Dear readers, I am always of the view that one should always build an investment warchest, so that when stock markets correct and investors flee, those with the capital will be Kings (as the saying goes that Cash is King).
This especially so when global stock markets have not corrected since 2008 and this to me, means that the next stock crash is not just long overdue but will be of significant.
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Renowned investor Jim Rogers also shares the aforementioned view. Recently, it was reported that Jim Rogers has commented that “America, and therefore the world, is long overdue for a problem.”
In recent years, those who have had the bulk of their portfolio in cash have been duly rewarded as risk-free market interest rates from Treasury Bills, Singapore Savings Bonds and Fixed Deposits have been high. As interest rates are expected to be cut and equities become more attractive again, the flow of investment will return back to equities. But this does not mean that investors shall rush into equities from cash.
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Cash is King when equities correct and this is also why it was reported that Jim Rogers holds a strong position in cash (as per the report in the above link).
Jim Roger is not the only investor with still a favourable view on cash: Warren Buffett’s Berkshire Hathaway is also holding a significant cash reserve: cash and cash equivalents reached $224.2 billion as of June 30, 2024 — up from $121.8 billion in 2023.
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Even if one has no intention to build up an investment warchest, having cash savings will buffer one against the economical volatilities when the next stock market or economic corrections come.
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That is why I have been advocating the importance of saving. We must continue to save even in this current climate when costs of living are high and one may not as easily save more now.
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