We are talking about cash, not 30-year bonds. Cash by definition is a short term investment. Why you would refuse a risk free positive real return for your cash?Marseille07 wrote: ↑Sat Apr 29, 2023 10:55 amCelebrating positive real return is the short-term view I'm talking about.billaster wrote: ↑Sat Apr 29, 2023 10:50 am I don't know what you mean about longer-term view unless you mean looking backwards. The current I-bond inflation rate is 3.4%. A 5% investment has a positive real return. 5% a year ago would not have a positive return. Why would you make your current investment decisions based on year-old data?
Obviously inflation flared up at 9% while the Fed played catch-up. Real return was negative; now positive. But then eventually the Fed will stop hiking, and possibly lowering the rates and cash equivalents would once again become 0% real if not negative real, and this is par for the course.
How many are holding cash right now?
Re: How many are holding cash right now?
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Re: How many are holding cash right now?
We are at 15.6% cash right now.
However, 50% of this "cash" is in a mix of T-Bills. The remainder is in a combination of MM funds, and my NYS deferred comps stable portion. We constantly have T=Bills maturing and available to us if needed.
We are happy with our overall expense ratio of .09.
FYI, retirement for us is by August of this year. My future pension has allowed us to stay primarily invested in equities even as we inch closer to the decumulation phase.
However, 50% of this "cash" is in a mix of T-Bills. The remainder is in a combination of MM funds, and my NYS deferred comps stable portion. We constantly have T=Bills maturing and available to us if needed.
We are happy with our overall expense ratio of .09.
FYI, retirement for us is by August of this year. My future pension has allowed us to stay primarily invested in equities even as we inch closer to the decumulation phase.
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Re: How many are holding cash right now?
Have to look at it relative to risk (i.e. Sharpe ratio). Getting 0% real for a zero risk holding is actually not too shabby. Consider the alternative, equities given rich valuations (if we believe in PE10 metrics) have considerable risk so to have an equal risk adjusted return to cash you should actually be getting something like 12-15% a year, however you're more likely to be getting a negative real return going forward possibly - not certain but it looks like that.ruralavalon wrote: ↑Sat Apr 29, 2023 8:34 amso 5% risk free means 00% real return.
A large investment with 00% real return makes no sense to me, except as a temporary expedient such as parking money for a home down payment.
Yeah, inflation is somewhere around 5-6% now, so we're almost a wash, I am ok with just preserving the value of my money for the next few years - I consider that a win.
Just to clarify I still have 80+% of my portfolio in equities but the cash helps me in the first few years of retirement now that I know we may possibly have a sequence risk.
Re: How many are holding cash right now?
I have more in 3-12 month TBills than I care to admit, but for a potential large purchase (condo for cash). If I decide against that large purchase, that money will go right back into bond funds. I don't like being out of bond funds, but can't take duration risk on a portion of my savings just yet. I do however maintain a portion in total bond for the long term though.
Re: How many are holding cash right now?
Although cash is a permanent part of my portfolio, I have seen over the years that the best time to diversify away from something is when everyone else gets excited about it. That might describe cash right now.
Re: How many are holding cash right now?
Probably about 35% in 3-12 m treasuries. Think weighted ave yield about 4.9%. I’ll keep rolling the bond positions until market is below 3600 (s&p) or I’m convinced fed will pivot
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Re: How many are holding cash right now?
Congratulations on your imminent retirementBbddl wrote: ↑Sat Apr 29, 2023 12:17 pm We are at 15.6% cash right now.
However, 50% of this "cash" is in a mix of T-Bills. The remainder is in a combination of MM funds, and my NYS deferred comps stable portion. We constantly have T=Bills maturing and available to us if needed.
We are happy with our overall expense ratio of .09.
FYI, retirement for us is by August of this year. My future pension has allowed us to stay primarily invested in equities even as we inch closer to the decumulation phase.
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Re: How many are holding cash right now?
What is your allocation on the 84.4%?Bbddl wrote: ↑Sat Apr 29, 2023 12:17 pm We are at 15.6% cash right now.
However, 50% of this "cash" is in a mix of T-Bills. The remainder is in a combination of MM funds, and my NYS deferred comps stable portion. We constantly have T=Bills maturing and available to us if needed.
We are happy with our overall expense ratio of .09.
FYI, retirement for us is by August of this year. My future pension has allowed us to stay primarily invested in equities even as we inch closer to the decumulation phase.
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Re: How many are holding cash right now?
Agreed with this being a good question. What is the reason 3724, or 3379, are not the numbers?Yesterdaysnews wrote: ↑Sun Apr 30, 2023 11:30 amAny particular reason that 3600 is the number? Just curious.
