[The Specialist] Is cash still 'garbage'?

[Warren Buffett / Berkshire Hathaway CEO: Cash is always a bad investment.

Cash does not create anything and loses its value over time.]

The phrase 'cash is garbage' often mentioned by investment geniuses such as Warren Buffett .

word to emphasize.

For example, with 10,000 won, you could eat two bowls of naengmyeon 10 years ago, but now you can eat less than one bowl.

In other words, they were just holding money, but when prices rise, their purchasing power is greatly lost.

Still, it was okay when the interest rate was high, because the interest income was salty.

The deposit rate, which was in the 10% range in the 1990s, was enough to make money with savings alone, but interest rates continued to fall, and interest rates in major advanced countries fell to zero after the 2008 financial crisis.

This means that the real interest rate is negative, and it corresponds to 'fool', which means that if you hold cash, your assets decrease.

A word that has been considered like a bible for over 10 years, but these days, slightly different interpretations stand out.

[Ray Dalio/Chairman, Bridgewater Associates: Of course, cash is still garbage.

But stocks are more garbage.]

Why is the analysis that cash is still garbage, but stocks are worse?

After the 2020 Pandemic, countries around the world have unleashed a huge amount of money.

But artificial bubbles can't last forever, and when inflation is stimulated, they austerity.

The US, Canada, New Zealand, and Korea are participating in big-step rate hikes one after another.

However, the never-ending war in Ukraine and Russia, which stimulates supply shortages, causes oil and grain prices to rise. Inflation has not been caught.

As a result, financial markets around the world are on a downtrend due to concerns about further austerity.

The virtual asset market also shrank, and the hot real estate market began to cool down.

Because of this, investors are starting to feel a little differently about cash.

The intensity of rate hikes and weakness in asset markets like stock coins makes cash more attractive.

In fact, major investment institutions are increasing their cash holdings.

The proportion of investors, including a group of US fund managers, soared to the highest level since 2001.

Similarly in Korea, the amount of deposits held by institutional funds increased significantly.

In the past, whenever the stock price is adjusted, it is taking a different step from buying at a low price and reducing the proportion of cash.

As the deposit interest rate rises to 5%, the money in the market is also transferred from the central bank to the bank.

It is an analysis that the 'reverse money move' phenomenon, which moves from risky assets to stable investment destinations, is in full swing.

Since Corona 19, Donghak and Seohak ants have poured more than 220 trillion won into the stock market.

It seems that many of the individual investors who had fun received a bitter report card this year and would have a lot of trouble. First, we need to lower the target rate of return and take a conservative approach.

It is to increase the proportion of assets that can expect stable returns, such as interest, dividends, and rent.

We also need to weight cash much more than in the past.

I've heard from financial experts that the two things rich people have are cash and courage.

This means that you need to increase your cash holdings so that you can take the strategy of buying during additional bear markets.

Another important thing is to be sensitive to interest rates rather than stock prices.

The Bank of Korea is expected to raise interest rates faster in a situation where high inflation, high exchange rates and high interest rates overlap.

Lowering the interest burden means financial technology, so it's time to hurry up on debt restructuring.

In an investment environment that is inevitably difficult for the time being, a wise response is required with a mind that does not give up.

(Planning: Jo Ji-hyun, Composition: Shin Hee-suk, Video coverage: Park Jin-ho, Kim Yong-woo, Video editing: Yoon Tae-ho, CG: Um So-min, Kim Hong-sik, Seo Dong-min)