MICHEL PIREU: Owning company shares a better bet than holding cash
The real value of cash is always sinking while shares offer an opportunity to reinvest capital at higher rates of return
From the future speech of some great economist: “Dear ordinary people, it gives me great joy to announce that we are introducing negative interest rates at 3%. Our economic theory demonstrates that this step will bring you enormous benefit. It is true that we will take 3% of your savings each year, but do not forget the most important thing — that at least something will still remain for you. After 20 years, it still will be a bit more than a half.”
Holding cash has historically been a bad investment choice because its real value is always sinking. “Today the situation is even a bit worse, and may get even worse,” says Daniel Gladiš in a Vltava Fund letter to shareholders. “Some economists are seriously recommending substantially negative interest rates — to start with on the level of -3%.”..