Related Topics
Investing , Stocks

“Cash Is Trash”? Look at This Chart.

Why the anti-cash crowd is probably having second thoughts

by Bob Stokes
Updated: December 06, 2018

Back in September 2017, the investing public didn't care much for being in cash.

In fact, it had been many years since they had held so little in their portfolios. Most of their cash was invested in the market.

But our Elliott Wave Financial Forecast at the time said "cash ain't trash," and provided some perspective with this chart and commentary (wave labeling available to subscribers):


The bottom graph on the chart shows the results of a monthly asset allocation survey by the American Association of Individual Investors. Investors were quite fearful in March 2009 after the Dow crashed 54%, so they allocated nearly 45% of their portfolio to cash. Now that the Dow has advanced for 8 years, investors as of the end of July are allocating just 14.5% of their portfolio to cash and the rest to stocks and bonds. That is the smallest percentage since January 2000, after which the Dow declined 38% into October 2002.

But Mom-and-Pop investors were not the only category of investors a year ago that held a disdain for cash.

On Jan. 25, 2018 -- just one day before the DJIA hit a peak that resulted in a 10% sell-off and some of the wildest volatility in quite a while -- Bloomberg said:

The world's biggest asset manager and largest hedge fund manager are anti-cash.

It was perfect timing, from a contrarian investor perspective, because the very next day, the DJIA hit a peak that held for several months.

Since the October peak, the stock market has again experienced some of its most volatile days in years. And -- no, cash has certainly not been trash. Just the opposite is true.

Before the market opened on Dec. 4, the Wall Street Journal said:

In a year of anemic returns and wild gyrations across most markets, cash is a star.

One popular cash proxy--the S&P U.S. Treasury Bill 3-6 Month Index... has returned 1.7% so far this year. That comes against a background of lower and even negative returns on most assets this year.

The timing of that WSJ article turned out to be spot on. It was on Dec. 4 that the DJIA closed down nearly 800 points.

The big question is: What's next for the stock market -- and for cash and its equivalents, like T-Bills?

You can get our analysts insights into both right now, risk-free. Get the details below.

Take YOUR Place Among the (Very Few) "In-the-Know" Investors

"In-the-know" doesn’t mean “those with a crystal ball.”

It means being familiar with the repetitive patterns that show up in financial market charts.

It means being able to interpret those patterns NOW to gauge where the markets move NEXT.

Markets like stocks. Bonds. Gold. Silver. The U.S. dollar.

Now is the time. All these markets are on the cusp of BIG turns. (Some have already rounded the corner.)

Risk-free for 30 days, learn what our subscribers already know.

Here’s how.

Here's How Your Financial Forecast Service Team Works to Prepare YOU For New Opportunities

Read This, And Then Let Us Show You FFS in Action, 100% Risk-Free

Your Financial Forecast Service team includes three of the best-known market analysts in the world – Robert Prechter, Steven Hochberg and Pete Kendall. If you are familiar with Elliott wave analysis, you know exactly who they are.

No other analysts in the world, anywhere, undertake the depth of research that goes into the Financial Forecast Service. Throughout the month, Bob, Steve and Pete sift through mountains of data, often studying 100 years of data or more. Why? Because a chart of the big, long term waves is the only way to know precisely where in the pattern we are today – and therefore, precisely where we are most likely to go next.

Here's what you get with the Financial Forecast Service, 100% Risk-Free for 30 days

Every Month

At the end of each month, your team of analysts gets together and lets the sparks fly. The result? The Elliott Wave Financial Forecast. It's just one of three essential parts of your Financial Forecast Service. When you get a new issue, you can be sure it contains the most critical information you must know about the markets this month.

Three Days Per Week

In addition, at the end of the U.S. trading session every Monday, Wednesday and Friday, your team updates its monthly analysis with the Short Term Update. In STU, they prepare you for the most likely price moves in the next 3-5 trading days.

Latest Research

Finally, once every month, Robert Prechter sends you his very latest research about Elliott waves in the markets and society. For 30+ years, The Elliott Wave Theorist has delivered more groundbreaking market research than any other publication on the planet. One month Bob might prepare you for a multi-year move in a market; the next he will deliver a jaw-dropping study that challenges everything you thought you knew about investing. Whatever he writes, it will help you hone your grasp of the psychology behind the markets – and give you an enormous advantage over other investors.

Prepare for Risks and Opportunities That Will Surprise Most Investors

See our eye-opening forecasts for stocks, bonds, gold, USD and more.

Risk-Free, Start Your Subscription Now


for 1 month of unparalleled market insights