Ouch.

That's how I felt in 2008 when my portfolio was down 28.6%.

The S&P was down 37% that year but I certainly didn't care about having beaten the market.

I'm supposed to be indifferent to how the market is doing and to take a long term focus. After all, that's what I tell people all the time.

But I remember it clearly.

I was in Seoul, Korea getting married while the market was crashing.

Obviously, I wasn't concerned because I was sweating bullets while waiting at the altar.

Also, being on the other side of the world helps drown out the noise.

Then it was straight to the honeymoon and by the time I woke up, the market was in ashes.

I was excited though and I had to sneak away to the resort lobby and hurriedly put in some trades before my newlywed wife noticed that I was missing.

But despite all that, when 2008 came to an end, my portfolio was hurting by 28.6%.

It wasn't hurt from losing money.

The hurt was due to the wasted opportunities I couldn't take advantage of because I was 100% invested.

The Current Situation

At the moment, I have 20% in cash which provides flexibility and the opportunity to act if needed.

Here's what Prem Watsa, “Canada's Warren Buffett”, once said during a conference call about having a high cash position.

As far as the 30% cash, remember, that can change. So in 2008, and we had this position in 2007, in 2006. 2008, things turned the financial markets. Stock markets dropped… about 50%… And Tom, the only people who could benefit from that were the people who had cash or government bonds. And so we are conscious of that in our history.

Cash gives you options, gives you the ability to take advantage of opportunity but you have to be long-term.

We have built our company with a long-term view. Our long-term results are excellent. For example, in 2007, '08, and '09, the 3 years, 2007, 2008, 2009, we made $2.8 billion after tax, our book value went up by 150%.

Since that time, we haven't done a lot. But we've said to our shareholders that we are long-term focused, our results are lumpy and we never know when it can change. But the cash gives us a huge advantage in terms of taking advantage of opportunity as and when they come. – H/T BaseHitInvesting