Fund Manager Holds Cash in Anticipation of North Korea-Prompted Selloff

AMP Capital’s Nader Naeimi, who heads one of the firm’s dynamic investment funds, has about 30% of his holdings in cash, according to a¬†Bloomberg article from earlier this month, and sees North Korea situation as “one of the factors that could eventually bring down the long bull run in equities.” In addition to his cash holdings, Naeimi has “an allocation to gold and is short emerging-market currencies versus the dollar. His fund has beaten 77 percent of peers over the past year,” according to data compiled by Bloomberg. According to the article, Naeimi said, “Markets need a correction,” adding, “There […]

Amidst Conflicting Signals, Keeping Cash May Be Prudent

In an environment where markets look expensive and are sending conflicting signals, keeping a store of cash might not be a bad idea. This according to a recent article in The Wall Street Journal. According to the article, lower bond yields and swollen equity markets are “sending conflicting signals; the former reflecting the lackluster picture for inflation; the latter hopes for growth.” Further, it says, the high level of global central-bank liquidity is “past its peak” with the Fed raising rates and the European Central Bank moving away from loose monetary policy. “In this environment,” the article states, “faced with […]

Cash Rich Stock Picks

The tendency for major corporations to stockpile cash after the financial crisis seemed like a reasonable strategy, but according to recent data reported by FactSet, the trend hasn’t changed much. In his latest article for TheStreet, Validea CEO John Reese outlines some possible explanations and describes how our guru-based investment strategies (particularly that of Warren Buffett) evaluate a company’s use of their cash. Reese identifies the following high-scoring picks: NetEase (NTES) is a tech company that operates an interactive online community in China. Management’s use of retained earnings has produced a return of 18.7%, and the company’s debt free balance […]

Inflation: Maybe Not Today, Maybe Not Tomorrow, But Soon — And For The Rest Of Your Life

Inflation has been tame in recent years. But history shows that’s unlikely to continue forever — and that has major consequences for your portfolio. The chart below from BlackRock shows just how real a threat inflation — and taxes — are to different types of investments over the long haul (h/t to The Reformed Broker for highlighting the chart). As you can see, inflation and taxes eat away at stocks, bonds, and cash, but their impact on bonds and cash has historically left investors with close to — or less than — zero returns. Source: Blackrock, via Reformed Broker