Tuesday, Apr 06, 2010
Any views on this?
Motley Fool: Cash Is King
A top fund manager is moving heavily into cash.
Posted by mr g @ 09:27 PM (2008 views) Add Comment
18 Comments
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1. hpwatcher said...
Obviously a deflationist, but the problem is that BOE can always create lots more.....
2. fallingbuzzard said...
Outside of the banking sector, equities are overvalued.
3. cyril said...
This fund manager did well in the credit crunch but missed the recovery.
I read an academic paper the other day which said that it takes about 10 years to identify whether a fund manager has outperformed the market or not. It's really a game of chance, but people who have been lucky are credited with great wisdom after the event. Funny we don't do the same with lottery winners.
4. vacuouspolitician said...
'Cash Is King'
...well it's certainly not talking about that silly old duffer in the BoE. I can hear him snoring from here...
5. fallingbuzzard said...
Cash doesn't mean sterling
6. drewster said...
Cash doesn't mean sterling
I was thinking the same. But what else? Everything looks expensive compared to Sterling, except maybe US dollars.
7. taffee said...
has any ever considered that you can actually get a reasonable return on cash 3-5% id easily achievable
8. nomad said...
He talks about some good opportunities - Far East, Norway Banks and US Financials - but still retains cash. You do this if opportunities are about to occur. Any suggestions? Sterling tanking being the obvious one.
9. mark wadsworth said...
A painted clock is right twice a day.
I've been "in cash" for two and a half years so I've made modest losses (apart from a super gain on Yen/Australian dollar, different topic), as against huge gains I could have made if I'd bought shares a year ago, so what? There are many who still say you should gear up and buy housing (which I did from 1998 to 2007). But as a general rule, in a recession you are best off with cash, and, as Drewster says, sterling looks undervalued at the moment.
10. house said...
@9 Mark
Do you still have faith in cash? I have always believed in it and with modest returns of 4% (Gross) is not bad. Although in real terms I am still losing some value maybe 1% or so. Who knows what opportunities are around the corner to recover the slight loss.
I have always relied on your opinion on cash as we agreed that the worst inflation figure would be in the region of 4%.
Your comments would be appreciated.
11. mark wadsworth said...
@ house, as a hyper-cautious sort of person, of course I have faith in cash, and sterling at that, but seeing as most of my future spending will be in sterling, I'm hedged at least. Sure, I'm pretty guaranteed to lose 2% a year in real terms, but as long as house prices are falling faster than that, I'm not too bothered.
OK, I've been wrong for the last year or so, shares would have been the way to go, but cometh the hour cometh the asset class.
12. debtfree said...
never really understood the phrase 'cash is king' - over the years it's constantly losing value... how can that be king ? seems a stupid statement to say the least.
land, diamonds, precious metals, property and art have all outperformed cash over the years. what would cash buy you from 1970 or going back further 1700's 1800's... it's almost worthless.
13. mark wadsworth said...
Debtfree, as I said, "as a general rule, in a recession you are best off with cash" it is a general rule that does not always turn out right (so don't go by what I say, I'm just saying what I do and if I'm wrong then I'm wrong) and even perennial pessimists like me know that we are only in a recession a third of the time.
14. house said...
@11 Mark
I am a very cautious person too and my past bad experience of property in the 1990's and stock and shares in the 2000's etc meant that if I can get around 4% per annum on cash I am more than happy. My biggest fear was inflation running away like the 1970's but judging from the Greek crisis means that the mrkets will not allow it to get away with it which is very re-assuring. I do not think property prices are going to go up from the 2007 levels means that the cash would do better in the next 10 years. I am hoping for that as the FTB are at present shut out of the market and the lending criterias are much tighter means that property prices are not going to go up until the wage increases catch up. Every business is looking to cut cost's not increase them by offering higher wages.
Thank you for your comment.
Do you agree?
15. Crunchy said...
Sterling undervalued? Think on! It's a long time till November.
16. house said...
Just to add, if you had bought a house 10 years ago for £50,000 then the property today might be worth £140000 but no longer going up and may not go up for another 1 years but may come down. If you had invested £50000 in a saving account earning an average of 5% interest then you could have a balance of £81000. This amount will carry on earning interest and say for the next 10 years it averages at 4% interest then the balance in the next 10 years could be say £120000. I know it has not perhaps done as well as the property but property for cash buyers as an investment would be a mistake IMO. I do understand that there are many other factors to be considered.
Any comments on this ?
17. debtfree said...
@13 mark wadsworth
Apologies for the misunderstanding, I didn't directly mean you mark, just the phrase in general.
All the best
18. mdmick said...
re: never really understood the phrase 'cash is king'
I think that the main thrust of that statement is that cash lets you invest in all kinds of deals whereas 1000 shares of AcmeWhatever is limited in the deals that a banker could negotiate; and, you realise its current value by converting it into cash. Cash is a good measure of the worth of something because it is a kind of universal language of deal brokering.