In a Market Boom, Should Cash Be King?
As
stock indexes hit record highs, investors face a difficult choice: Do
they keep betting as heavily on the markets, or do they move more money
into cash? Eric Cinnamond, Aston/River Road Independent Value Fund vice
president and portfolio manager, joins MoneyBeat. Photo: Getty Images.
WSJ Live
I don't think cash is completely king because one always has to think about inflation which over the years tends to average about 4% a year. So, if you are in cash and your interest isn't at least 4% you are losing money every year through inflation. However, given that that is true, because of increased volatility in the market more cash is being kept in interest bearing accounts than before 2007 likely. Everyone I know keeps a lot in cash for a rainy day or wartime scenario, especially looking at the (pre-world war II type of scenario we are seeing in the Middle East and Ukraine). What if the market drops to 7000 one week again?
Long term investors would be okay because they would just wait until it got to 17,000 again before they sold any stocks. But what about everyone else?
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