Adding A Cash Position Last week we introduced the concept of an efficient frontier. This set of portfolios creates a curve in the return vs. risk space that sometimes resembles a rocket taking off from the ground and bending toward orbit. It seemingly asymptotes to a nearly linear reward for risk trade-off at the upper ranges of typical asset class annualized risk measurements. This week, we added one layer of complexity by adding a cash position to our traditional two asset (bonds and stocks) portfolio. A cash position can help us reduce our risk or increase our expected returns for most expected risk levels.   Source : JQR Capital The Market Portfolio The easiest way to visualize adding cash to our set of bond and stock portfolios is to plot the expected interest yield on a cash asset along the y-axis of our return vs. risk space. We then imagine a vertical line “falling” from that pivot point down onto our now familiar efficient frontier of bond and stock portfolios. The landing po