How do you invest the Cash portion?

Discussion of the Cash portion of the Permanent Portfolio

Moderator: Global Moderator

User avatar
mathjak107
Executive Member
Executive Member
Posts: 2722
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: How do you invest the Cash portion?

Post by mathjak107 » Fri Mar 20, 2020 5:05 am

as long as the same owners who own the printing machines are responsible for seeing to it that fdic and treasuries are paid i would think both are as good .. i can see a bit of delay though in restocking fdic.

i moved more than i would typically keep in local banks over to chase and cit .... the rest is now in fdlxx and bil .....i show the most cash i can remember ever holding ,,

stocks are still unsold and i actually added 100k to get back to 25% , but i cut the total bond funds and high yield by half . so cash levels are crazy .....

i took advantage of all the local promos like getting 1100 bucks from citibank
User avatar
mathjak107
Executive Member
Executive Member
Posts: 2722
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: How do you invest the Cash portion?

Post by mathjak107 » Sat Mar 21, 2020 6:02 am

i am starting to think that with these short term bond funds like bil , one may be better in a treasury money market than a treasury etf ..... if rates flip negative i would think yields on bil will go negative ... money markets that at least conform to the standards will not break the buck .....

i really have no idea here what would happen with the etf's as bonds come due
User avatar
jhogue
Executive Member
Executive Member
Posts: 492
Joined: Wed Jun 28, 2017 10:47 am

Re: How do you invest the Cash portion?

Post by jhogue » Sat Mar 21, 2020 3:42 pm

I just saw this notice on Fidelity's fixed income web page:

icon-exclamation-yellowtriangle-1x Recent extreme market conditions have resulted in a lack of liquidity, wide spreads (the difference between the price a customer can buy and sell a bond), large swings in prices, and substantial increases in pressure on trading systems. This can make it very difficult to determine fair and reasonable pricing on bonds. Fidelity continues to monitor the market environment and make every effort to ensure a fair and reasonable market for our customers.

In addition, the recent drop in interest rates has caused some Treasury securities to have negative yields. While active markets do exist for these securities, pricing may not be currently available on Fidelity.com. If you are interested in buying or selling Treasury securities and cannot locate an active market on Fidelity.com, please contact a Fixed Income Specialist at 800-544-5372.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
User avatar
ochotona
Executive Member
Executive Member
Posts: 3175
Joined: Fri Jan 30, 2015 5:54 am

Re: How do you invest the Cash portion?

Post by ochotona » Thu Apr 02, 2020 9:51 am

Across my entire portfolio, I have $350 in non-Treasury Money Market.
barrett
Executive Member
Executive Member
Posts: 1524
Joined: Sat Jan 04, 2014 2:54 pm

Re: How do you invest the Cash portion?

Post by barrett » Fri Apr 03, 2020 8:17 am

ochotona wrote:
Thu Apr 02, 2020 9:51 am
Across my entire portfolio, I have $350 in non-Treasury Money Market.
I checked our accounts yesterday and we are at $242 in non-Treasury cash positions!
Genious Moran
Junior Member
Junior Member
Posts: 1
Joined: Sun Aug 04, 2019 7:56 pm

Re: How do you invest the Cash portion?

Post by Genious Moran » Fri Apr 03, 2020 11:32 am

jhogue wrote:
Sat Mar 21, 2020 3:42 pm
I just saw this notice on Fidelity's fixed income web page:

icon-exclamation-yellowtriangle-1x Recent extreme market conditions have resulted in a lack of liquidity, wide spreads (the difference between the price a customer can buy and sell a bond), large swings in prices, and substantial increases in pressure on trading systems. This can make it very difficult to determine fair and reasonable pricing on bonds. Fidelity continues to monitor the market environment and make every effort to ensure a fair and reasonable market for our customers.

In addition, the recent drop in interest rates has caused some Treasury securities to have negative yields. While active markets do exist for these securities, pricing may not be currently available on Fidelity.com. If you are interested in buying or selling Treasury securities and cannot locate an active market on Fidelity.com, please contact a Fixed Income Specialist at 800-544-5372.
In addition to this, Fidelity closed FDLXX to new investors on Tuesday, I think.
User avatar
foglifter
Executive Member
Executive Member
Posts: 591
Joined: Tue Apr 27, 2010 5:37 pm
Location: The Golden State

Re: How do you invest the Cash portion?

Post by foglifter » Fri Apr 03, 2020 1:56 pm

Genious Moran wrote:
Fri Apr 03, 2020 11:32 am
jhogue wrote:
Sat Mar 21, 2020 3:42 pm
I just saw this notice on Fidelity's fixed income web page:

icon-exclamation-yellowtriangle-1x Recent extreme market conditions have resulted in a lack of liquidity, wide spreads (the difference between the price a customer can buy and sell a bond), large swings in prices, and substantial increases in pressure on trading systems. This can make it very difficult to determine fair and reasonable pricing on bonds. Fidelity continues to monitor the market environment and make every effort to ensure a fair and reasonable market for our customers.

In addition, the recent drop in interest rates has caused some Treasury securities to have negative yields. While active markets do exist for these securities, pricing may not be currently available on Fidelity.com. If you are interested in buying or selling Treasury securities and cannot locate an active market on Fidelity.com, please contact a Fixed Income Specialist at 800-544-5372.
In addition to this, Fidelity closed FDLXX to new investors on Tuesday, I think.
Yes, I got an email alert about FDLXX. Apparently too many investors learned to appreciate the safety of a Treasury-only MMF. Thankfully I have it in my taxable and HSAs. 8)
"Let every man divide his money into three parts, and invest a third in land, a third in business, and a third let him keep in reserve."
- Talmud
User avatar
mathjak107
Executive Member
Executive Member
Posts: 2722
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: How do you invest the Cash portion?

