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If you sold everything in 2007 and re-bought in 2009 you're substantially wealthier now than you were in 2007. So in that way, cash appreciated (relative to assets) during the crash of 2008.

During that time period the numbers in your bank account didn't get any bigger. But if that were the sole qualification for "increasing wealth" then the folks constantly worried about deflation are totally wrong!

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I was using consumer-goods purchasing power as an estimate of wealth. It is obvious that if you can time the market you can make more than if you can't time the market.

However, until someone seriously suggests keeping a significant fraction of your investment portfolio as cash (preferentially to e.g. bonds) as a hedge against market crashes, I don't think it makes sense to classify cash as an investment instrument.

http://money.cnn.com/2013/11/06/investing/wealthy-investors-...

Keeping a significant fraction of your investment portfolio as cash (it's typically actually very short term T-Bills), to buy up assets during a crash is actually something lots of people do.

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