The news that Mohamed El-Erian, the former chief executive officer at PIMCO is currently holding mostly cash has re-ignited the cash debate.
El-Erian is concerned about the fact that central banks have artificially lifted asset prices, by maintaining zero interest rates and using their balance sheets to buy assets. But is a high cash allocation a wise choice?
Cash: Addictive nature
Maintaining a suitable level of cash in your portfolio, which will allow you to take advantage of opportunities when they arise is always a prudent decision.
However, holding a high percentage of cash isn't always the best way to utilize capital as the blog, Abnormal Returns explored in 2013:
“I try to make the distinction between “cash as an investment” and...
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