Holding Cash Will Be a Winning Strategy in 2023, Investors Say

In 2023, cash is far from trash.

That’s the verdict of the 404 professional and retail investors who took part in the latest MLIV Pulse survey. Two-thirds of respondents said the cash in their portfolios would bolster rather than drag down their performance in the year ahead.

That cash holds such allure says a lot about the unsettled financial and economic environment. Fears of a potential bear market, continued rate hikes by the Federal Reserve and a looming recession have investors nervous, worried that 2023 could be a reprise of 2022’s brutal hit to portfolios. Morgan Stanley’s chief US equity strategist Michael Wilson told Bloomberg TV last week that the S&P 500 Index could fall around 20% due to weak corporate earnings.

Investors Like Cash

We asked: Do you anticipate cash holdings this year to be …

Source: Bloomberg MLIV Pulse survey on Feb 27- March 3 with 404 responses

Against that backdrop, cash looks like a safe haven, particularly with recent yields on short-term Treasury bills high enough to beat the classic 60/40 portfolio of stocks and bonds for the first time since 2001. Even high-yield savings accounts pay savers close to 4% now.

“We’re encouraging people that it’s okay to hold cash, that it’s not just a lead weight on your ankle weighing you down,” said Leo Kelly, chief executive officer at Verdence Capital Advisors. “You can get a nice yield and there will be a lot of volatility in the markets and lots of chances to put that cash to work at attractive levels.”

Of course, investors lose ground to inflation by holding cash, said Rachel Elson, a wealth advisor at Perigon Wealth Management. But for clients who have known expenses to save for, like an upcoming wedding or a looming tax bill, it’s less painful to be prudent when you can get 3.75% on a savings account from Marcus, Goldman Sachs Group Inc.’s consumer bank, Elson said.

860 573 Prospergate Group
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