Just because cash is not 'high returning' does not mean it is not valuable... A major assumption regarding the attraction of the 'yield trade' is cash is an impaired asset class because it is earning such a low return. We strongly disagree. Despite cash providing little return, it provides an optionality that has value. Warren Buffet for example, thinks of cash as a call option over every asset class and with no expiration date. The question Buffet asks is how much can the cash return if I have it when I need it to buy other assets that are cheap, versus the upfront cost of holding it? Nassim Taleb, author of The Black Swan also highlights that the optionality of cash allows the holder to buy assets from people who are over exposed when a crisis hits. Let's assume that you have cash in the bank and there's a big crisis. You have dry powder. You can buy anything you want. Cash is the opposite of leverage.