Post by mathjak107 » Sat Apr 04, 2020 4:55 am

we are holding a lot of cash now , most being reinvested in drips and drabs .

we have about 1 million in fdlxx , and 500k in gov't money markets and banks . these are the highest cash levels i can ever remember having ...

with bond funds that are not treasuries being beat up i pulled about 1/2 out of total and corporate bond funds and prefer cash , until i re-deploy it all ..


i much prefer high yield at this stage ..the high yield funds have been beaten up so badly , like every company will default ... some are paying over 7% interest .....

i find that safer then total or corporate bond funds where they are mostly BBB ... the last rung of investment grade ...the big difference is not only the higher rate on high yield but high yield is already "junk bonds " .

one slip from BBB and investment grade gets down graded to junk ... that will be a nasty drop in value ... high yield is already priced as junk .

so each drop i have been adding equities and high yield . although i do own tlt and gld at the moment too .

i think high yield may actually beat equities this year like 2016 where my fidelity high yield fund returned 19%
User avatar
technovelist
Executive Member
Executive Member
Posts: 5580
Joined: Wed Sep 15, 2010 11:20 pm

Re: How do you invest the Cash portion?

Post by technovelist » Sat Apr 04, 2020 7:34 pm

mathjak107 wrote:
Sat Apr 04, 2020 4:55 am
we are holding a lot of cash now , most being reinvested in drips and drabs .

we have about 1 million in fdlxx , and 500k in gov't money markets and banks . these are the highest cash levels i can ever remember having ...

with bond funds that are not treasuries being beat up i pulled about 1/2 out of total and corporate bond funds and prefer cash , until i re-deploy it all ..


i much prefer high yield at this stage ..the high yield funds have been beaten up so badly , like every company will default ... some are paying over 7% interest .....

i find that safer then total or corporate bond funds where they are mostly BBB ... the last rung of investment grade ...the big difference is not only the higher rate on high yield but high yield is already "junk bonds " .

one slip from BBB and investment grade gets down graded to junk ... that will be a nasty drop in value ... high yield is already priced as junk .

so each drop i have been adding equities and high yield . although i do own tlt and gld at the moment too .

i think high yield may actually beat equities this year like 2016 where my fidelity high yield fund returned 19%
Most of the BBB stuff should be rated as junk already but the rating services are slow to downgrade it. As you suggest, when they do, look out below.
Another nod to the most beautiful equation: e + 1 = 0
User avatar
CT-Scott
Executive Member
Executive Member
Posts: 202
Joined: Sat Mar 21, 2020 8:39 am

Re: How do you invest the Cash portion?

Post by CT-Scott » Thu Apr 16, 2020 8:27 am

Other than cash in a few bank accounts, all of our savings are in 401k accounts and Roth IRAs. I did something drastic (and not conforming with the HBPP philosophy) and sold everything on 2/27 inside of our Roth IRAs, so that's now sitting in MM funds. Inside of our largest 401k accounts, we moved everything to the one Stable Value fund that was offered by each of our 401k providers, as I was/am under the belief that the Stable Value fund was the "safest" option available.

Some questions:

1) Just how "safe" can I expect these Stable Value funds to be? I read somewhere that a Stable Value fund inside of a 401k is "insured", which is part of what makes it the safest choice. But when I spoke to an adviser at Fidelity (my employer's 401k provider) he seemed uncertain about that (I didn't get the impression that he was 100% knowledgeable about it). FWIW, the one Stable Value fund in my account is the Wells Fargo Stable Value fund. I can provide more details if it would be helpful. From what I can gather, it looks like I might be getting about a 2.5% annual return (currently) on that.

2) I believe I've read before that a 401k's Stable Value fund qualifies as "Cash" from a PP perspective. True?

3) Other options inside of my 401k would be a couple of bond funds that are all/mostly Treasuries (VSIGX and ABTIX). Should I consider moving some of my Stable Value funds over to those? Or wait until Treasury yields look better?

4) The PP calls for 25% in long-term treasuries, but I don't believe the Treasury fund options inside my 401k (noted in #3) are restricted to *only* long-term Treasuries.

I read about the HBPP many years ago and liked the idea (leading to me moving all of my money in one of my smaller 401k accounts to PRPFX), but that didn't seem to gain me much, so I moved it back out of PRPFX and into all-stocks a few years later. Now that I'm revisiting this forum and reading up on things more, I still like the concept of the HBPP, but I think I'm learning that it's not really possible to follow it properly if most/all of your investment funds are inside of a 401k / Roth IRA.
User avatar
CT-Scott
Executive Member
Executive Member
Posts: 202
Joined: Sat Mar 21, 2020 8:39 am

Re: How do you invest the Cash portion?

Post by CT-Scott » Fri Apr 17, 2020 7:13 pm

No replies to my question? Bumping the thread.
User avatar
vnatale
Executive Member
Executive Member
Posts: 2636
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: How do you invest the Cash portion?

Post by vnatale » Fri Apr 17, 2020 7:17 pm

Wouldn't the safety of any stable value fund depend upon how safe the insurance company is backing it? I'm forgetting exactly how the insurance company produce these funds.

In any event they will never be as safe as a short-term Treasury Bill fund. But the latter will pay less.

Therefore, it comes down to which you prize more -- return or safety.

Vinny
"I only regret that I have but one lap to give to my cats."
Post Reply