Why I’m Heavy Cash Currently

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Well howdy there ladies and gentlemen so the other day in a livestream i mentioned that i am more in cash currently than i have ever been at any point in my investment career and it is absolutely the god’s honest truth currently i have 40 percent of my net wealth is in cash right now versus about 60 percent is in stocks and options related to stocks that is by far

The highest ratio of cash to investments i’ve ever had usually for most of my investment career it’s been around 95 percent or more of my money is always invested in stocks or options at a particular time more than 95 percent that has changed recently guys and i’m gonna go through three reasons on why that has changed and why i’m holding so much money in cash

Right now which is very rare for me very rare for me so and i think it’s just kind of important to get out there because why is a guy like me holding so much cash well the i mean it’s technically not cash it’s just money that’s in accounts or whatever waiting to be invested why is that happening versus why is that not money not it already in stocks or something

Like that guys so i’m gonna give you these three reasons let’s get into this the first reason is all-around p/e ratios currently so currently the current p/e ratio right now you want to discount the one where it spikes way up there in 2009 that was basically because we had the recession and companies had huge charge-offs and all those type of things so that’s why

The p/e ratios one up and saying there but if you looked any time since what about 2010 and on we’re currently at by far the highest p/e ratio so weird work since i started investing i started investing in 2009 i started looking in the market in 2008 since i started investing the current p/e ratios by far the highest ever in my investing career guys so the first

Off right off the bat there i’m not running out to buy stocks if they’re higher priced than they’ve ever been on a current p/e ratio p/e ratio basically tells you what the company has for earnings coming in versus what the stock price is and the lower the lower that p/e ratio is generally the more undervalued a company is unless of course they’re they’re losing

More and more money and things like that but generally speaking that if you look at the market as a whole if the ratios under 20 or especially if it’s under a 15 that means the market is undervalued if it’s under 20 it’s probably you know cree in a round average value and if it’s over 20 it’s starting to get a little overvalued where our current pees almost out

Of 25 right now guys around a 25 so i would put us that’s why i say we’re at slightly overvalued territory are we as something like we went through in the 2000 no we’re not that bad we’re not that bad then we look at the next pe ratio this is called the shiller p/e ratio right on the shiller p/e ratio look at how much higher we are and we have been pretty much

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Ever before i mean we’re at well over a 30 on the shiller p/e ratio right now the last time it was anything even remotely close to it it was in the dot-com bubble in 2000 when the shiller p/e ratio was around a 4340 for guys so you look at that in and that in itself is a big reason why i’m not running out there to buy stocks why am i going to run out to buy stocks

When they’re more expensive for me to buy them than they’ve ever been in my investing career i’m just not guys that’s why i’m gonna sit more on the sidelines we look at this here the nasdaq saw about 18% year today we’re once 8 months through the year but 8 months through the year in the nasdaq sup 18 percent if and as that keeps on this trend it will have gone

Up well over 20 percent this year well over 20 percent if it keeps on this trend guys in a year that’s an insane amount for the nasdaq to go up especially in a year where we’re not coming off a stock market crash or something i mean if you’re coming off of a stock market crash and the market goes up 20 percent then maybe that’s ok but when you’re in just normal

Like last year was just a normal year right and then this year the nasdaq being up well possibly going up well over 20% that’s a monstrous move there guys monstrous so that first reason for me holding more cash is just things are a lot more expensive it’s like going to the grocery store and you know a few years ago you could buy ears of corn for 10 for 10 dollars

And your buy namely crazy because you love corn and they’re 10 for 10 bucks and the next year you go when it’s 8 for tennis like okay yeah i’ll still buy all these corn and then next year it’s 6 for 10 it’s like man these corns are kind of getting expensive now i guess i’ll still buy them nelson is 4 for 10 dude a few years ago i was paying 10 cents a year for

These corns and now i gotta pay 25 cents like what is going on that’s kind of how i feel about the stock market right now these peas are just getting so high that i’m like it’s making way less deals out there wait less things for me to go out and put my money into the second reason behind me having more cash than ever before is my number one of my number two

