Cash is trash, but liquidity is king
Adjusting liquidity like a faucet
It’s human nature to want safety.
When the world feels unstable, the instinct is simple: retreat to cash.
Over the past year, I’ve spoken with many investors who felt completely stuck throughout 2025. And honestly, I don’t blame them. We’ve been dealing with a rare combination of pressures hitting all at once:
Trade tensions that moved from headlines to real economic consequences
Geopolitical instability across multiple regions of the world
Asset prices at record highs, even as uncertainty keeps rising
When stocks, real estate (Alberta), and precious metals are all trading near all time high, it’s natural to wonder:
Am I buying at the very top?
So people wait.
They hold cash.
They tell themselves they’re being “safe.”
But safety deserves a closer look.
The illusion of safety (The debasement trap)
Cash feels safe because it doesn’t feel like it’s moving up and down everyday.
But that’s exactly the problem.
We are living in an era where money quietly loses value every single year.
Faced with hard choices, governments and politicians almost always choose the path of least resistance: spending more and printing more.
Looking ahead to 2026, that pressure is only increasing.
This year, currency debasement is only going to accelerate.
Because of 1 simple reason:
The US’s mid-term election in November.
If your money is standing still, its purchasing power is moving backwards.
Cash may feel comforting, but comfort is not the same as protection.
Why liquidity matters more than cash
This is where the distinction matters:
Cash is static.
Liquidity is strategic.
Liquidity gives you options.
One of the best real-world examples is Berkshire Hathaway, previously led by Warren Buffett.
He has since retired from the company at the end of last year.
By late 2025, Berkshire was sitting on roughly $382 billion in cash-like assets.
That money isn’t there because Buffett is fearful.
It’s there because he’s patient, and strategic.
Liquidity allows him to act when volatility forces great assets to sell at bad prices.
It’s dry powder, waiting for the right moment.
That’s the mindset most investors find it challenging:
Liquidity isn’t idle.
It’s prepared.
I manage liquidity the same way I adjust a faucet, turning it up or down depending on conditions.
Approach #1: Adjust liquidity with the market cycle
Markets move in cycles.
They always have.
When optimism is high and valuations are stretched, liquidity should increase.
When fear dominates and prices are compressed, liquidity should be deployed.
Simple rules:
Near market peaks: Raise liquidity
Near market bottoms: Be bold to push the chips all in
This isn’t about predicting exact tops or bottoms.
It’s about positioning so you’re able to take advantage when great opportunities arise.
Approach #2: Strategic selling
Most investors understand diversification.
Fewer understand discipline.
The hardest action in investing isn’t buying, it’s selling.
When a position grows too large, it quietly introduces concentration risk.
Strategic selling trims winners back to target allocations, converting overexposure into liquidity.
Same thing applies to taking losses on the losers.
This applies beyond stocks.
Real estate, for example, is inherently long-term.
We can’t rebalance it with a mouse click.
But we can manage our equity position.
Recently with my own portfolio, I’ve sold off smaller real estate assets that reached their original objectives while holding onto core long-term properties.
This approach let me raise meaningful liquidity without abandoning the asset class for the long term.
I took some chips off the table, without leaving the game.
Approach #3: Keep liquidity working (short-term investments)
Liquidity doesn’t mean doing nothing.
When markets are uncertain and long-term opportunities aren’t yet attractive, capital can still work in shorter time frames.
I wrote about the time frame investing framework previously here:
https://www.ecresearchgroup.com/p/investing-timeframe
For me, that has included:
Short-term gold trading strategies, as protection against currency debasement
Private lending, generating yield while maintaining access to capital
The goal is simple:
Protect purchasing power while staying flexible.
Dry powder should stay dry, but it doesn’t have to sit idle.
Interestingly, over this past year, my short term strategies are out performing my long term assets.
Professionals rarely are fully invested
One of the biggest differences between amateurs and professional investors is this:
Amateurs fear missing out.
Professionals fear being trapped.
Being fully invested at all times removes your ability to act when opportunity appears.
Liquidity is what allows great investors to buy when others are forced to sell.
And in an environment where currencies are being diluted faster than ever, learning how to balance liquidity and debasement will be the theme for this year.
Make sure your faucet is adjustable.
Because when the market volatility increases, the professionals are ready.
How about you?
Will you be ready to move?
If you like my work, I invite you to share it with others.
Eric Chang
Calgary, Alberta, Canada
January 13, 2026
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