Why does Marketocracy limit the amount of cash we can hold?
The diversification and minimum investment rules that we enforce are required by the SEC. Keep in mind the primary purpose of the Marketocracy competition–to find the best investors capable of managing a real money mutual fund. We therefore try to mimic as closely as possible the conditions under which a real money mutual fund manager must operate. A real money mutual fund manager must follow the guidelines of the fund prospectus. Cash may have indeed be the best place to invest. But if a mutual fund advertises itself as an “equity mutual fund”, SEC rules require the mutual fund manager to invest at 65% of the fund as best he or she can in stocks–not bonds, cash, or other financial instruments. It is expected that potential investors in a mutual fund will make the decision of how much of their assets to allocate to different asset classes (stocks, bonds, mutual funds, cash) before they ever put money into a fund. If an investor in a stock mutual fund decides that they want to re-allo
