Categories: Stock Market
Topics: Inflation Stocks

An Environment Where Cash is King

And just like that, we’re almost halfway through 2023. 

As we head into the second half of the year, we’re still grappling with several headline-making issues. 

Inflation is still running rampant, there’s an ongoing cost-of-living crisis, economic growth is slowing, and the bear market rages on. On top of it all, recession is looking increasingly likely. 

The sentiment that things are going to get worse before they get better prevails. A growing number of people are worried that surviving is going to get even harder as they're forced to do more with less. 

Investors with the means to do so are putting their money into whatever havens they can find to weather what’s coming. Gold is up year-to-date. Over the past week, cryptocurrencies have rallied despite crypto exchanges being targeted by regulators.

And some investors are still keeping their money in cash. 

That was the finding of a recent survey carried out by CNBC. The survey questioned millionaire investors and found that 34% of the respondents were keeping more of their money in cash. These respondents had around 24% of their portfolios in cash (and cash equivalents) on the expectation that interest rates would remain high for the foreseeable future. 

That isn’t completely unfounded. Fed Chairman Powell himself said that more interest rate raises were likely this year, despite the recent pause. 

So, more people are accepting market volatility as a fact of life over the next few quarters and are acting accordingly. 

This hoarding of cash can also be seen as a consequence of cuts in discretionary spending.  Those polled said they were spending less on things like dining out, purchasing cars, and going on vacations.

That means they can instead put that cash in those haven investment vehicles, keep it as part of an emergency fund, or set it aside for other things. 

As this market volatility continues to unfold, having this kind of cash makes it possible to build a stockpile that can be deployed on the right investment opportunities when they emerge. 

All turbulent markets contain opportunities to still make money, and this time is no different. It’s just a matter of knowing where to look. 

In this kind of environment, it’s better to have a long-term strategy that can be resistant to the uncertainty a market like this brings. That means investing in not only staples that have historically proven their staying power, but getting into sectors that are set to thrive given the unique conditions of the time. 

As far as what we’re seeing now, one of those sectors is gold, which has remained in a sustained bull market through all of this. It’s looking to keep that momentum going as it pushes near all-time highs due to investors wanting something that holds value. 

That’s just one example, but there are others. 

Having that cash on hand to deploy when opportunity presents itself is one of the best ways to thrive in this kind of environment. With the right strategy, your money can grow instead of being eaten away by the stubborn inflation we’ve been stuck with.

Ryan Stancil
Editor, Daily Profit Cycle