Great story from The Wall Street Journal ... it turns out that the world's richest investors are hoarding cash to the tune of an estimated $10,000,000,000,000.00+ as a reaction to the uncertainty in the markets, economy, and tax situations around the world. I wrote about the importance of liquidity several years ago and nothing has changed.
The reality is that if individuals are uncertain about what to expect, they will have a higher preference for hoarding cold, hard cash, gold, silver, and other sources of money that can be easily exchanged for value. This may be bad for a country or the global economy but it makes sense on a microeconomics scale because it is beneficial for families who just want to make sure they can keep eating and supporting the lifestyle to which they have become accustomed.
On a purely anecdotal level, a lot of people in my circle of friends and business associates have been ruthlessly reducing debt levels and piling up cash in bank and brokerage accounts. (Around here, we are value investors so our activity was not normal because when the market bottomed, I told you at the time that we were going "all in" in poker terms, buying everything we could get our hands on, from General Electric at $6, Wells Fargo at $10, U.S. Bancorp at $10, and Berkshire Hathaway in the $70,000 to $80,000 range for the Class A shares / $46 to $54 range for the Class B shares. It didn't matter to us if we had to wait five or ten years for the market to recover, we just wanted to own more of the companies we loved. Now that the market is somewhat recovered and things aren't giving-away-the-store cheap, we have started building cash levels and obliterating the small amount of debt we do have.)
What are you doing? Investing more to take advantage of lower prices? Repaying debt as quickly as possible? Building cash reserves in the bank? How did you respond to the crisis?
I am trying to invest using all the volatility in the market to make money when it goes up and when it goes down. Am I crazy for trying to do this? It is like playing craps and betting on both the come and don’t come bets except with the stock market you always have the chance that your “losing” bet comes back to even or a winner, right!? I think it can be done on a regular basis.
Judgment And Indictment Against The Rich For Hoarded Wealth In The Last Days
James Chapter 5
There are, then, three miseries specified for the rich: despair from losing their wealth, guilt from the evidence against them and horrible pain from being devoured in the judgment upon them. The Specific Sins of the Rich (5:3-6)
Now we find out why these rich people are so condemned, as the second half of the paragraph is the indictment against them. The charges may be summarized as “greed and injustice.” The greed of the rich has consisted of hoarding wealth and living in luxury and self-indulgence. The injustice has consisted of cheating workers of their wages and condemning and murdering innocent people. But these charges are not listed calmly, with the decorum of courtroom order; they seem to tumble off James’s pen in outrage against gross immorality. Moral outrage such as this ought to come from one deserving James’s reputation as “the Just.”
These charges are made with reference to certain days–the last days and the day of slaughter. If these are both references to the time of God’s judgment, they produce a twin irony. The rich have hoarded wealth-only to lose it in the last days. They have indulged themselves–only to become fat for their own slaughter. The first phrase most likely does refer to the future judgment (indicated by the future tense of the verbs in the middle of 5:3), and reflects the common apostolic viewpoint that the first coming of Jesus has already ushered in the last days, which will culminate in a future judgment. James, however, is not particularly amused with the irony of it all. He is moved far more by the offensiveness of the sin, that the rich have dared to hoard wealth even in the days when they should be most concerned to repent. In the context of the last days, when the rich should be most in fear of God, their greed amounts to a mocking of God, a hurling of arrogant insults into God’s face.
The latter phrase, the day of slaughter, may also refer to God’s judgment on the rich (as Davids contends, 1982:178-79). Certainly there is an Old Testament tradition for the image of God’s judgment as a slaughter of his enemies (Is 34:5-8; Jer 12:3; 46:10). Yet there are problems with this view. The exact phrase does not occur in the Septuagint (as Davids acknowledges, 1982:178), and the connotations of the phrase are not clear (as Laws admits, 1980:203); it could be a description of the violent treatment of the poor by the rich (as Dibelius defends, 1976:239). The meaning advocated by Dibelius becomes the more likely one because of the immediate parallelism that emerges between 5:5 and 5:6, which could be paraphrased:
You have lived on earth in luxury and self-indulgence,
you have fattened yourselves
–even in a day when you are slaughtering others!
You have condemned,
you have murdered the innocent one
–who is not even opposing you!
Please Read More On The Subject At The Following Link
http://www.biblegateway.com/resources/commentaries/?action=getCommentaryText&cid=13&source=1&seq=i.66.5.1
Joe,
You are speculating, not investing. As Benjamin Graham said, this is neither illegal nor immoral. But don’t delude yourself into thinking you couldn’t lose everything with a single bad trade because you are playing the equivalent of roulette, just on a much larger scale with far bigger sums of cash. If you insist on proceeding with that course of action, do it with your eyes open and don’t delude yourself into thinking it is sustainable because all it takes is a single major loss to wipeout years, or even decades, of successful positions.
I invest in gold and have profited from it. Gold is the world’s second currency and is a smart investment.
Ms Young, I guess you didn’t see the article where Bill, Melinda Gates & Warren Buffet met with 40 of the world billionaires and they all pledged at least half of their wealth to society.
You need to understand riches & wealth and how it works to understand the actions of the wealthy. Most people who hoard wealth and refuse to give don’t become wealthy. Most wealthy people are just smart at playing with money, they know when to give, how much to give and in which ways to make that money back. So my advise…..learn all you can about money and use the ensuing wealth to support Biblical cause…..- assuming you won’t be caught in the web of “i want to be rich” mentality and hence hoard that wealth…
Never forget this: Wealth/Money is a tool given by our creator to help advance HIS course on earth
@Duke. How does Wealth/Money advance the creator’s course on earth? If you please.