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Where to hold cash aka dry powder
For those that follow a somewhat value investment strategy by buying businesses ‘on sale’ it means that in certain environments (such as now) a lot of quality business are trading at fair or above value price points in the market
Therefore my/your cash pile from regular deposits from dividends, wages, etc into a brokerage account pile up earning essentially nothing in interest
Researching strategies around this ‘time in the market, not timing the market’ and a host of research from various sources say to be fully invested as picking the bottom is inherently difficult to do
I can see the logic in this but part of me goes... ‘why should I buy a company at a high price/earnings multiple/low dividend yield only because I’ve got cash burning a hole in my pocket’?
Damned if I do and damned if I don’t. Earning 0.05% on call grinds my gears but so does paying more than I’d like to for a business
What’s your strategy for excess cash whilst waiting for purchases?
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