Neutral impactCorporate Action
Quote of the day by Arnold Van Den Berg: "Regardless of yield, when investments are absent of value, cash is always a better option than permanently losing money"
Economic Times 2d ago·28 Aug 2026, 12:17 pm
Arnold Van Den Berg, a veteran investor, emphasizes that a high dividend yield does not guarantee a good investment. His core message is that when an asset's price is disconnected from its fundamental worth, the risk of permanently losing money becomes significant. In such scenarios, holding cash is often a more prudent strategy than chasing yield.
This perspective is particularly relevant for retail investors who might be tempted by attractive dividend payouts. However, Van Den Berg argues that capital preservation should take precedence. If an investment lacks intrinsic value, the potential for a total loss outweighs the short-term income it generates. Investors should therefore focus on the underlying quality and valuation of a stock rather than just the dividend rate.
Moving forward, investors should scrutinize the fundamentals of their holdings. If an asset appears overvalued or lacks a clear growth path, reducing exposure might be the right move. Keeping cash reserves provides the flexibility to wait for better entry points or safer opportunities in the market.
Key takeaways
- Category: Corporate Action.
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