Juggling Dynamite

According to a report by UBS, 70 percent of investors with more than $1 million in invest-able assets do not consider themselves wealthy. Mike Ryan, UBS, and CNBC’s Robert Frank, discuss the definition of wealthy.

They also note that those who have more than a million in savings continue to exhibit a stubborn preference for cash…which is a big annoyance for the investment sales crowd (including the UBS commentator in this clip)…”must get people to part with their cash…must get them to buy financial products”…

Fortunately some people have learned from their lessons of loss over the past 15 years of this secular bear. Several times bitten has made wise people shy on capital market risk today. And for very good reasons. With most investment assets now back at extreme valuations, the liquidity preference for cash is likely to continue until prices correct enough that value and investment odds become once more worth risking for.

Yet being wealthy doesn’t just mean having millions in investments or assets. It means having plenty of cash on hand to handle any expense. Driven by the bad memories of the crisis, when many of the so-called wealthy were caught short of cash, investors currently have an average of 23 percent of their overall asset allocation in cash or equivalents. That’s the highest number since at least 2010. Here is a direct video link.

Bill Fleckenstein says the Fed is fooling some people, but they are losing control of the bond market, and history warns there’s a lot of pain ahead. Here is a direct video link.

This is a good time to review similar behavioral cycles in other historic periods. Lest we forget, indeed.  Here is a direct video link.

Watch The Crash of 1929 on PBS. See more from American Experience.