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Re: How many are holding cash right now?
I believe it is pretty much 25% below ATH. Might not be the reason but both 3,600 and 25% are nice round numbers.Yesterdaysnews wrote: ↑Sun Apr 30, 2023 11:30 amAny particular reason that 3600 is the number? Just curious.
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Re: How many are holding cash right now?
Eight is the roundest number I know if you exclude zero. Not everyone agrees that zero is a number.TheTimeLord wrote: ↑Sun Apr 30, 2023 11:35 amI believe it is pretty much 25% below ATH. Might not be the reason but both 3,600 and 25% are nice round numbers.Yesterdaysnews wrote: ↑Sun Apr 30, 2023 11:30 amAny particular reason that 3600 is the number? Just curious.
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Re: How many are holding cash right now?
I was going to post the same exact number. SP sub 3600. Because that is the point in which I stopped investing in my AA and went all MMF and ibonds (thinking the market was overbought). Maybe back in October. Was closer to 3700. So buying back to AA @ 3600 would prove I was right! Not feeling too great about it at this pointTheTimeLord wrote: ↑Sun Apr 30, 2023 11:35 amI believe it is pretty much 25% below ATH. Might not be the reason but both 3,600 and 25% are nice round numbers.Yesterdaysnews wrote: ↑Sun Apr 30, 2023 11:30 amAny particular reason that 3600 is the number? Just curious.
For this year I've been telling myself I bought MMF as a hold over until the end of the year so I can buy my AA when I am certain on annual income. If the market keeps going up I won't be sad. That is better for my 70% VT. 30% is some ibonds and some MMF. If December 31 comes and the markets are still up, I am not sure I will have the heart to move it. I like to be right. Hopefully I am learning some serious investing lessons for the future.
Re: How many are holding cash right now?
Also agree. I just rolled my 401k over to Fidelity IRA/Roth IRA. It's all sitting in SPAXX, and Fidelity automatically re-invests the dividends. Diversifying is on my "To Do" list but it doesn't feel extremely urgent. I am reluctant to be out of the market for too long, though.
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Re: How many are holding cash right now?
I am about 55/40/5 at the moment. Whilst driving recently, I had briefly pondered going to all cash for my fixed income allocation. From the steering wheel, I immediately summoned advice from the Bogleheads, and thankfully you talked me down off the ledge. It was my idea "du jour."Yesterdaysnews wrote: ↑Thu Apr 27, 2023 7:40 pm Anecdotally, reports are saying there is a record amount of money on the sideline in MMF.
My portfolio is currently 16% in 5% T-bills currently.
Who is holding higher than normal cash right now?
What’s it going to take to see all that MMF sideline cash enter the market any time soon??
Thank goodness for the Bogleheads. Being two years from retirement, I could really do a lot damage with my temperament.
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Last edited by Charles Joseph on Sun Apr 30, 2023 6:16 pm, edited 1 time in total.
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
Re: How many are holding cash right now?
It's possible that some of the dollars "sidelined" in MMFs right now are a result of people moving their emergency funds/sinking funds out of HYSAs (many of which are still paying less than 4%, and also that bank panic spooked some folks...) and into higher-yielding MMFs. I did this awhile back. Those are dollars that I am not and have never been planning to put in equities or bonds, so from my perspective they are not sidelined. But now they are visible to my brokerage firm in a way that they weren't when they were in my HYSA.
One area where I am currently putting dollars into cash that I had previously planned to put into the market is my kids' college funds. I have been planning to cover half of college expenses from 529 accounts and half from my taxable brokerage (to avoid ending up with overfunded 529s). I learned early this year that I have a windfall coming, part of which I plan to allocate to future college expenses. Normally when I get windfalls I just lump sum them into my brokerage account according to my AA. But this time I am going to put the college allocated expenses into CDs and MMFs. For my older kiddo that's because of the short time horizon--she is in her first year of college now, so those dollars will be needed within 3 years. For my younger one I am feeling annoyed about the low yield in the Vanguard 529 "low risk" options, which are quite a bit lower than current CD or MM yields. And since I don't get a tax break for 529 contributions here in CA it's not really a loss to use a muni MMF instead.
One area where I am currently putting dollars into cash that I had previously planned to put into the market is my kids' college funds. I have been planning to cover half of college expenses from 529 accounts and half from my taxable brokerage (to avoid ending up with overfunded 529s). I learned early this year that I have a windfall coming, part of which I plan to allocate to future college expenses. Normally when I get windfalls I just lump sum them into my brokerage account according to my AA. But this time I am going to put the college allocated expenses into CDs and MMFs. For my older kiddo that's because of the short time horizon--she is in her first year of college now, so those dollars will be needed within 3 years. For my younger one I am feeling annoyed about the low yield in the Vanguard 529 "low risk" options, which are quite a bit lower than current CD or MM yields. And since I don't get a tax break for 529 contributions here in CA it's not really a loss to use a muni MMF instead.
