Investors Increase Cash Holdings As Trade Anxiety Heightens


Investors are waiting for stock prices to drop as they increase the amount of cash they hold.

Increasing prices in stocks has been coupled with a growing reserve of cash amongst investors.

Currently, investors have accrued an estimated $3.4 trillion that have yet to be invested. This cash reserve has eased worries that investors are excessively spending their assets. However, it is trade related anxiety that has caused investors to keep their cash liquid.

Over the past three years, money-market funds have increased by $1 trillion. The growth is fueled by anxiety that the 10-year economic growth streak will pivot to a substantial decrease in growth.

“Cash always makes me feel good, both having it and seeing it on the sidelines,” said Michael Farr, president of the money-management firm Farr, Miller & Washington, which is holding twice as much cash as usual.

Investors are also worried about the instability that has been observed in the markets because of the ongoing trade war between the U.S. and China. Instability in the markets and rising prices have caused portfolio managers to increase the amount of cash they hold.

“We don’t have to swing at every pitch,” said Sandy Villere, portfolio manager at the $2 billion Villere Balanced Fund.

A survey of 4,600 wealthy entrepreneurs and investors found that 27% of respondents increased their portfolio’s cash holdings during the third quarter.

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Economics, Finance and Investing