When financial professionals say “cash is a position,” they mean that holding cash or cash equivalents (such as money market funds) can be a strategic investment decision in and of itself. This is because cash provides investors with liquidity, flexibility, and optionality, allowing them to take advantage of opportunities as they arise.
By holding cash, investors can quickly and easily make investments or take advantage of market movements without having to sell other assets first. This can be particularly important during periods of market volatility or uncertainty when investors may need to act quickly to avoid losses or capture gains.
Furthermore, holding cash can provide investors with the option to buy assets that may be temporarily undervalued or take advantage of new investment opportunities as they arise. Cash can also act as a buffer against market downturns, providing investors with a source of funds to buy assets at lower prices or simply to weather the storm.
Overall, while cash typically generates lower returns than other types of investments over the long-term, it can be an important strategic position for investors to hold as part of a diversified portfolio.