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Re: How many are holding cash right now?
Not only "holding" but rather "building" some cash to support a future home purchase by one of our (grown) children. Would like to raise it above $100K, perhaps by factor of 2 or 3.
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Re: How many are holding cash right now?
I think that is the most likely explanation for the large inflows to money market funds over the last few months.JayDee37 wrote: ↑Sun Apr 30, 2023 2:55 pm It's possible that some of the dollars "sidelined" in MMFs right now are a result of people moving their emergency funds/sinking funds out of HYSAs (many of which are still paying less than 4%, and also that bank panic spooked some folks...) and into higher-yielding MMFs. . .
. . . . . .
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Re: How many are holding cash right now?
The vast majority is S & P, Total market and Intl index funds all with extremely low expenses.chassis wrote: ↑Sun Apr 30, 2023 10:51 amWhat is your allocation on the 84.4%?Bbddl wrote: ↑Sat Apr 29, 2023 12:17 pm We are at 15.6% cash right now.
However, 50% of this "cash" is in a mix of T-Bills. The remainder is in a combination of MM funds, and my NYS deferred comps stable portion. We constantly have T=Bills maturing and available to us if needed.
We are happy with our overall expense ratio of .09.
FYI, retirement for us is by August of this year. My future pension has allowed us to stay primarily invested in equities even as we inch closer to the decumulation phase.
Re: How many are holding cash right now?
Yes the OP alluded to 'cash' being money market, however cash could alternatively be considered as hard currency or even gold legal tender coins.
If your primary objective can be usually met whilst holding a proportion in cash, such as a 30 year 4% SWR then investing that cash for a possible higher return doesn't reduce the risk, only potentially increases the residual wealth, which for some might be superfluous to requirements. More so if that 'cash' adds in additional diversity/risk-reduction.
In a similar vein to how some opt to shift bond risk over to the stock side, maybe holding 75/25 TSM/T-Bill rather than 60/40 TSM/TBM others might shift cash (MMF) risk over to the stock side, 75/25 SCV/hard cash instead of 60/40 TSM/TBM, or 50/50 SCV/gold instead of 60/40 TSM/TBM. That historically still achieved similar objective such as SWR withdrawals.
For me, physical legal tender gold coins as 'cash' is more preferable to MMF/STT as they're in-hand and gains (inflation) are internal, don't involve regular interest payment taxable events or having to be repeatedly rolled taxable events.
On the assumption of a general comparable SWR objective outcome for 60/40 TSM/TBM, or 75/25 SCV/hard cash, or 50/50 SCV/gold, then notable is that whilst the average/best cases were similar when comparing PV Monte Carlo of 60/40 TSM/TBM versus 50/50 SCV/gold, the worst/lower end was better for the latter.
Content to be holding a above average amount of 'cash' (gold), that's instantly in-hand but is comparable to a $2000 dollar bill note i.e. generally each coin needs to be broken down into smaller dollar bills denominations as otherwise most outlets will tend to refuse it as direct payment.
Re: How many are holding cash right now?
It’s near the October (22) lows - I think we retest the lows given the lag effect in fed rate rises - eventually it’s going to affect demand - fall 23 will hit the normalchassis wrote: ↑Sun Apr 30, 2023 11:33 amAgreed with this being a good question. What is the reason 3724, or 3379, are not the numbers?Yesterdaysnews wrote: ↑Sun Apr 30, 2023 11:30 amAny particular reason that 3600 is the number? Just curious.
18 months that policy effects take time to work through the larger economy
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Re: How many are holding cash right now?
Holding just over 3% of total liquid net worth in cash, which represents just over 1 year's base expenses.
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Re: How many are holding cash right now?
~12% in a TIAA Traditional 403B account, earning something like 3.5%. Probably should shift it elsewhere, I suppose (I see people here earning 4-5%).
It's there for me to buy another SPIA just before 12/31 of the year I turn 72, avoiding having to take RMDs. Of course, if inflation is still cooking much above 3% then, I'll probably put it in a target-date fund instead.
It's there for me to buy another SPIA just before 12/31 of the year I turn 72, avoiding having to take RMDs. Of course, if inflation is still cooking much above 3% then, I'll probably put it in a target-date fund instead.
Last edited by Lawrence of Suburbia on Tue May 30, 2023 2:34 am, edited 2 times in total.
