

That difference compounds over time.

Why?

Cash:

• Has near-zero duration

• Maintains liquidity

• Prevents forced selling

This ties directly to Bengen’s sequence risk research:

Early losses matter more than long-term averages.

Cash reduces those losses.

Conclusion:

Cash is not a leftover.

It is:

→ Risk control

→ Liquidity

→ Strategic positioning

Question: Why is the one asset that gives you flexibility treated as a liability?

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