It's the safest investment on the planet. There's no arguing that.
Over the past few weeks, this asset never dropped once.
In my Stock of the Month advisory, I bring readers my single favorite investment each month. Under normal circumstances, I only share this idea with my Stock of the Month subscribers. But I think you'll agree that these aren't normal circumstances...
The Dow posted four consecutive days of 400-point swings in August. That's the first time in its 115-year history that's ever happened. And with Friday's jobs report showing employers weren't hiring in August, the picture for September doesn't look much better.
So with that in mind, I want to share my single favorite idea for September...
Cash.
I have given countless investment lectures. Whether I'm speaking to beginners or seasoned pros, I start my talk the same way. I always stress the importance of cash as a portfolio asset. Cash gets short shrift from the business media and investment advisors. Yet cash can be your greatest ally -- especially in this kind of market.
Take a look at how it has performed over the past month compared to other safe havens -- including gold and the Swiss franc.
Now, I'm not suggesting you sell everything in your portfolio and run for the hills. But with today's unpredictable market, holding a little more cash than usual isn't necessarily a bad thing.
Why now?
In baseball, the knuckleball is the most difficult pitch for a batter to hit. It is unpredictable and can change directions in mid-flight. It is also the most difficult pitch to catch.
Bob Uecker, former major league catcher and announcer for the Milwaukee Brewers, once said: 'The best way to catch a knuckleball is to wait until it stops rolling, then go to the backstop and pick it up.'
Right now the stock market has been the equivalent of a knuckleball.
No one can predict with any certainty the direction that the market is headed. Uncertainty is causing investors to sit on the sidelines. And when fewer shares trade, it doesn't take much to move the market.
So even though I'm following a number of promising investment ideas, I don't want to commit to a new position while the market flails. Instead, I'm using market conditions to raise cash and better position myself for this autumn -- when the market is less chaotic.
But there's more...
With all this uncertainty, securities within the same sector tend to get painted with the same broad brush.
Whether they are financials, industrials, or tech -- securities are getting traded as a group. But within those sectors there are always outperformers. The market's failure to recognize the cream of the crop is creating a lot of bargain opportunities.
However, bargains don't stay bargains for long. And I've always found that cash is hardest to raise when you need it the most. Without cash on hand, these opportunities could pass you by. And once they're gone, they're gone... you've missed out.
If you're holding cash, then you don't have to worry as much. You won't be scrambling to sell off pieces of your portfolio at discounted prices. You can easily pick up these bargains as they present themselves.
The Investing Answer: Though it may seem counterintuitive, consider holding cash. For the time being it looks like one of the most opportunistic investments.
Better yet, it's an investment that's guaranteed not to lose money. And in this market that's a valuable asset in itself.
