🎯(13 Exclusive Investment Approach) Is better positive real cash yield or assets? 👇
💡 Exclusive Macro & Business Insights
Hi, and welcome back to The Macro & Business Insights!
(13 Exclusive Investment Approach) 👇
🚨 THE COST OF HOLDING TOO MUCH CASH
✔ “As cash yields remain elevated and inflation has cooled significantly from last year’s levels, cash yields moved into positive territory on a real, inflation-adjusted basis after a few years of negative real yields.”
✔ “This shift to a positive real cash yield environment has prompted investors to question if now is the time to increase cash holdings or hold on to cash to wait for a better opportunity to enter the market.”
📌 As my subscriber you get totally FREE my weekly summary and exclusive research that I do and share only with you.
You won't find these materials shared by me on any other platform.
IS BETTER POSITIVE REAL CASH YIELD OR ASSETS? 👇
✔ “Investors may be tempted to move out of the market and increase cash holdings as a way to benefit from these elevated yields and to reduce portfolio volatility ahead of a potential economic slowdown and market correction.”
✔ “However, this can have unintended consequences.”
✔ “Even if cash yields remain elevated in the short term, cash will likely underperform other growth assets over the long term, putting a drag on long-term performance.”
✔ “Utilizing a diversified allocation that is tailored to an investor’s goals and risk tolerance can be a more effective way to capture the upside-return potential of growth assets while also smoothing volatility when compared to a concentrated position.”
✔ “And history has shown that even a very conservative allocation, such as Moderate Income, has returned more than cash over long periods of time.”
✔ “While we do not expect a return to the ultra- low cash yield environment of the past decade or so, we do expect every strategic asset class to outperform cash over the long term based on our capital market assumptions.”
“We believe developing a disciplined investing approach, such as dollar-cost averaging, to invest excess cash and rebalancing to maintain targeted allocations is prudent for long-term investors, as we expect most assets to outperform cash over the long term”
TOP TAKEAWAYS FOR INVESTORS 👇
✔ “However, the better-than-feared earnings results have had little impact on Bloomberg consensus estimates.”
✔ “Overall, 2023 earnings forecasts for the S&P 500 Index are modestly higher during earnings season.”
✔ “We believe earnings will be challenged in the coming quarters as companies deal with an expected U.S. recession.”
✔ “In this environment, we suggest focusing on quality, and we prefer U.S. Large Cap over U.S. Mid Cap and Small Cap Equities.”
If you appreciate this content I'd ask you to share this newsletter with your friends/colleagues passionate like you about financial markets. You will pay off my hard work, thank you very much.
Be my friend
💌 Sign up to my weekly email newsletter
🎙 PODCAST
Best regards,
Ale
Disclosure
This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. This material has been prepared for informational purposes only. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.