H&W in the Media
Why some investors are keeping large sums of money in cash
Some investors have turned their stance into a more conservative approach because of the potential interest rate hikes and weak economic growth coupled with the results of the upcoming presidential election, said Kevin Mahn, chief investment officer of Hennion & Walsh, the Parsippany, N.J.-based investment firm.
“Given the volatile start within the equity markets in 2016, for some investors this may involve holding excess funds in cash or having a larger allocation to cash or cash equivalents,” he said.
While keeping cash in reserves can be a prudent strategy, investors should not attempt to figure out when they should change their allocation to only cash.
“Trying to time the market in terms of when to be in cash versus when to be in the market can often be an exercise in futility,” Mahn said. “These types of investors often tend to mistime cash deployment positions and impact their longer term goals negatively.”
Other assets such as fixed income or stocks are a better bet than “having the money sit idle in cash” and can generate greater returns, he said.
“We may get some concerning outlooks going forward and guidance from some of the bigger multinational players or those that are correlated to energy prices,” Kevin Mahn of Hennion & Walsh Asset Management told TheStreet. “But, I don’t think they’ll be that dramatically different from some of the guidance we got coming out of the third-quarter earnings season.”