Cash is (always) KING!!???

Is it true?

Undeniable, this period of time is the situation we call "Financial Crisis". It happens all over the world right now. Actually, we have some sketch of this crisis since 2007 when USA faced the Sub-prime crisis plus the highest oil's price in history then the real crisis in 2008.

The most obvious incident is come from stock market all over the world, they crashed in just a short period. The investors in stock market facing a big bear market right now and do not know when the bull will come back.

Many people head back to the most fundamental asset in capitalism, it is "Cash". They think that "Don't invest in anything right now, the markets are very bad and businesses are even worse. Keep your cash, wait for the rise". This suggestion is not only for individual but also for companies which have a plan to invest their capital to grow in this period to stop for a while and consider it carefully before let their cash out of their pocket.

Is it true?

hmmmm...

I will start from stock market. When you look into the stock market, you will find many types of investor. Somebody is the speculators. They hold the stock in just a short period, maybe 2 days, 1 day, 1 hour or even minutes. They buy and sell their stock according to the news around the market, their marketing's suggestions, or even someone who said that he is a "guru" who knows that which stock will going up or down. On the other hand, you may find somebody who is the investors. They look in to the business behind their stock fundamentally, invest their money when the price is going down below the real value of the company (they call it's Cheap) then sell it when the market change its direction. Investors play with psychology of speculators, they believe that stock market always over-acting with bad and good situations. They use this strategy and hold the stocks longer than speculators.

Well... You can see that the crisis is bad for the speculators. When they buy the stocks, speculators expect to sell their stock very fast with the profit. But, in the crisis period, whenever they buy, the price always goes down and speculators have to sell them lower than the price they bought. However, for investors who do not care so much for the share's price in just a short period. They can buy stock and hold for longer time. This crisis is the real opportunity to find the really cheap stock with very good company, good business behind that stock. They look for value, not a price.

So, Cash is always King???
Yeah, I have to admit that you must always carry cash to be ready for the market though you are investor or not, otherwise where is the money to invest? But, for the speculators, they hold their investment in crisis period and think that "Cash is King, don't invest" while for the investors, they turn cash to be the stock when the bear market comes and think "It's time to invest now!"

Different, huh?

This is just for individual investment, it may be not the real entrepreneurial activity. Therefore, next time I will serve you with the company's investment, "Cash is King???"

By the way...
Which type of investor you prefer?