Cash is a low-yielding asset but has other virtues
The immediacy of cash is a plus when other investments rely on evermore distant earnings
EVER HAD the feeling that there is a party somewhere that you’re not invited to? It is the same feeling investors have when they have capital sitting in three-month bills or on deposit at a bank. Cash is a safe asset, but a wasting one. The real returns on risky assets have been much greater. True, cash affords options—to buy cheaply when others are selling. But episodes of distressed selling have been fleeting, largely thanks to central banks, which have been liberal in supplying cash in emergencies. Why then should investors incur the opportunity cost of holding it?
This article appeared in the Finance & economics section of the print edition under the headline “For the duration”
Finance & economics November 13th 2021
- China attempts to clean up its sleaziest regional banks
- Will the craze for crypto startups ever produce the next tech giant?
- A three-decade high in inflation sows concerns about America’s recovery
- Belize shows the growing potential of debt-for-nature swaps
- Cash is a low-yielding asset but has other virtues
- A whodunnit on Zillow
From the November 13th 2021 edition
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