Ray Dalio, the founder of Bridgwater Associates, popularized the phrase “cash is trash” when interest rates were significantly lower. He correctly observed that net of inflation and taxes, cash has historically produced a negative return. Thus, rational long-term investors should never hold significant amounts of cash in their portfolios.

However, assets in money-market funds have ballooned to an all-time high. Money market funds are a type of mutual fund that invest in high-quality, short-term debt securities and pay a dividend that reflects short-term interest rates. Many investors use these funds as a short-term place to park cash. Currently, money market funds are offering 4%-plus interest rates. Thus, it’s reasonable to assume that cash is no longer trash and offering an attractive yield for the first time in decades.

Superficially, it appears that investors are simply piling into money market assets as a logical response to higher interest rates. If you take a longer view, you’ll realize that retail investors typically move into money market assets during times of high volatility and economic uncertainty. They aren’t being attracted by the potential for higher returns, rather they’re fleeing other asset classes where they fear returns will be negative. From the chart below, we can see that retail investors have parked $1.35 trillion in money market funds an all-time high.

You’ll also notice that prior peaks have all coincided with recessions, the grey-shaded areas in the chart above. The problem is that equity markets will always bottom anywhere from 3 to 6 months ahead of the economy. Retail investors tend to flee to cash, more or less simultaneously and at precisely the wrong time.

In fact, every time an all-time high has been reached it was the beginning of a new bull market. You can see in the chart above that the first great peak was in 1982 and was the beginning of the greatest bull market in history that largely ran uninterrupted till the dot-com bubble burst in 2000. Similarly, the next great peak occurred during the double market bottom in October 2002 and March 2003, which led us into the housing bubble. Moving forward we see another all-time high in late 2008 and 2009. I’m sure that most of you will remember that the market bottomed in March 2009 and became the longest bull market in history.

This brings us to the current all-time high. It’s more than likely investors are fleeing from bank failures and the most widely forecasted recession in history. However, it’s important to remember that cash is not trash because of its poor returns. In the current scenario, cash is producing an adequate return but retail investors may prove once again that it’s the wrong time to be hiding in it on the sidelines.