Billionaires are hoarding piles of cash

[IDemo]

Billionaires are holding mountains of cash, offering the latest sign that the ultra-wealthy are nervous about putting more money into today's markets.

According to the new Billionaire Census from Wealth-X and UBS, the world's billionaires are holding an average of $600 million in cash each—greater than the gross domestic product of Dominica. That marks a jump of $60 million from a year ago and translates into billionaires' holding an average of 19 percent of their net worth in cash.

"This increased liquidity signals that many billionaires are keeping their money on the sidelines and waiting for the optimal moment to make further investments," the study said.

Indeed, billionaires' cash holdings far exceed their investments in real estate. Their real-estate holdings average $160 million per billionaire, or about one-fifth of their cash holdings.

http://www.cnbc.com/id/102021996#.

[Sopkoviak]

1. Well, the FED's Janet Yellen did say that people need to save more.

So there is that.

[yeoman6987]

4. Not good when billionaires don't trust the market.

We are so due for a 20 percent decrease. I so hope it happens, because I have cash in a bank account too. Although not 600 million. I definitely want a correction, but not until after the election. October is typical, but it would be a disaster for Democratic candidates. November 10 or so is fine.

[LiberalElite]

12. It's not fine for people like me

who are nearing retirement and have employer provided 401Ks.

[Warren Stupidity]

17. Start shifting into money market or short term bond funds.

Generally you have some choice of funds in your plan. As you get closer to retirement your risk aversion should increase. If you can't wait 5-7 years to take out the money in equities, it shouldn't be there.

[Xipe Totec]

2. We'll need those piles to roast their carcasses. nt

[tularetom]

3. For some reason your post title made me think of this

Scrooge McDuck diving into the piles of cash in his money bin.

[drm604]

5. How exactly do they hold it?

Scrooge McDuck safes? Savings accounts? They'd have to divide it amongst a hell of a lot of accounts to have FDIC protection.

[Warren Stupidity]

7. t-bills.

[drm604]

8. I didn't realize that was considered cash.

[Warren Stupidity]

13. its close enough. Any money market fund is also considered cash.

Short term T-bills are liquid enough to be "cash". Note that they are accepting what amounts to negative returns as a hedge against a bear market.

[Sopkoviak]

11. The rich are different. Some of the strategies include

Establishing a so-called zero-balance account.

The rich investor has his or her money in bonds, certificates of deposit, commercial paper and other highly liquid debt instruments. They write checks out of the account, which has $0 in it, and at the end of the business day, the private bank sells off enough of the highly stable, liquid investments to wipe out the negative balance in the account, bringing it back to $0. That way, if the bank fails, it doesn’t hurt the investor because the underlying assets are held in his or her name, not the name of the institution. (This service is known as custody or, in some cases, global custody. The banks will charge a small fee for it as a percentage of assets in most cases.) Almost every intelligent rich person on the planet uses some form of global custody because you don’t want to worry about losing your shirt because a broker failed.

Parking the money directly with the United States Treasury in an account backed by the taxing power of the United States government. They can buy short-term Treasury bills and keep rolling them over until they need the money. Unless the United States goes bankrupt by hyper-inflating, they are safe. Buffett literally has tens of billions of dollars of Berkshire Hathaway’s money parked in Treasury bills, bonds and notes at times. There is no risk of default or bankruptcy unless the entire nation goes bust!

Physically holding cash in multiple currencies in safe deposit boxes throughout the world. These aren’t insured, though, so there is that risk.

[drm604]

16. Okay.

I guess I thought of "cash" as what I have in my wallet or possibly in a savings or checking account. If I say that I'm paying cash for something, I mean the green things I have in my wallet (not that I pay cash for much anymore).

[Sopkoviak]

18. Too narrow. What you carry in your wallet is coin and currency

Which is really only a medium of exchange for "cash". Even when you deposit your "cash" in a bank it's only an entry on a ledger. If everybody went to the bank tomorrow and demanded currency for their balance there would't be enough to cover it.

The amount of currency in circulation is an extremely minor percent of the total "cash" in existence.

[drm604]

20. I understand how fractional reserve banking works

and I understand that most money only exists as magnetic bits on hard drives (which is what ledgers consist of these days). I was just using an incorrect definition of the word "cash". I thought it was the same as currency.

If we intend to pay for something using actual greenbacks, we say that we're "paying in cash" rather than "paying in currency". Thus the confusion.

[VanillaRhapsody]

6. this is news how?

This is the very definition of what they do.......the rich hoard money.....everyone else spends it and drives the economy.....the more you allow rich folks to hoard cash....the worse it is for everyone else....

Wealth seeks slave labor....if you don't supply it....they will destroy your economy....and find it elsewhere. Same as it ever was....

[Warren Stupidity]

9. No the point is how they are hoarding, not that they are hoarding.

If the smart money is easing out of the market and into "cash", then that is perhaps a sign that those of us that don't have a spare billion also ought to rebalance the pittance we do have to minimize a bear market risk.

[VanillaRhapsody]

10. If you want to stick it to them....you are going to have to allow some inflation....

[Warren Stupidity]

14. I think you are missing the point.

The rates are going to go up and the market is going to go down. The cash sitting on the sidelines will then buy up the now undervalued equities. The rich are not going to lose in any scenario that doesn't involve a 1930-50 style global catastrophe.

[VanillaRhapsody]

15. I know.....I am agreeing with you....

We either push back and take back a little from them and accept that...OR we get ready to live through Mad Max from Thunderdome conditions...

[kelliekat44]

19. And they will die hoarding it until Obama is out of office. That's the plan. nt

[Algernon Moncrieff]

21. Eh -- sorta

Billionaires and corporations generally are hoarding cash. To be sure, there is a little wait-for-the-economy-to-collapse-and-then-we'll-clean-up-at-the-fire-sale mentality out there. However, most of the cash hoarding is for a more obvious and simple reason -- interest rates at near historic lows. If you are a sucessful business person, one of the first things you learn is never to use your own money to make money when you can use someone else's.

[Rex]

22. Of course the are! Trickle down worked just liked planned.

Developed a true Ownership society.