WSJ Your Money Briefing - Why More Americans Are Sitting on Cash Piles Instead of ‘Buying the Dip’

Episode Date: April 18, 2025

With an ongoing trade war and a volatile stock market, some cautious investors are opting to keep their cash on hand. Wall Street Journal reporter Krystal Hur joins host Julia Carpenter to discuss the cash investments gaining traction.  Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Unwrap the early days of your favorite hockey stars with Tim's new retrospective rookies hockey cards featuring exclusive NHL and PWHL players and retired legends. Collect them all only at Tim's at participating restaurants in Canada for a limited time. Here's your money briefing for Friday, April 18th. I'm Mariana Aspuru for The Wall Street Journal. April 18th. I'm Arianna Aspuru for The Wall Street Journal. In the past, investors saw a market like this one as an opportunity to buy low so they could later sell high. But these days, more people are opting to instead sit on the sidelines and keep their cash on hand. Americans are seeking traditionally safe assets right now instead of trying their luck in the stock market because their strategies that they have gravitated toward aren't really working. And we're actually seeing that in other investments as well like gold, which is another

haven and has hit repeated record highs this year. Wall Street Journal reporter Crystal Herr joins host Julia Carpenter to talk about the cash investments gaining traction. Stick around after the break. Okay, Martin, let's try one. Remember, big. You got it. The Ford It's a Big Deal event is on. How's that?

A little bigger. The Ford It's a Big Deal event. Nice. Now the offer? Lease a 2025 Escape Active all-wheel drive from 198 bi-weekly at 1.99% APR for 36 months with $27.55 down. Wow, that's like $99 a week. Yeah, it's a big deal. The Ford It's a Big Deal event. Visit your Toronto area Ford store or ford.ca today.

This week we have been looking at how a volatile market can impact your housing plans, college savings, taxes and more. It can also likely, college savings, taxes, and more. It can also likely change where you put your cash and why. Wall Street Journal reporter Crystal Herr joins me. Crystal, certain investors would have once found silver linings in a market like this. Investors usually call it buying the dip. But you wrote that people aren't exactly buying the dip as they once were.

Why is that? Yeah, so buying the dip or buying stocks when they're down with the expectation that they'll rise again was really popular over the past two years. During that time, sell-offs tended to be really brief and the stock market was notching dozens of record highs. But the market's been so volatile lately that the strategy just doesn't seem to work anymore. Stocks are lower for the and the stock market was notching dozens of record highs. But the market's been so volatile lately that the strategy just doesn't seem to work anymore. Stocks are lower for the year. They're continuing to decline.

There's investors who are trying to buy the dip, but then they're seeing those stocks decline another 5% or 10% just days later. And those losses can pile up really quickly. So yeah, buying the dip is tricky when you don't know where the bottom is. Exactly. You can see those stocks continue to fall over and over again. Your story, which listeners can find in our show notes, mentions how much money has been

poured into cash investments, like money market funds. Can you tell us more about some of those high numbers we're seeing there? Those numbers really signal that Americans are seeking traditionally safe assets right now instead of trying their luck in the stock market. Because there are strategies that they have gravitated towards like buy the dip aren't really working. They're really flailing for a new playbook. Some of them are deciding that it's safer to just maybe set things out for a little bit right now.

And we're actually seeing that in other investments as well, like gold, which is another haven and has hit repeated record highs this year. So that record cash pile really underscores the fact that investors are grappling with a ton of uncertainty. So when we say people are sitting on the sidelines with cash in hand, that cash isn't literally in their hand, right? Where is the cash? There's a few different places that people are putting cash. There's high-yield savings accounts, for example, and their bank accounts and money market funds and treasuries that are known to

be some of the safest assets in the world. In the case of the investor whom I spoke with, he says that he's just keeping cash in his brokerage account, ready for the next time that he might want to buy a stock. I was especially struck reading your story by some of these anecdotes and opinions from investors. And you spoke to one person who had this really vivid metaphor that stuck with me. They said, if I try to catch this falling knife, I'm just going to get cut over and over and over on the way down. Could you tell me what he means by that and what his strategy is going forward?

Yeah, that investor is an example of someone who had bought the dip for a while, but is now coming to terms with the reality that it's not really working so well anymore. He told me that he plans to sit out of China trade these really violent swings that we've seen in the stock market and is waiting for things to get a little bit calmer before he buys anymore. He actually sold a lot of his stock positions before Trump's Liberation Day tariff announcements and said he plans to just sit on as much cash as possible

and a lot of investors actually have the same game plan. And we know investor sentiment is bearish at best. What other factors are motivating this tendency to sit on the sidelines with their cash in hand? A lot of people right now are just really frustrated with the chaos tariff uncertainty has caused. I've heard from a lot of readers who are concerned about the volatility that we have seen in markets and the losses that they have seen in their investing accounts, including their retirement funds. A lot of people are also just really afraid that the U.S. economy could enter a recession

or even stagflation, which is when economic growth slows or flattens and inflation goes higher. And there's also just this feeling of helplessness, right? No one really knows what's going to happen in a day or a week or a month from now with all of the twists and turns in this tariff saga. And that's causing a ton of fear. So when you're feeling helpless, you want to be liquid. You want to have your cash easily accessible.

Right. People are worried that they will have their money in stocks and will just continue to fall with no end in sight. With the market still so volatile, I wonder what you're expecting to see over the next few weeks. That's the question on everyone's minds these days. What I've heard from the investors I've spoken with is that it will really depend on what happens with tariffs. We saw just last week after a historic rally following Trump's decision to delay reciprocal tariffs that investors are desperate for any piece of good news they can find right now. We're also seeing a lot of companies report their quarterly earnings results in the next few weeks and more importantly their guidance given tariffs and all the uncertainty that

we're seeing. So depending on what Trump says and what corporate executives say, we might be in for a bit of a bumpy ride going forward. And what parts of your portfolio should you keep an eye on? What I've heard from investors is that they think that it's really important to be diversified these days. So that means sort of spreading out what you're invested in terms of certain stocks,

even in terms of certain assets that are not stocks, you have to be careful of which kinds of bonds you're investing in. For example, I think right now what I've heard is that you have to be really discerning with the places that you're putting your money. And why is that? Because the market conditions are so different now where we're not really seeing these gangbusters rallies in stocks anymore. It's become more important than ever to pick companies that have strong balance sheets is something that a lot of investors will tell me, for example. That's WSJ reporter Crystal Herr speaking with Julia Carpenter.

And that's it for your money briefing. Tomorrow, we'll have our weekly markets wrap up. What's news in markets? And then we'll be back on Monday. This episode is produced by me, Arianna Aspuru. Jessica Fenton and Michael Laval wrote our theme music. Our supervising producer is Melanie Roy. Aisha Al Moussoulym is our development producer. Scott Salloway and Chris Sinsley are our deputy editors. And Falanda Patterson is the Wall Street Journal's head of news audio. Thanks for listening.