Investments i have no interest really in putting more money into those investments which it’s kind of rare for me but in gopros instance right that’s my biggest investment i just have i’ve had no interest for over a month now putting any new money into gopro just because i’ve been already so heavily invested in gopro i have so many call options that expire in 2018

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2019 already in gopro i’m so heavily invested in that one that i just literally don’t want to stake any more money if it went down to i don’t know six dollars a share or whatever i still wouldn’t put money in just because i’m so heavily invested and already i’ve already averaged down so many times wynn resorts i’m kind of at that same place with it i’ll win resorts

Obviously the stocks done tremendous and all those type of things i don’t feel like putting more money in one resource i mean it would have to it would have to literally go down to probably less than a hundred dollars for me to really start investing in win resorts and that’s like a 27% downside move or something like that like that would have to be dramatic move

Down for win for me to really start putting more money in win time so those two stocks although of my two biggest and i still obviously believe in them if i didn’t believe in i’m i would have sold out already or would be selling out i obviously believe in i’m a ton to keep them as my number one and number two i just don’t feel like putting any new money into it and

Then you compound that with what we just talked about with the p/e ratios on a lot of other companies and it’s like there’s so few companies for that i’m even interested in investing and because the p/e ratios are so high and then we that gets me to my third and last reason here guys and that is just me and more i guess you could say maturing a bit in my investing

Career where i want to keep some more money in cash now 40% i don’t want to always keep 40% this is a lot i got really don’t want to do that i want to keep closer to around 10 to 20 percent in cash at all times for instance if a stock drops huge and i love i can make a big position that stock immediately or almost immediately write a and i can take advantage of

Opportunities you know a flash crash happens i could you know load up on a stock event in a flash crash or something like that i’m always you know have more money on the sidelines and say a recession came out of nowhere right under the say a recession came out of nowhere if it came out of nowhere i’m sitting a little i would have at least some money on the sidelines

Then as things drop my dollar is worth more and i get more shares to buy in whenever i want to buy in those kinds of things that i have money if i don’t need to buy put options if i need to buy you know if i need to go short shares i have money on the sidelines rather than just the money invested in those long shares which primarily i generally am i’m just going

Long companies and those kinds of things sometimes i’m buying call options but generally speaking it’s mostly just behind shares because i believe they’ll go up in value over time so those are the three reasons guys you look at the p ratios they’re higher than they’ve ever been in my investing career by far the highest they you know on the shiller p/e is higher


It’s the highest it’s been since the dot-com bubble burst in 2000 you look at i don’t want to really stick more money in my number one number two biggest investments and then you compound that with i want to keep more money in cash just generally speaking and that’s how we get to a place right now where i have 40% of my money in cash guys i don’t know what else to

Say i have started by a michael kors stock as you guys know that was on the august video it’s a new stock i’m buying and then that is hard for me to find deals out there in the market some of the low p companies like the fords and the gm’s of the world no interest at all in investing in those that i don’t care if they’re at a 5 pe or an 8 pe ratio i don’t want to

Be in a car and a car manufacturer and you know when we’re going into a lecture game with tesla when we’ve already had in my opinion you know peak autos and things like that like so some of these companies that are low in pease i don’t want those companies at all i’m not interested them at all and some of the companies i love that i believe in for the future they

Trade it ridiculous peas and it’s like what’s a guy to do go and buy a super overvalued stocks and risk you know them going down substantially or being forced to buy stocks that you don’t even believe in just because they happen to be a low p/e i don’t want to do either one of those things i always want to buy stocks i believe in in are either undervalued or at

Least maybe fairly valued by sure don’t want to buy overvalued companies guys at the end of the day so that’s why i’m heavier in cash than ever before let me know in that comment section what you guys are as far as you know maybe you’re worth ten thousand dollars do you have five thousand dollars in stocks right now five thousand dollars sitting on the sidelines

Or you know you don’t have to tell me specific numbers but i’d just love to hear from you guys as far as like what’s your ratio is of your net wealth in cash versus what it is in investments and things like that guys i would love to hear from you in that comment section love to hear your opinion on this video in general let me know hit a thumbs up if you enjoy

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Watching guys and have a great day you

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Why I'm Heavy Cash Currently By Financial Education

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