Rick Rule CASH CASH COMMENT Mar 14, 2025

Interest classified as income on this product - therefore taxable. Not a significant premium, but very safe option. Good overall. 

Sitting tight and not buying. He expects a 4-5% pullback short term.

Still owns it but a lot less, as he's gone more into equities and tax-favourable coupon bonds. Still a very compelling offering. At this moment, instruments are yielding slightly over 5%, though the rate moves around.

He's pretty close to 25% cash right now in his conservative platform, and that's high for him. Why? Because there's a lot of overvalued stuff out there in the market, and he's worried. He's not selling purposely to raise cash. But if he takes profits, he just doesn't want to reinvest yet. 

There will come a time to redeploy that cash. Though July can be a good month, August and September not so much. So maybe in the next 2-3 months there will be an opportunity. Something can be a buying opportunity, but not if you don't have the cash ready.

Have cash handy, because there's more room for markets to fall though markets tanked today. The panic could come back. He's holding onto cash and is ready to buy, but buy in portions, not all at once. Be ready for more fear.

CPI missed expectations today, so maybe the market now things cutting 25 basis points from interest rates isn't so bad. We need to wait for Q3 earnings starting in October before knowing whether the bottom is in. He doesn't know yet. It's wise to still hold some cash and to stay in the megacaps.

The markets in Toronto and especially New York have done very well the past two years. It's time to pause. Typically, markets will go sideways or fall. It's likely we'll see more volatility like in December. Higher interest rates will hurt growth stocks, particularly tech, and overall markets. He's cautious near term.

He's now at 20% cash. The S&P just broke below its 200-day MA. He doesn't have opinions about these things, just lots of rules. One rule is to give a breakdown between 3 days and 3 weeks grace.

Next week, if the S&P is still below its 200-day, he's going to raise another 5% cash for a total of 25%. He'll just have to keep an eye on what's happening. He gives it at least a 50% chance that we're falling into a bear market and, if we do, he'll move his bare cash into something that at least pays some interest. Lots of ways to park cash.

If he thinks it's just a pullback within a bigger uptrend, he wants his cash ready to deploy into opportunities. He wants it readily available, with nothing in his way. But if he becomes even more convinced of a bear market (POSSIBLY something like 2022 with a 25% drawdown), he wants cash in a vehicle such as a HISA, as he knows it'll be there for 3-4 months as the market continues to wash out.

People accuse him of always being bullish, but that's actually not the case. He's played defense through lots of downturns. There's a time to be aggressive and a time to be more cautious. Right now, there are so many uncertainties that having cash gives you flexibility. Some of the best investments you'll make are when you see something hold up when the market retests a low. His client portfolios have between 35-45% cash.

The current situation could be short term, or it might be a more drawn-out process. His guess is that the news flow will stay bumpy. He likes to have an option to make investments as we see leadership become clear. There's no race to do that.