Comments on: THE CASH CONUNDRUM http://pragcap.com/the-cash-conundrum Sat, 26 May 2012 08:38:13 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: CTC http://pragcap.com/the-cash-conundrum/comment-page-1#comment-5038 CTC Thu, 20 Aug 2009 20:24:08 +0000 http://pragcap.com/?p=7679#comment-5038 When I look at the DX chart and hear all the negative comments about the Greenback -- whether from Asia, Pimco, or Buffett, I am coming to the opinion that the decline in the dollar is coming to an end at least for the near term. Why? When it comes to demand in a debt ridden society, Dollars are what everybody wants at the moment and future. Take the credit card companies, these pigs feed at the trough of low interest rates and gorged themselves to no end, but now they need DOLLARS to cover their loses and therefore are jacking up card rates because they need DOLLARS to cover their loses. I don't think they are doing this in anticipation of hyperinflation yet, they are making money hand over fist at a ZIRP rate. They want your dollars now and are trying to force as many hands as possible to pay up BEFORE they jack the rates. Or before Ben jacks the rates. Either way, my point is that Dollars are in demand more than stuff from China or RE, or any other asset and soon I believe people will realize that DEFLATION is actually better than hyperinflation. I say the DX is going to rise in the near term. The only concern I have to this is Ben and his desire to be reappointed to the Chairman's position. Maybe Ben will surprise us and not continue QE for the moment. I hope so. When I look at the DX chart and hear all the negative comments about the Greenback — whether from Asia, Pimco, or Buffett, I am coming to the opinion that the decline in the dollar is coming to an end at least for the near term.

Why?

When it comes to demand in a debt ridden society, Dollars are what everybody wants at the moment and future. Take the credit card companies, these pigs feed at the trough of low interest rates and gorged themselves to no end, but now they need DOLLARS to cover their loses and therefore are jacking up card rates because they need DOLLARS to cover their loses.

I don’t think they are doing this in anticipation of hyperinflation yet, they are making money hand over fist at a ZIRP rate.

They want your dollars now and are trying to force as many hands as possible to pay up BEFORE they jack the rates. Or before Ben jacks the rates.

Either way, my point is that Dollars are in demand more than stuff from China or RE, or any other asset and soon I believe people will realize that DEFLATION is actually better than hyperinflation.

I say the DX is going to rise in the near term.

The only concern I have to this is Ben and his desire to be reappointed to the Chairman’s position.

Maybe Ben will surprise us and not continue QE for the moment. I hope so.

]]> By: exertia http://pragcap.com/the-cash-conundrum/comment-page-1#comment-5031 exertia Thu, 20 Aug 2009 19:14:22 +0000 http://pragcap.com/?p=7679#comment-5031 TPC, by cash I presume you mean USD. What are the other currency positions that you currently favor / short? TPC, by cash I presume you mean USD. What are the other currency positions that you currently favor / short?

]]> By: TPC http://pragcap.com/the-cash-conundrum/comment-page-1#comment-5025 TPC Thu, 20 Aug 2009 18:10:58 +0000 http://pragcap.com/?p=7679#comment-5025 Cash in the form of money market or currencies is likely my absolute favorite risk management tool. The people that trash cash are likely the same people that don't truly understand risk management. "When in doubt, get out" has saved my skin on more than one occasion. Most notably, sitting out the entire 50% decline last year. Trashing cash is like saying that you should play every hand at the blackjack table. No thanks. That's exactly what the casino wants you to do. Cash in the form of money market or currencies is likely my absolute favorite risk management tool. The people that trash cash are likely the same people that don’t truly understand risk management.

“When in doubt, get out” has saved my skin on more than one occasion. Most notably, sitting out the entire 50% decline last year. Trashing cash is like saying that you should play every hand at the blackjack table. No thanks. That’s exactly what the casino wants you to do.

]]> By: tradeking13 http://pragcap.com/the-cash-conundrum/comment-page-1#comment-5024 tradeking13 Thu, 20 Aug 2009 18:05:16 +0000 http://pragcap.com/?p=7679#comment-5024 I remember hearing the "Cash is Trash" argument last spring/summer as well (not necessarily from JPM). How well did that work out? Also, fund managers seem to be very heavily weighted in equities right now and low on cash according to Mother Merrill. <a href="http://www.ritholtz.com/blog/2009/08/merrill-lynch-global-fund-manager-survey/" rel="nofollow">http://www.ritholtz.com/blog/2009/08/merrill-lynch-global-fund-manager-survey/</a> I remember hearing the “Cash is Trash” argument last spring/summer as well (not necessarily from JPM). How well did that work out?

