In a financial world paid to sell risk products, there is a natural disdain for holding cash. Portfolio Managers or investors who hold cash (because they see unreasonable risk on their rule set or few attractive options at current prices) are commonly labelled chickens, outcasts or hopeless pessimists. In a world where too few people have amassed ‘enough’ cash, many are desperate to quickly part with what they do have in the hopes of winning more. They don’t want to wait for favourable timing or attractive prices, they want to buy things and they want to buy them now! This is precisely why most fail to retain and grow wealth over a full business cycle. Easy come, easy go.
In all the frenzy, herd following and childish impatience, it is often forgotten that having cash is supposed to be a dream come true, a store of security and liquidity to cover future needs—a fund for future opportunity.
In this interview Jeffrey Gundlach, legendary bond manager talks about the value of cash in volatile times, and especially if the financial system blows up. It is cash that Osama bin Laden and Saddam Hussein had in their bunkers in hiding. Not credit cards, not gold coins–but light, easy to carry, widely accepted cash.
