CASH ALWAYS JUST TEMPORARY
* IN HIS LATEST weekly survey, Paul Hansen, director of retail investment at Stanlib, gives the following interesting summary of the merits of cash in the portfolio. It’s taken from a Fidelity Investment publication: The Seven Deadly Sins of Investing.
The seventh sin (and to my mind the greatest one, if I may be biblical for a moment) is: Entrusting the future to cash. While bank deposits and money markets are secure, this security comes at a price. Inflation eats away at the buying power of your cash.
Even though there may be reason to feel uncertain about the current high prices of shares and also property, a permanent investment in cash, and this includes preference shares, is never an alternative.
Garry Evans, who predicts a 10%25% correction in Pan-Asia, gives the following simple advice: “Take advantage of the coming correction to buy into cyclical industries when they become inexpensive.”
I’m going to collect some cash over the next few months and place my trust in the autopilot in case there’s another shock like the one in May last year. ¤