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Re: How many are holding cash right now?
In my main portfolio, I’m about 80% cash (SWVXX). Why? Risk free 4.91% annual yield is hard to beat and very safe. I look forward to getting this down to about 60% later on however.
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Re: How many are holding cash right now?
I'm far more inclined to consider the following categorization for gold, which suggests a rather long-duration asset, or insurance. Aside from essentially the aspect of luck, I cannot say that I recall running across much reason to rationalize gold as what people usually mean by cash. Typically cash-alternatives suggest a non-marketable or fairly predictable way to avoid potentially incurring a nominal loss in value relative to currency, such as the US Dollar, which clearly does not apply to gold. There are obviously examples for gold market price falling in near-term currency value, so usually gold would not be considered a cash-alternative category for many US investors, including coins with legal tender values substantially below commodity market prices.
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Re: How many are holding cash right now?
Alone, yes. As a combination asset however and I see both stocks and gold as being 'cash' with T+2 time availability. 'Notes' if you like, where a single gold (one ounce) coin has a $2000 value, and a SPY share has a lower $400 value, such that a cruise ship week vacation might be priced to 1 Eagle, 1 SPY share and $50 in loose-change ($2450) .. type out of 'wallet' cost. But with continually variable price (individual 'note' value variability). I might book such a trip, pay via credit card, whilst making the gold and SPY ETF sales trades so that by the time the credit card bill falls due I can pay that off. For price stability and yes products/services priced in dollars and holding dollars as cash matches perfectly, at the time, but where mid/longer term dollar bills are inclined to lose purchase power.alluringreality wrote: ↑Tue May 30, 2023 9:23 amI'm far more inclined to consider the following categorization for gold, which suggests a rather long-duration asset, or insurance. Aside from essentially the aspect of luck, I cannot say that I recall running across much reason to rationalize gold as what people usually mean by cash. Typically cash-alternatives suggest a non-marketable or fairly predictable way to avoid potentially incurring a nominal loss in value relative to currency, such as the US Dollar, which clearly does not apply to gold. There are obviously examples for gold market price falling in near-term currency value, so usually gold would not be considered a cash-alternative category for many US investors, including coins with legal tender values substantially below commodity market prices.
A 50/50 stock/gold barbell, a two extremes combination of fiat and non-fiat (commodity) currencies, tends to combine to a central (volatile bond type) bullet. So no, not actual cash as in instant redeemable with tendency to lose purchase power.
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Re: How many are holding cash right now?
$100 in checking and $1.68 in settlement fund. Tomorrow is DW’s payday so will increase then.
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
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Re: How many are holding cash right now?
I only hold cash for near-term purchases like the new car I plan to buy next month. The rest of my money is invested. At the end of each month I invest whatever is left in my checking account after monthly expenses.
I never hold cash "on the sidelines" while waiting for market conditions to change.
I never hold cash "on the sidelines" while waiting for market conditions to change.
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Re: How many are holding cash right now?
The thread seems to surround cash as an asset class, which historically tends to have exhibited limited standard deviation, worst year, and maximum drawdown. In exchange for those properties, cash also has tended towards limited long-term performance, even losing real value for considerable periods. Some people consider intermediate bond funds close enough to cash for thier considerations, yet marketable bonds essentially amount to a separate asset class, as exhibited by currently being in nominal drawdown. The combination of half stocks and half gold historically has exhibited additional market price variation, and generally that does not approximate colloquial intent for holding cash.
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Re: How many are holding cash right now?
I come here for learning, correction and punishment, not to expound upon things about which I know nothing. But one thing I seemed to have learned from observation and research is that for the long-term investor, the “safety” of cash is an illusion — a complete fantasy. Better to be diversified among stocks and bonds. Your real returns and risk-adjusted returns will almost certainly be better.
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
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Re: How many are holding cash right now?
Short-term fixed income is a risky asset for long-term investors, but so are long-term nominal bonds in real terms. Therefore, I treat all my nominal bonds as speculative in the long-term. There is no safety no matter how one looks at it for the long-term. Hence, BND holding a mix is reasonably justified.Charles Joseph wrote: ↑Wed May 31, 2023 2:31 pm I come here for learning, correction and punishment, not to expound upon things about which I know nothing. But one thing I seemed to have learned from observation and research is that for the long-term investor, the “safety” of cash is an illusion — a complete fantasy. Better to be diversified among stocks and bonds. Your real returns and risk-adjusted returns will almost certainly be better.
But throw in TIPS, then it is then a speculation for long-term investors to ignore the ensured long-term real returns. This is where it gets interesting.
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Re: How many are holding cash right now?
