July 7, 2016

Cash is the alternative

"This morning, [T. Rowe Price's Brian Rogers] mentioned 'T.I.N.A.' ('There Is No Alternative' to stocks).

Isn't cash an asset class and a means of protecting assets? Can't the global bond market be saying that a secular decline in growth lies ahead?"

I've long felt that the concept of T.I.N.A. ("There Is No Alternative" to stocks) is inane -- a figment of the imagination for perma-bulls who rationalize sluggish economic growth and tepid corporate profits.

In fact, it should be abundantly clear that T.I.N.A. is B.S. Personally, I endorse "C.I.T.A." -- "Cash is the Alternative." And that's regardless of the low interest rates that we're currently seeing in America, or even the negative rates available in Europe and Japan.

After all, cash is a legitimate asset class and performs the job of insulating our portfolios from wild gyrations and draw-downs.

So, I say that if the current rally runs it course over the next few days (as seems possible), traders and investors should consider using cash as a protective tool in these uncertain times and markets. And that's even after we bear in mind the puny yields that the world's fixed-income markets are offering.

The bottom line: "Goodbye T.I.N.A. ... Hello C.I.T.A.!"