The Concept of Cash Carry

Imagine that you know you are going to acquire shares of a company such as U.S. Bancorp or Wells Fargo (both of which I own at the time of this article.) You are due for some major cash windfall such as a bonus, inheritance, or proceeds from the sale of real estate. While you are waiting for these funds, the stock market crashes and you find yourself, after careful analysis, coming to the conclusion that the stock in which you are interested is cheap; dirt cheap. What are you to do? Wait, and hope for the same (or lower) price, taking the risk that by sitting on the sidelines you could have missed the opportunity to buy at an attractive price?

Not necessarily. Take a moment to read about the concept of cash carry. There are certain assets with specific characteristics that can lower the cost of financing them long-term. Although not appropriate for most investors, for those with the right training, professional oversight, and understanding, it can be a useful tool.