CY09 portfolio

[nsengkia]

I am always fully vested. I do keep 1-2 years emergency fund which is not for investment.

IMO, both strategies are valid. Mr. Buffett keeps cash research, while Peter Lynch didn't. The right choice depends on your investment temperament. Keeping cash research is a mean, not the end. The end result depends on your reactions to crisis.

I have chosen the strategy of be fully vested

I think another determinant is whether or not one is still working and the size of one's regular savings relative to one's portfolio. If the former is large relative to the latter, than one can make a strong case for always being fully invested as there will always be cash available to invest into any market pull back. Essentially, you and your earnings / savings become the bond component of your diversified portfolio.