Why the Stars Model Doesn’t Hold Cash

For the portion of the Stars model that isn’t invested in TQQQ, does it matter what you hold?

Yes — and no.

You can choose individual stocks that perform like SPY, but I personally choose SPY. Why? Because most individual stocks underperform it. SPY is the benchmark for a reason.

Some investors prefer to hold cash during uncertain markets. But here’s the trade-off:
📉 Risk vs. Opportunity Cost
Stars doesn’t try to predict market direction. It’s built to make money long-term — whether the market rises or falls. After a few years, Stars has no real risk because it doesn’t carry losses.
Holding cash instead of SPY may feel safer, but it comes at a cost:
• Cash loses you ~9% per year in opportunity cost
• Over 5 years, that adds up to a 45% loss in potential growth
• SPY may correct 20% in that time, but with a buy-and-hold mindset, that drawdown doesn’t impact your long-term return

That’s why the Stars model doesn’t hold a cash position. It’s not just about protecting value — it’s about maximizing long-term return.