Capitalistpig's Hoenig: 'Cash More Attractive Than Any Time in Last Year'

Monday, 04 Aug 2014 07:05 AM

By Dan Weil

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Cash is often forgotten as an asset class, and that's not a good thing, says Jonathan Hoenig, manager of Capitalistpig Hedge Fund.

"People tend to think they have to have all their money invested at once," he told Yahoo. "Don't make investing an all or none decision."

Hoenig thinks the bull market for stocks is "intact," but he also thinks the market is due for a correction. The S&P 500 hasn't experienced a pullback of at least 10 percent since October 2011.

Editor’s Note:
5 Shocking Reasons the Dow Will Hit 60,000


The index recently soared 191 percent from its March 2009 low. On Friday, the Standard & Poor's 500 index lost 5.52 points, or 0.3 percent, to 1,925.15. The index fell 2.7 percent for the week, its worst weekly performance since June 2012.

"What has worried me in the last couple weeks is that . . . the number of stocks hitting new 52-week highs is shrinking," Hoenig noted.

The means "cash is more attractive now than it has been at any time in the last year," he said. "Cash gives you opportunity. When either sales come up and stocks fall precipitously, or new opportunities arise, you have the means to take advantage of it."

With volatility "so low for so long, having some money on the sidelines makes sense," Hoenig explained.

CNBC commentator Jim Cramer shares Hoenig's optimism on stocks for the long term and his caution for the short term.

"I am skeptical, especially of the most-recent gains. . . . We have to face some facts here," Cramer said on his "Mad Money" show. Those facts include "the denouement of the housing cycle," and weakness in the aerospace, auto and banking sectors, he argued.

"I don't believe that most of these [bullish] cycles are played out. I simply think they are pausing."

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

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