 Good day, fellow investors. Is cash safe? Is cash trash? Or cash is king? So we are in a very volatile environment. What should one do if he's looking for safety? Going to go into the details a little bit there to show you what you can expect if you need safety or where to look for other ways or other kinds of safety or when to look at safety and when not to look at safety. It always depends on the price. So we'll discuss how safety can be expensive in crisis, how safety can be cheap when nobody's looking at it, how safety evolves over time. You need short-term safety, long-term safety, how cash is trash but also king. And what does it all mean? And I really hope this video helps you in structuring your finances so that those lead to your financial goals. That's the key when it comes to safety. That's what I tried. That's my main message on this channel. So reaching your financial goals. So please subscribe, click that notification bell so that you get notified when an important video for you comes out that might help you in reaching your financial goals. Let's start. So there was a great comment from Luisa Parker. I always get worried when I hear talks about cash becoming worthless. But what am I supposed to buy with my cash to feel safe? And then there are a few concepts I want to discuss here. Safety and investing, linear versus exponential concept. Safety always comes at the cost. Safety is priced differently, cheap when nobody cares, expensive, well, all wanted. Safety might not be where you think it is or how you think it looks like. I've discussed this a little bit in a few videos. Cash is trash, Ray Dalio really explained it really well how the currencies will be sacrificed. And then just two months later, the stimulus came, trillions, helicopter money, everybody gets money. When everybody gets money, then the cash is actually trash. But there is also a timing component there. So you have to really be careful when doing this and keeping things a little bit volatile and flexible especially. So what's the price of safety? Is cash king or trash? Well, that depends on you. What is your required safety? And safety always comes at the price. Now this is the 10 year treasury, the blue line and inflation in the United States, the green line. So you can see that there have been two periods with high inflation in 1970s when the 10 year treasury rate was close to the inflation rate. So those that owned bonds didn't make any profit on it. Actually inflation ate all their profits. However, before that in the 60s, you see the yellow parts of the chart and from 1983 till 2003, the spread was higher and there was a return above inflation for bonds. So those people made money, especially those that owned long-term bonds in a lowering interest rate environment. However, over the last years, if you held the bond, the return wasn't that much over inflation. So it was just protection. And with the SAP 500 up two times or something like that with a lot of stocks doing really well, paying dividends, protection wasn't the best way to go. So there is always inflation to keep in mind and what is coming with all the stimulus packages across the globe, it is likely that currencies will lose their purchasing power over the long term as those have been losing their purchasing power in history. If we look at what's the price of safety now, if we want to park our money for 10 years, we look at the 10 year treasury, United States government treasury, the interest rate there is 0.88% per year, inflation to 3% and you get so little return. That's because we are at zero interest rates from the Fed. There is plenty of money that the Fed is printing, printing and even the government is giving helicopter money to work with this situation, which means if there is so much money, cash is trash. And you can see here when the inflation was higher, returns from the government were higher, but there was a relative average would be between 4% and 8% where you get something in return. But governments and businesses need a little bit of inflation because it makes easier for them to pay back debt. Let's say a government borrows 1 million for 10 years, in 10 years it has to return 1 million, okay? Let's say there is inflation of 3% per year, the government's revenues increase by 3% per year and the cumulative total of 34% in 10 years. With 34% higher revenues on the same nominal amount that they have returned, it's much easier to refinance and pay back debt. Therefore, there is inflation, everybody has the target to be inflation. But if you are saving money, if you're looking for safety and protections, there is a pretty big guarantee that you will lose money if you invest in safe options, especially long term. Now, what are other ways to find safety where there is linear safety and there is volatile safety, what I like to call? You can always find safety in real assets. Let's take a house, for example. You own a house, you probably rent it out 90% of the time, less in a bad economy, more in a good one. But you will get nine out of 10 years, you will get some rent, you will get some income out of there, you'll have your costs, your yield. And