There is a Time to Increase Cash Positions Even if there are few Alternatives to Asset Markets

Monthly Market Commentary: November 1, 2017

According to a survey from Bankrate.com, in late 2016, just 37% of Americans had enough savings to pay for a $500 or $1,000 emergency. The other 63% would have to resort to measures like cutting back spending in other areas (23%), charging to a credit card (15%) or borrowing funds from friends and family (15%) in order to meet the cost of the unexpected event (most recent statistics seem to indicate that currently 41% of Americans had enough savings to pay for a $500 or $1,000 emergency).

Then, a few weeks ago, I read about how Hurricane Maria had transformed Puerto Rico into a “Cash Only” economy. According to Zero Hedge, “Electricity, internet access and cell phone service have been offline in parts of Puerto Rico for a whole week."

Aside from the fact that it may not be a bad idea to raise now some cash and reduce the exposure to asset markets, I urge my readers never to leave home without some cash.

Emergencies do happen, and ATM do not always work. In less developed villages of emerging economies there may not even be ATMs, and credit cards may not be accepted.

Finally, there is an human aspect. People all over the world, especially in poor countries will always appreciate a small tip as a reward for their services. I find it difficult to accept that some people can tip generously a head waiter they know at their regular dining place in order to get a nice table, but cannot even part with one dollar for poor people who service them in emerging economies.

I wish my readers a serene and joyful festive season.
Yours sincerely
Marc Faber 

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