Pennsylvania School Of Business finance professor Jeremy Siegel suggests people “deploy” their cash – if they have any – potentially confusing anyone unversed in money-talk. So, what does it mean to deploy cash and why does Siegel recommend people start doing it?
What does ‘deploying cash’ mean in finance conversations?
You might be familiar with the word “deploy” in the context of troops being moved into position for military action, or skills being utilised.
And in financial terms, deploying cash means something similar. To deploy cash is to use it – to put it “to work”.
The opposite, or alternative, is to “hold” it. Leave it in your bank account. That way, interest rates being as they are, it will pretty much stay at a constant level.
- CULTURE: Sri Lanka has donated more than 60,000 human eyes yet desperately lacks medicine
That is, in a sense, the safe option. Unless by some freak occurrence your bank goes bust it will still be there when you next need it.
But it also means the capital (amount of cash) at your disposal won’t get any (or much) bigger. In other words, to use your money to make money, you have to spend it. And in doing so, you risk losing it.
Note: The Focus is not here to give financial advice, only to interpret the advice of others. Deploying cash means spending it in a way that will produce a profit. How investors – first-time or experienced – choose to do so is up to them.
What are examples of what ‘deploying cash’ could mean for you?
In this context, it’s worth noting, “employing” your cash and “deploying” it mean the same thing.
- TV: B&B stars battling painful injuries after Katrina Bowden explains broken bone
“How do you deploy cash in this market?” Investment News asked in 2017. And the short answer, according to the experts interviewed by the outlet? Buy stocks.
Of course, what this means in practice changes very quickly. If anyone knew for certain which stocks were the “right” stocks to buy at any given time, they probably wouldn’t go around telling people.
Why did Siegel make the recommendation in the first place?
The context of Jeremy Siegel’s suggestion that people “deploy” their cash is likely one people are familiar with.
The Financial Times has numerous (paywalled) articles from just the past few days about the “scorching” rate of inflation currently beleaguering US markets, and the “unprecedented scale” of quantitative tightening the Fed is implementing to contain it.
- TV: GH fans say Nikolas and Esme’s kiss was like ‘Titanic’ but some aren’t convinced
Stocks have “officially have entered a bear market”, The Street notes, “with the S&P 500 index recently at 3,793, down 21% from its Jan 3 record closing high of 4,797”.
It is therefore in the context of relatively cheap assets that Siegel is recommending people who have money spare to “deploy” it by judiciously buying stocks and shares. The hope, for anyone who chooses to follow his advice, is the markets pick up soon afterwards.
PLEASE NOTE: Our publications do not offer investment advice and nothing in them should be construed as investment advice. The information contained in our publications is not, and should not be read as, an offer or recommendation to buy or sell or a solicitation of an offer or recommendation to buy or sell any securities.