You hear it all the time, “Cash is King”. But we forget that it really can be. Not all the time, very few times in fact, but cash does serve a great purpose.
There are a lot of institutions that are not allowed to go to cash, as part of their mandate. The majority of investors, however, do have that option. Why not use it?
You’re going to see a lot of the passive investing community advise against cash. “Market sell-offs are an opportunity to buy more at lower levels”, they say. “You’re not disciplined or smart enough to get back in”, they preach. “Just buy and hold and everything will be ok”. It’s all based off this theory that the market always goes up. I guess if you trust data based off the tiny sample sizes that we have, you’ll believe anything. [Read more…]