Also, fund managers seem to be very heavily weighted in equities right now and low on cash according to Mother Merrill.

http://www.ritholtz.com/blog/2009/08/merrill-lynch-global-fund-manager-survey/

]]> By: svg http://pragcap.com/the-cash-conundrum/comment-page-1#comment-5022 svg Thu, 20 Aug 2009 17:57:13 +0000 http://pragcap.com/?p=7679#comment-5022 Cash has lost it's crown? Wonderful - now I feel much better about being in cash 90% (selling options and collecting dividends in my few longs). These geniuses are so consistently wrong that all one need do is fade them to do well in investing. And if equity markets keep running higher, no problem, I'll feel much more comfortable shorting it at that level than committing too much to the long side at this point. The time to be long was in March (which I was). Yes, I closed most of my longs way too early (@ SPX 900). That's just fine with me. Not a pig. Cash has lost it’s crown?
Wonderful – now I feel much better about being in cash 90% (selling options and collecting dividends in my few longs).
These geniuses are so consistently wrong that all one need do is fade them to do well in investing. And if equity markets keep running higher, no problem, I’ll feel much more comfortable shorting it at that level than committing too much to the long side at this point. The time to be long was in March (which I was). Yes, I closed most of my longs way too early (@ SPX 900). That’s just fine with me. Not a pig.

]]> By: Huge Ackman http://pragcap.com/the-cash-conundrum/comment-page-1#comment-5019 Huge Ackman Thu, 20 Aug 2009 17:35:28 +0000 http://pragcap.com/?p=7679#comment-5019 I don't like the relativistic argument against historic comparisons within asset classes. If everything looks expensive today I'm not buying. That said, I've been scaling into cash since May, and maybe I'll continue to regret that. It doesn't look brilliant at the moment, but it didn't look brilliant in mid-2007 either. It does reinforce the axiom, "Don't fight the Fed." I don’t like the relativistic argument against historic comparisons within asset classes. If everything looks expensive today I’m not buying. That said, I’ve been scaling into cash since May, and maybe I’ll continue to regret that. It doesn’t look brilliant at the moment, but it didn’t look brilliant in mid-2007 either.

It does reinforce the axiom, “Don’t fight the Fed.”

]]> By: Divided States of America http://pragcap.com/the-cash-conundrum/comment-page-1#comment-5003 Divided States of America Thu, 20 Aug 2009 14:14:22 +0000 http://pragcap.com/?p=7679#comment-5003 Only losers are Americans and people holding US denominated Assets. Everyone else wins. Only losers are Americans and people holding US denominated Assets.

Everyone else wins.

]]> By: TPC http://pragcap.com/the-cash-conundrum/comment-page-1#comment-4996 TPC Thu, 20 Aug 2009 13:39:23 +0000 http://pragcap.com/?p=7679#comment-4996 I should add that everything I provide here is not necessarily my opinion. I am trying to provide readers with a multitude of outlooks and perspectives so that they can come to their own conclusions about the market. I often nudge readers in one direction, but don't assume that every piece is my opinion or is backed by a market position. I should add that everything I provide here is not necessarily my opinion. I am trying to provide readers with a multitude of outlooks and perspectives so that they can come to their own conclusions about the market. I often nudge readers in one direction, but don’t assume that every piece is my opinion or is backed by a market position.

]]> By: TPC http://pragcap.com/the-cash-conundrum/comment-page-1#comment-4995 TPC Thu, 20 Aug 2009 13:36:07 +0000 http://pragcap.com/?p=7679#comment-4995 Also see here Rob: http://pragcap.com/using-cash-to-boost-your-portfolio Also see here Rob:

http://pragcap.com/using-cash-to-boost-your-portfolio

]]> By: TPC http://pragcap.com/the-cash-conundrum/comment-page-1#comment-4994 TPC Thu, 20 Aug 2009 13:35:47 +0000 http://pragcap.com/?p=7679#comment-4994 Rob, This is JPM's current opinion, not necessarily mine. I am more focused on the realization that many money managers have to reach for returns now. As I've described in "Why You Trade Like a Loser": "As I said earlier, when everyone is thinking the same, someone isn’t thinking. Learn to go against the crowd. And when the boat feels like it’s tipping to one side, jump off or consider moving to the other side. And never let anyone tell you cash isn’t a position. If you feel uncertain or uncomfortable pull your portfolio out of the game. Like blackjack, there is no rule that says you have to play every hand. For more sophisticated investors cash can also serve as an alternative asset class via currency markets." Cash and currencies are probably my favorite position. It just so happens that cash positions are currently a driver of sentiment. I don't think that makes cash a terrible position. But I recognize it as a potential catalyst for a bullish position. Just providing some alternative perspective.... Rob,

This is JPM’s current opinion, not necessarily mine. I am more focused on the realization that many money managers have to reach for returns now.

As I’ve described in “Why You Trade Like a Loser”:

“As I said earlier, when everyone is thinking the same, someone isn’t thinking. Learn to go against the crowd. And when the boat feels like it’s tipping to one side, jump off or consider moving to the other side. And never let anyone tell you cash isn’t a position. If you feel uncertain or uncomfortable pull your portfolio out of the game. Like blackjack, there is no rule that says you have to play every hand. For more sophisticated investors cash can also serve as an alternative asset class via currency markets.”

Cash and currencies are probably my favorite position. It just so happens that cash positions are currently a driver of sentiment. I don’t think that makes cash a terrible position. But I recognize it as a potential catalyst for a bullish position.

Just providing some alternative perspective….

]]>