Alpesh B Patel OBEManaging Partner (UK), RootBridge Capital · Asset Management. Great Investments Programme. 18 Books, Bloomberg TV alum & FT Columnist, BBC Paper Reviewer; Fmr Visiting Fellow, Oxford Uni. Multi-TEDx. UK Govt Dealmaker. alpeshpatel.com/links Pro

UK Investing: Smart Cash Strategy for Growth #shorts

9 Jun 2026 · 1 min

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1:13

In this short video, the speaker discusses how to deploy cash in a portfolio after rebalancing. He outlines three options—adding to winners, adding to losers, or adding equally to keep the portfolio balanced. Citing a paper he authored, he argues that when the future market direction is unknown, the statistically optimal choice is to add equally, preserving equal weighting. He explains that this simple rule prevents procrastination, confusion, and the temptation to gamble, thereby improving returns. The commentary then shifts to UK market fundamentals: the price‑earnings ratio is at or slightly below its one‑year average, earnings have risen 30% while market‑cap prices have risen only 19%, and revenues have grown just 5%. This suggests margin‑driven earnings growth and indicates that UK equities are not expensive by historical standards, leaving room for further price appreciation.

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That's all, which is perfectly normal thing to do. It's what you do with the cash afterwards. Should you add to winners? Should you add to losers? Or should you add to make everything equal? I've written a paper on this. Statistically, you should add to keep everything equal when you don't know what the future holds. If you knew the future held that the losers would do better, you'd add to those. If you knew the future held that momentum would do better, then you'd add to those. So if you believe that the future held in your portfolio momentum will win, you'd add to winners. If you believed mean reversion would win, you'd add to losers. Since we don't know which of those two would work, we add equally to keep the balanced portfolio equal. Very simple process. I keep By keeping the process simple, it avoids procrastination and confusion. By avoiding procrastination and confusion, you avoid gambling. By avoiding gambling, you make the money, okay? You make the moolah, okay? Price earnings is at its 1-year average, pretty much slightly below. Now here's the interesting thing. Earnings have gone up 30%. That's good. But market cap prices have only gone up 19%. Earnings have gone up 30%, but revenues have only gone up 5%, which means there's been an increase in the productivity of profit margins as a result of productivity increases that may last or it'll revert to mean. But it could also arguably mean that market cap prices have got room to go up without being expensive. And as you can see in this chart, indeed, they're not expensive by historic standards in the UK market.