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Where Do You Invest in the Most Uncertain Market Ever?

Gambling is mostly fun. But gambling with savings is fraught, especially now. That’s probably why so many people upped their cash holdings as the economic crisis continued.
By Joseph Guinto |
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Since the pandemic began, I haven’t duked anyone. I’m beginning to worry that I might never duke anyone again.

By “duke,” I of course mean that I haven’t tipped anyone extravagantly—and in cash—in months. Way back in the times before our cash seemed to be crawling with contaminants, Frank Sinatra dubbed that kind of tipping “duking.” He was famous for carrying neatly folded $50 and $100 bills and pressing them into the hands of maître d’s and bartenders, anyone whose hard work might help fuel a gasser of a night. 

Me, I couldn’t afford to operate like the Chairman of the Board. When I was duking, I used twenties. Still, it adds up. And now that my wife and I haven’t hit the town since March, we’ve accumulated some cash. There’s a bit more to it than just a lack of tipping, but either way, we’ve added this savings to cash we shielded from investments just as the pandemic began. 

I don’t feel good about that money sitting in a bank account that earns almost exactly what I’d make if I’d stuffed the cash in my mattress. But what’s the alternative? Dipping into savings and playing the market right now, in a time when 8 million people have fallen into poverty, when more government stimulus is far from certain, when the fallout of the election is still falling out, and when the virus is still spreading and unpredictable, seems more like gambling than investing. It actually seems almost as irresponsible as duking people with stacks of twenties. And that’s why I’ve decided to do it. Here are a few things I’ve considered in preparing to place my bets:  

  • Gambling is mostly fun. But gambling with savings is fraught, especially now. That’s probably why so many people have upped their cash holdings as the economic crisis has continued. 

  • Deposits in commercial banks this year have jumped by $2.2 trillion, a record. There are now $15.4 trillion worth of grimy greenbacks stacked up in bank vaults. That’s twice the amount of cash that was sidelined in 2009 during the Great Recession. 


My cash is part of that, of course. So is a lot of money belonging to the 800 members of a famous investment club called Tiger 21. The club, whose members are all multimillionaires, most with more than $100 million in assets, said this summer that its members have moved 19 percent of their total assets into cash since March. Tiger 21 says that’s the largest and fastest change in asset allocation it has ever seen among its members.

If the very rich are keeping more of their cash out of investments, shouldn’t the rest of us be nervous? I called up Jean Keener, the founder of Keener Financial Planning, which has offices in Keller and in Dallas, to ask if her clients have gotten skittish. “We saw some increase in people reaching out to us back in March,” she says. “But we talk about this kind of situation in every meeting with our clients. We didn’t know there was going to be a pandemic in 2020, of course, but we’re always preparing and talking about how much risk to take on, about what might be the worst-case scenario, and about how the clients are going to feel and what they’re going to do if that scenario plays out.” 

Keener, like a lot of financial advisers, counsels clients to stay their financial course. Look at how the S&P 500 index has fared since cascading in March to a three-year low. From March 23 to just a couple of weeks before Election Day, the index climbed more than 50 percent, hitting an all-time high along the way. “There’s nothing that’s going on right now that is a cause to inherently change your portfolio or your investment strategy,” Keener says. “So if you’ve been a long-term buy, hold, rebalance investor, you should continue to be that.”

So that’s one play: put some cash into an S&P 500 exchange traded fund or Johnson & Johnson or Apple stock and watch the returns roll in—eventually. But what if your investment horizon doesn’t allow for patience? 

I called a friend about this, a sixtysomething guy who, to give you an idea of how he rolls, built a wall around his Dallas manse that cost more than the current median price of a home in the city. This friend—we’ll call him Hadrian—has gone to about 75 percent cash. But when we spoke, months into the pandemic, he was ready to get a little less liquid and place some bets. Except he’s not gambling on the S&P. “I don’t want to go back to the market when the S&P is trading way above its historical average,” Hadrian told me.

Gambling with savings is fraught, especially now. That’s probably why so many people have upped their cash holdings as the economic crisis has continued.



What he was talking about is the S&P 500’s price-to-earnings ratio—a key metric that weighs the earnings of companies in the S&P against their stock prices. The PE ratio has, depending on the calculation, averaged just under 15; now it’s around 30. That puts the S&P just below where it was in 1929. Not great. 

By Hadrian’s figuring, there’s no point in a high-net-worth individual like him putting money into traditional Wall Street equities because they won’t produce a good return over the next, say, decade. His thinking is to instead become a “mini VC” by investing in small companies through crowdfunding sites. Unlike, say, Kickstarter, equities crowdfunding, which was first approved during the Obama administration, doesn’t give you an advance line on a product or service produced by an emerging company. It gives you an investment—a federally regulated investment—in that company. You can acquire shares or debt or an equity stake right now in at least 1,400 companies nationwide through crowdfunding sites like CircleUp, StartEngine, Republic, and Crowdfunder. For each listed company, you’ll find a pitch for its product or service, a business plan, and contact information. It’s something like Shark Tank only without the excessively dramatic music and without Mark Cuban. In fact, StartEngine, which has raised more than $150 million since it debuted, in 2014, employs Shark Tank’s Kevin O’Leary as an adviser.

Many of the investments are restricted to accredited investors, meaning people like Hadrian whose net worth exceeds $1 million or whose annual, individual income tops $200,000. But non-accredited investors can also access some investments with no brokers or hedge fund managers needed. There’s a real estate company in Dallas, for instance, that’s selling $25,000 stakes to anyone who’d like to own a share of an office building on Greenville Avenue. Another Dallas company, Mizzen + Main, which makes “performance” dress shirts with the stretchy fabrics popular in sportswear, brought in $1.2 million last year through crowdfunding on a platform called Fundable. It has become a hit with consumers since then. 

Finding those winners among so many tiny firms won’t be easy for most. A recent financial literacy survey by the TIAA Institute and George Washington University found that only 52 percent of people could correctly answer a set of questions about the basics of finance. Still, Hadrian is convinced crowdfunding is the future. And considering this is a guy who owns a $10,000 toilet, I’m not qualified to argue with him. 

“Look, Apple has a $2 trillion market cap,” he told me. “You think that’s going to double? For an average investor who doesn’t have my kind of deal flow, this gives you the entrée into private investing that can produce much bigger returns than you’re going to see in public markets. Why not take the gamble?”




Write to [email protected].

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