Cash is King
Younger investors aren’t replacing their retiring counterparts. Cash holdings are at the highest levels since the record in March 2009, according to an Aug. 16 survey by Bank of America Merrill Lynch. Investors from 18 to 30 years old have the highest cash position of any age group at 30 percent of their portfolio, MFS Investment Management said in an Aug. 8 report. Almost three in five investors cite fear about volatility or needing money someday as a reason they hold high or increasing levels of cash.
“Investors are in cash for a reason and, regardless of time horizon, conventional investing wisdom no longer applies,” William Finnegan, senior managing director of retail marketing at the Boston-based firm, said in the report. “The Great Recession of 2008 has had a profound and longer-lasting impact on investors’ confidence than expected.”
The average investor tends to hold large amounts of cash when the markets are at a low and thus miss out on gains, JPMorgan’s Goldberg said. The previous high of cash as a percentage of portfolios was in October 2002, right before the start of a five-year bull market.
via Volatile Stocks Seen Leaving Lasting Scars on U.S. Fund Investors’ Psyche – Bloomberg.