Why are the world’s leading investors moving their holdings into cash?
It comes as Warren Buffett’s company Berkshire Hathaway sits on its largest cash reserve ever - a whopping 334 billion dollars, after he shaved off some of his holdings in Apple and Bank of America.
Known for being patient, Buffett only makes moves when the odds over the long term seem to be in his favour.
Therefore, the question is what kind of opportunity is he waiting for?
Additionally, investment platform, TPP, like Buffett, also believes in the power of long-term growth in global equities - and has switched their holdings into cash too.
However, where they differ is that they also tweak their portfolios and strategies more regularly to take advantage of market gyrations and volatility.
And just like Buffett, TPP is also very much under-exposed to the global stocks.
On the TPP platform, which assists the retail investor market, they adopt three different approaches to building portfolios.
One is tracker-based products (whole market and funds), one is what they term a 'long or flat', and the other is an 'active equity long/short' technique.
Currently (subject to change), a glance at their strategies also suggests that they're underexposed to global equities.
Their trackers are in a position to track.
However, their two approaches that adapt to an ever-changing market climate, both currently have minimal long exposure.
More importantly, looking at their trade logs, it's been like this for a few months.
Therefore, right now, we have a legend who some would call the world's most patient and successful long-term investor, holding record levels of cash.
On the other hand, we have an investment platform that many shrewd investors are allocating capital to, and is tearing up the traditional world of wealth management, holding far more cash than normal.
“Investors are fed up with regularly underperforming market benchmarks”
Commenting further, Warren Buffett, said: “Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities.
Buffett wrote. “That preference won’t change,” - and noted that while the firm’s holdings in stocks fell last year, the value of its private holdings rose “and remains far greater than the value of the marketable portfolio”.
He continued: “Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities—mostly American equities although many of these will have international operations of significance.
“Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned.”
Meanwhile, Lane Clark of TPP said: "We concur with Warren on many counts.
“Over the longer term, global equities are an amazing wealth-growing tool.
“Warren and his approach have proved this time and time again.
“However, could a more modern approach to investing be adopted to boost those longer-term returns? In my humble opinion, definitely.
“This is why we built TPP. Investors are fed up with regularly underperforming market benchmarks, and we're assisting them to reverse this trend.
“However, although we differ from Warren in his predominantly 'buy and hold' approach, we make semi-regular tweaks to our portfolios, and currently, those tweaks are witnessing many of our 'long or flat' strategies move into a flat/market neutral position."
His fellow founder Ed Davies chimed in with the following: "I live and breathe the markets. They're my passion. Right now, I just can't say with any certainty which direction they'll move next, and hence why many of the TPP strategies are flat at the moment."
Expert voices continue to warn about investors - as their companies consistently beat their benchmarks.