Founder of world’s largest hedge fund says ‘cash is trash’ as the Dow soars to records When people like Ray-Dalio start to make statement's like the above it may pay to listen..
If the market keeps running up he will look like a genius but if it tanks! I guess if your a long term investor than holding cash above an emergency level is probably not going to do much for you in the lower for longer rate environment.
I have been watching what a few have said recently from Robert-Shiller --Dr Doom Mark Faber -Nassim Nicholas Taleb- and they all seems to stay right away from the negative value of information even as most of their books focus around boom bust boom ,and greed always over-runs fear.. Quote .. Nassim Nicholas Taleb But while early on in my career such focus on noise would have offended me intellectually,as i would have deemed such information as too statistically insignificant for the derivation of any meaningful conclusion ,i currently look at it with delight.. Top day in the free world..
Please explain what that means to you as everyone see;s it different the way things are presented in the current environment..
? If which market tanks ? If the stock market tanks he will look like a genius for being diversified. if it doesn't tank he wont look quiet so smart But Either WAY BEING DIVERSIFIED is SMART The 40% of assets he has in fixed income assets will still give way more income and preserve more capital than any amount of cash, especially as he will have built much higher multiple of assets.
do you know what a call option is? if not here is quick run down, if you are a holder of a call option it give you the right but not the obligation to buy an asset at a certain price. you can walk away from that right and you don't have an obligation to buy. but in options world, if you are holding a call option you have to pay someone a premium and it has an expiry date and if you don't exercise your right before the expiry date then the options would expires worthless. so what Warren saying is holding cash is like holding a call options with no expiry date, you have the right at any time to exercise that cash and buy asset at any price you like but you dont have any obligation to buy, you free to buy whenever it suit you, no one can force you and you don't have an obligation what so ever to anyone to act or buy so if there is a market crash you exercise that right and buy asset cheap with your cash and no one can stop you and if you don't want to there is no obligation for you to buy or act if the price keep going up and you want to join the rising tide you can also exercise that right with the cash and buy asset but there is no obligation on you to act. That what he mean a call options on all asset class with no expiry date the right to buy at any time and there is no time limit, you can sit there for 1 years, 10 years or 100 years and do nothing or do something at any time
PandS,thanks for your time to post and as i only have a small understanding of options as i was deriving a small amount of my income maybe 18 years ago ,but have not been down that road for a long time .. To be honest half the time your sitting on a time bomb and as you are a lot more skilled then me by reading your post ..For me back then as now the way it worked most times i had a 50/50 chance of a large loss or a 25/75 % chance of a small win.. So it's just better to stick too the simple boring plan re-invest everything back in through the drp's ,have a random set-up of smalls caps and wait til they go up above 38% like one i bought is now into that range over the past month and wait till the counter ideas start to emerge..thanks and good luck because most i know doing what you do end up broke and working in car parks at music concerts ..
PM me if you want to know more about options I been doing it for while and loving it, it is a very limited strategy I derive for myself, I can explain it to You to see if it fit your profile, it would bore most people unless you really want to know. If you like your head spins a bit I can answer whatever question you throw at me on it. it is a different way of thinking if you hold shares and properties it takes a bit of time to get your head around it ... it seem strange and weird when you first read into it. It is a big market options probably the biggest there is in derivatives market
You can view options that you see as the same as properties seminars and spruiker Most people promotes options as easy trading money earner and they pocket from your hard earned cash. the same way people falls for properties seminars as an easy way to make money in properties and you know that is far from the truth. the only way you can make money is you understand the subjects, risk, rewards and executes it your way.
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