Is Cash King at the Moment?

Leblanc_2

Considering the undoubted risks out there at the moment ie bonds, equities, gold, silver, property bubble etc, is cash king at the moment?

dealer_wins

It has always been at best the Joker!!

oldtoolie

Everything carries risks, even cash -- with inflation risk. So the question is assessing and comparing the risks. Then deciding your own investment strategy based on your own needs. Most people like to diversify.

Hominu

Its very difficult (pretty much impossible for new accounts) to have any amount of cash that will keep its value with current inflation and savings accounts.

Likewise, bonds, equities, property, etc, may rise or decrease in value.

It just depends on what risk your prepared to take with your investment.

For example, I invested £5000 in April in a fund and its increased in value by £340 since then, but could have quite as easily gone the other way as well. I certainly wouldn't have invested any more than that due to risk factors that I have no control over.

dunstonh

Considering the undoubted risks out there at the moment ie bonds, equities, gold, silver, property bubble etc, is cash king at the moment?

What do you mean by "at the moment"?

What risks are different to risks that have always existed?

jabba42

dunstonh wrote: »

What do you mean by "at the moment"?

What risks are different to risks that have always existed?

I think he means the market at all time highs, every second article about bonds going to explode, gold and silver been whacked ( probably the best bet now).

Problem is once you are out, as I am, it is hard to get back in

http://seekingalpha.com/article/1461471-why-this-long-time-bull-is-moving-to-the-sidelines

Perhaps take some solace in this article I read yesterday.

dunstonh

I think he means the market at all time highs

Not quite in most markets and certainly not in real terms.

every second article about bonds going to explode

Not sure an explosion is likely. They got a well documented boost but then they had been in decline or at best stable for the best part of the previous 5 years (seeing around 20% losses in that period on capital value). Take income out of the equation and you are only around 20% higher than the 2003 levels. Most bond funds have lost money in real terms after inflation if you ignore their income. It is the income that saved them. I suspect a decline will come at some point but the income should compensate. However, nobody really knows.

Anyone trying to time these things and second guess what is coming next is likely to lose more than those that take a standard approach.

jamesd

Cash is useful but there are markets where prices are not exceptional. In general, when prices are above long term averages future investment returns in a market are lower, so that tends to suggest that it's better to reduce the weighting in those high price markets. Rebalancing to original target percentages would be one way to do that. Others might deliberately reduce weights beyond that in markets that are well above long term averages in favour of those that aren't. None of this comes with a guarantee, for markets can move in unexpected ways for a long time.

Peanutheed

Couple of good metal clips on YouTube. Unfortunately as a newbie I cannot link to them.

I am however going to start buying Silver Coins for my kids long term savings.

dktreesea

At the moment QE, plus the stock buy back activities of some major US companies, is keeping equity markets high. Once the QE programme stops, the equity markets should ease.

Cash of itself, in an inflationary environment, loses value. If the interest rate is above inflation, then the difference is what you make on the cash.

jamesd

Peanutheed, see the rule about silver discussions here.