that's real value. If you own something like that, real assets, a producing asset can be a house, can be whatever that does well, piece of land, that you grow potatoes on it or whatever, you know you will get pretty much a stable level of potatoes over time, good year, bad year, but that's normal. And that's real safety, real assets. However, when it comes to the issue of the price, are you looking for safety in price? Forget about it, there is no safety in price because everything is volatile. House prices depend on interest rates. If the yield is now 0.88 on the 10 year treasuries we have seen, somebody buying, investing in a house you'll be happy with a 3% yield. If the yield of the treasure is 5%, somebody buying a house will not be happy with 3%, they will want 8%. Therefore the price of the house will drop significantly but will the value drop? That's something you have to keep in mind. Value and price, the difference there has to be. So home prices can fall easily 30% if there is a recession or crisis, less demand, et cetera, interest rates go up. However, it will protect you over the long term over from inflation you have a safe income, et cetera, et cetera. So safety depends on you. For me, safety comes from owning businesses which is I think the safest thing I can do. Yes, it is volatile, some businesses, yes will go bankrupt but those businesses will likely grow, protect me against inflation, that's a certainty and therefore I would say businesses over the long term are the safest investment. However, if you need cash in the next five to 10 years and you have no other ways of getting there or income or no other ideas, then you can keep it in cash or in treasuries and simply accept the cost of safety. Why do people think that safety comes for free? No, it doesn't. Safety comes at a huge cost, especially long term. And then safety is expensive when everybody rushes to safety, like now, treasuries, so you get just 0.88% but you had to think about safety if you needed it a few years ago. So November 5, 2018, just one and a half years ago the price of safety 10 year treasury bond was 3.2%. So it was much, much lower than what it is now. Now you get 33% of the yield you would have gotten in 2018. And also safety, when nobody was looking at it, in 2018 the price of the iShares seven to 10 years treasury bond ETF was 100. Now, given the much lower interest rate and everybody rushing to safety, the medium term treasury bond ETF is up 20%. Now it is much more expensive and if interest rates return to the levels of 2018, it will go back down to 100. So buying a bond now, going into safety, a 10 year bond for example, 10 years of safety might cost you short term, of course, 20% if the interest rates returns there. So my message is simple. Short term cash is king. If you deploy it when you find value, when you find real assets that will give you that income, safe income, safe returns, growth, business pricing power, investing in real assets, margin of safety, value investing, then cash is king. But if you're just keeping cash for the sake of keeping cash, then you know it's going to lose its purchasing power over the next years. You are going to miss the opportunities of growth that the market always offers because economies, businesses and everything grows and that's the difference between cash is trash. Over the long term cash is definitely trash and we have seen the dollar lose 95% of its value over the last 100 years. Similarly, Eurozone, Italian Liras if you remember started with one lira, then an espresso or what was 1000 liras, et cetera, et cetera. So it's normal that currencies, fiat currencies get sacrificed. Therefore the message is cash is trash. But then some windows of opportunity is the keys to balance between cash is trash and cash is king. When safety is cheap like it was a year and a half ago, you can be more in cash buying those treasures, see how that fits your portfolio. And when safety becomes expensive, you can trade in that safety that now is expensive where you made the gain and then focus on real assets that as the price goes down, become safer, safer and safer. That is investing, that's rebalancing. If you look at the intelligent investor when stocks are his normal strategy, when stocks are cheap 75% stocks, when bonds are normally cheap and stocks are expensive 75% bonds, rebalance between good businesses, the Dow I think is here. And that's a normal rebalancing strategy. You might not be able to do it now if you were too much long stocks up till now, but that's something to keep in mind and see how it fits you. Investing is all about you and the investor and his financial goals. And I don't know which vehicle will serve you well over time, but I hope this video helped you in making decisions. If you're looking for stocks to invest, let's say businesses that own real assets, then you might check my stock market research platform where I show all my research, also my portfolios, my buys, my sales and you get notified every time I make a transaction with an email. Check that out, let me know if you have any questions in the comment section and I'll see you in the next video.