Holding cash - waiting is a real choice

Watch a good batsman play a careful over. Ball after ball comes down outside the off-stump, a little too wide or a little too risky, and he simply lets them go. He does not swing at everything. His bat stays quiet. People watching sometimes get restless - "hit something!" But the batsman is not being lazy. He is waiting for the one loose ball, the easy one he can hit safely for four. When it finally comes, he is ready, and he scores. All those balls he left alone were not wasted. Leaving them was part of how he scored.

Seth Klarman treated money the same way. When nothing was cheap enough to buy safely, he did something that looks strange to many people: he held his money as cash and simply waited. Cash means money kept ready and not put into anything - sitting quietly, doing nothing exciting, but safe and ready to use the moment a good chance appears.

Most people feel that holding cash is a mistake, almost a failure. They feel money should always be "working," always be in something. Klarman disagreed. He believed that if nothing was clearly cheap, the right move was to not buy - to leave the ball, keep your bat quiet, and wait. This study is about why waiting with cash is a real, brave choice, and not laziness at all.

Here is the idea in one line: you do not have to swing at every ball. In cricket, the rules do not force you to hit. You can leave as many balls as you like and lose nothing by leaving them. Investing has the very same gift, and Klarman used it fully. If today there is nothing cheap enough to buy with a good margin of safety, you are allowed to buy nothing at all. You just hold your cash and wait for a better ball.

Why is this so powerful? Because in the market, unlike in cricket, there is no bowler trying to get you out for leaving balls. You can wait as long as you like. The prices keep changing every day, and now and then - often when everyone is scared and selling - a truly cheap chance appears, a loose ball you can hit safely. If you have already spent all your money on so-so chances, your hands are full and you cannot hit the easy one when it finally comes. But if you kept some cash, you are ready. Klarman kept cash exactly so that his bat was free when the loose ball arrived.

So holding cash does two jobs at once. First, it keeps you safe - money sitting as cash cannot fall in a crash. Second, and this is the part people miss, it keeps you ready. When a crash comes and good things go on sale, the person with cash can buy the bargains, while the person who was fully invested can only watch. Cash is not a gap between decisions. Cash is the ammunition you save for the shot that is really worth taking.

illustrative Two friends, Arjun and Neha, each have ₹1,00,000 to invest. The market is expensive right now - nothing looks clearly cheap.

Arjun cannot bear to sit still. He puts all ₹1,00,000 into shares even though they are not cheap, just so his money is "doing something." Neha looks around, sees nothing cheap enough, and does the hard thing: she buys a little and keeps ₹70,000 as cash, waiting for a better ball.

For a whole year, Neha's cash earns very little, and she feels foolish while Arjun's shares drift up. Then a crash comes. Good shares suddenly fall to half price - the loose balls appear everywhere. Now look at the two friends. Arjun has no cash left; his money is already tied up in shares that also fell, so he can only sit and watch the bargains go by. Neha calmly uses her ₹70,000 to buy excellent things at half price, exactly the cheap chances she was waiting for. A year later, Neha is far ahead - not because she was cleverer at picking, but because she kept her bat free for the one easy ball. Her "boring" cash was the reason she could act when it counted.

The loose ball may not come for a long time. A batsman might get an easy ball next over - or he might wait many overs. In markets, cheap chances can be rare for years. While you wait in cash, prices may keep rising, and you earn very little. That waiting has a real cost: you can miss years of a rising market. Klarman accepted this cost on purpose, but it is a genuine price, not a free lunch.

Waiting can turn into hiding. There is a difference between wisely waiting for a clearly cheap ball and simply being too scared to ever buy anything. Some people use "I'm waiting for a bargain" as an excuse to never act, even when good, safe chances do appear. The skill is to actually swing when the loose ball comes - cash is only useful if you eventually use it well.

Cash slowly loses value, too. Money kept as cash does not fall in a crash, but over many years, rising prices in the shops (things getting costlier) quietly shrink what your cash can buy. So holding a mountain of cash forever is not safe either. Cash is meant to be ready ammunition, waiting for a target - not a place to hide from the game for good.

The plain idea - you are allowed to wait, and waiting is a real choice - works perfectly well here, and any child who has watched a patient batsman already understands it. What does not transfer so easily is the comfort to do it. Around us, everyone seems to be buying something, WhatsApp groups buzz with tips, and sitting on cash can feel like being the only one not playing. Klarman had his own money and patient partners, so he could wait for years without anyone forcing him to act. A person saving from a salary, feeling family pressure, watching neighbours boast of profits, finds that same waiting far harder. And knowing when the ball is truly loose - when something is genuinely cheap and not just falling - needs real study of the business, not just a low price on the screen. The right to wait is the same everywhere; the steadiness to use it well, and the skill to know the easy ball when it comes, is the hard part.

• Remember you can leave the ball. Nothing forces you to buy today. "Nothing cheap enough, so I buy nothing" is a full and honest answer.
• Keep some cash as ammunition. Being fully invested all the time means empty hands when bargains finally appear. Save some money for the easy ball.
• Judge the ball, not the boredom. Swing because something is clearly cheap and safe - never just because sitting still feels uncomfortable.
• Watch that waiting doesn't become hiding. Cash is useful only if you actually use it when a real bargain comes. Be ready to act, not just to avoid.
• Know that waiting costs something. You may miss a rising market while you hold cash. Accept that price with open eyes, don't pretend it isn't there.