By Investment Master Class Investment Master Class

“Cash is the equivalent of financial Valium. It keeps you cool, calm and collected.” Bruce Berkowitz

“I think it’s [cash] actually an aggressive strategic asset because it’s one of the few things that rises in value as the market plunges. Its value is inversely proportional to how challenging the environment is” Ken Shubin Stein

“Holding cash is uncomfortable, but not as uncomfortable as doing something stupid” Warren Buffett

Get The Full Warren Buffett Series in PDF

Get the entire 10-part series on Warren Buffett in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

We respect your email privacy

[drizzle]

"The hardest thing to do in investing is not the decision to buy or sell but to sit idle even if that means allowing the build-up of some cash" Christopher Begg

"The big lesson I learned, which was a correct lesson to learn, in the financial crisis is to hold cash" Mohnish Pabrai

“I have found it wise, in fact, to periodically turn into cash most of my holdings and virtually retire from the market. No general keeps his troops fighting all the time, nor does he go into battle without some of his forces held back in reserve” Bernard Baruch

"There will be some incident, it could be tomorrow. At that time, you need cash. Cash at that time is like oxygen. When you don't need it, you don't notice it. When you do need it, it's the only thing you need. We operate from a level of liquidity that no one else does." Warren Buffett

“Buying hedges in a choppy market can be expensive, so we view cash as one of the cheapest hedges out there” David Nierenburg

“Unfortunately the important criterion of investment merit is obscured or lost when substandard investments are acquired solely to remain fully invested” Seth Klarman

“While the S&P Index is by design a fully invested index, we have generated our returns with negative leverage, ie cash has averaged 14% of invested capital since inception” Bill Ackman

“Fairholme views market crashes, panics, and downturns as opportunities to buy more of the companies we love at fire sale prices. The only way to exploit these opportunities is to have cash on hand.” Bruce Berkowitz

“Naysayers argue that holding a large amount of cash that yields nearly nothing is foolish, and perhaps it is - until it isn't. On all counts, we think it's better to have cash and not need it, rather than to need it and not have it.” Bruce Berkowitz

“There are worse situations than drowning in cash and sitting, sitting, sitting. I remember when I wasn’t awash in cash – and I don’t want to go back.” Charlie Munger

“Our willingness to hold cash at times when great opportunities are scarce allows us to take advantage of opportunity amidst turmoil that could handcuff a competitor who is always fully invested” Seth Klarman

"We think of cash as a trump card that can be played any time. Holding a card in your hand that ranks above all others is a secret weapon in the competitive game for the best ideas at the best price, allowing us to gain an advantage. There, however, the analogy breaks down since cash, as an investment trump card, does not depend on the luck of the draw. We actually believe that our equity performance is much greater precisely because we hold cash in reserve. We get enthused —and have the wherewithal to take action—when prices of existing or prospective holdings fall because cash allows us to buy more of a good idea, like the two-for-the-price-of-one bargains that entice consumers at the mall or online." Frank Martin

“I’d much rather apologize for holding cash than for paying too much” Gregg Powers

“Cash is our hedge. That’s an anchor on returns when the market’s strong, but it’s a hedge when markets are bad and it allows you to put money to work at those times to generate attractive future returns” Andrew Jones

“When bargains are lacking, we are comfortable holding cash Seth Klarman

Get The Full Seth Klarman Series in PDF

Get the entire 10-part series on Seth Klarman in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

We respect your email privacy

"Because we are focussed on absolute returns, we will hold cash in the absence of values and a margin of safety. We view cash as an opportunity fund" Arnold Van Den Berg

“It takes character to sit there with all that cash and do nothing. I didn’t get to where I am by going after mediocre opportunities.” Charlie Munger

"You're deluding youself if you believe your stocks, however cheap they are, won't temporarily go down when Mr Market decides to correct. When that happens, your cash becomes ammunition for future bargains" Charles de Vaulx

"You invest only in the opportunities you see. I have no problem sitting on cash." Marc Lasry

"We view cash as a residual of a disciplined underwriting approach and as deferred purchasing power" Mathew McLennon

"Cash is a wonderful thing.  If you have cash you can buy"  David Winters

"There are times to sit on cash, because sometimes cash enables you to take advantage of investment opportunities" Sir John Templeton

"We don't feel the need to force cash to work just because it is a zero-percent yield today, because the return to cash has two components; it has current yield, and it has the option of redeployment in distress"  Mathew McLennon

“Contrary to many mutual fund managers, we do not believe we have to be fully invested 100% of the time.  Our cash balance is purely a residual of whether or not we’re finding enough to invest in.” Jean Marie Eviellard

“Cash combined with courage in a time of crisis is priceless.” Warren Buffett

"In many different ways, cash gives you options.  It offers wonderful downside protection and upside optionality"  Mohnish Pabrai

"It's better to earn nothing than to potentially lose money by making a risky investment that isn't up to your standards.  Cash is a weapon.  Guy Gottfried

"In an up market the liquidity looks like it’s hurting you, but when prices on average are high, people don’t think about the optionality value of cash. That value reflects what cash can buy in the future versus what it can buy today. Sometimes the difference can be enormous." Keith Trauner

"I have always loved cash - if you've got lots of it you will never have to pass up a great opportunity"  Peter Cundill

"Cash is misunderstood by some, who do not appreciate the value of a cheap option on a better future entry point"  Steve Romnick

"The “we” investor is comfortable holding cash when he can’t find attractive investments" Howard Marks

"If you have cash, you may remain safe in the shelter of the harbour until the storm passes" Frank Martin

"One of the most common misconceptions regarding Baupost is that most outsiders think we have generated good risk-adjusted returns despite holding cash.   Most insiders, on the other hand, believe we have generated those returns because of that cash. Without that cash, it would be impossible to deploy capital when we enter a tide market and great opportunities become widespread." Brian Spector

"If you go back and study the great investors throughout history—the Medicis, the Morgans, the Rothschilds, and recently Buffett—these great investors with terrific records share a common trait: they were always in a position to be liquidity providers. Each was willing to hold cash until someone was in distress or under duress, and they could provide liquidity at very attractive prices... I actually consider cash to be an asset class"  John Phelan

[/drizzle]