On... Cash is King
I had wrote that Cash is Trash . But now, I also say that Cash is King. What's going on here? With all things financial, there is always a paradox. And the role of cash is one of them. Forget about what I said about cash being trash and see why I say it is king and you judge for yourself on the Role of Cash. Cash is actually a Call Option without an Expiry. How powerful is that? For those uninitiated, a Call Option is basically a Contract which gives the buyer the rights to buy a Financial Asset at a certain strike price within the contract expiry date. Now, a Call Option without an expiry date - that's Powerful! Let us take an example that I often come across. During the 2008 Financial Crisis, one of the biggest laments of investors was not that their investment had plummeted and crashed. Of course, that hurt a lot. But a savvy investor know that the crash is temporary and when things eventually clear, the price will rebound. However, without enough Liquid Cash on hand, you wi...