This is a dilemma for me. I think in answer to the 'Why you would refuse?' question, it's because while there's this positive return on cash, a lot of investor money has fled to cash, and out of longer-duration assets.billaster wrote: ↑Sat Apr 29, 2023 11:16 amWe are talking about cash, not 30-year bonds. Cash by definition is a short term investment. Why you would refuse a risk free positive real return for your cash?Marseille07 wrote: ↑Sat Apr 29, 2023 10:55 amCelebrating positive real return is the short-term view I'm talking about.billaster wrote: ↑Sat Apr 29, 2023 10:50 am I don't know what you mean about longer-term view unless you mean looking backwards. The current I-bond inflation rate is 3.4%. A 5% investment has a positive real return. 5% a year ago would not have a positive return. Why would you make your current investment decisions based on year-old data?
Obviously inflation flared up at 9% while the Fed played catch-up. Real return was negative; now positive. But then eventually the Fed will stop hiking, and possibly lowering the rates and cash equivalents would once again become 0% real if not negative real, and this is par for the course.
So right now you can buy some quite attractive long-term returns – like infrastructure at 5-6% with some inflation-linking .. As soon as the return on cash drops, the return on those long-duration assets is likely to do the same as they get bid up. So while cash seems like a no-brainer at the moment, the opportunity to secure attractive long-term returns may be as good as it gets right now (depending on whether we hike much more). I don't have an opinion on that, but I know right now there are quite a few things you can buy at much cheaper prices than you've been able to in a good 10-15 years.
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Re: How many are holding cash right now?
With dividends, SP500 is down about 11% from peak. Did you manage to hold cash starting exactly at the peak? Doubtful. So if you had invested that cash at any time in the last year, you'd be down no more than 11%, and for much of the past year, you'd be up.billaster wrote: ↑Sat Apr 29, 2023 10:28 amThat was last year's inflation, looking backwards. Inflation is lower now.ruralavalon wrote: ↑Sat Apr 29, 2023 8:34 am "The annual inflation rate for the United States was 5.0% for the 12 months ended March" link so 5% risk free means 00% real return.
A large investment with 00% real return makes no sense to me, except as a temporary expedient such as parking money for a home down payment.
Looking backwards at last year, the stock market lost 20% so does a large investment in the stock market make no sense to you?
And since you're holding that cash, waiting for a drop, you also have to consider that the market will probably be higher than it is now by the time you feel it's safe to invest.
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Re: How many are holding cash right now?
In how many of the last 10 bear markets did you accurately predict the bottom? I mean I'm pretty sure you've failed to identify the bottom even 8 months after we're past it, so to think you can see it coming 6 months out seems kinda delusional.JC CPA wrote: ↑Mon May 29, 2023 7:00 amIt’s near the October (22) lows - I think we retest the lows given the lag effect in fed rate rises - eventually it’s going to affect demand - fall 23 will hit the normalchassis wrote: ↑Sun Apr 30, 2023 11:33 amAgreed with this being a good question. What is the reason 3724, or 3379, are not the numbers?Yesterdaysnews wrote: ↑Sun Apr 30, 2023 11:30 amAny particular reason that 3600 is the number? Just curious.
18 months that policy effects take time to work through the larger economy
Re: How many are holding cash right now?
I am holding almost no cash at all. I had plenty of undeployed cash after selling off the 40% or so portion of my portfolio that was in a company that got bought out. But it's since gotten redeployed. A good chunk of it went into regional bank preferred stocks, so I will be receiving a healthy amount of cash dividends every quarter. It just so happened that all the stocks I liked in the past several years were all non-dividend paying. It will be refreshing for a change.
Re: How many are holding cash right now?
In my investment accounts, I'm holding only a little cash. Some is there in a MM fund, which I use as a "drop box" that holds money that's scheduled to be paid out as part of my monthly RMD during the current year.
But my only "true" cash is in my bank (credit union) where I have "savings" and "money market" accounts and escrow accounts that receive my Social Security from Uncle Sam and my RMD distributions from my investment accounts.
But my only "true" cash is in my bank (credit union) where I have "savings" and "money market" accounts and escrow accounts that receive my Social Security from Uncle Sam and my RMD distributions from my investment accounts.
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Re: How many are holding cash right now?
Right. I do not see a reason to be chasing cash because it can dry up with returns in a moments notice. It really is overrated given the situation; the main problem (the real discount rate was very low) has been corrected mostly. At this point, cash holders are merely trying to lock in more real returns by delaying when the market is strongly suggesting it will be otherwise.Logan Roy wrote: ↑Wed May 31, 2023 3:54 pmThis is a dilemma for me. I think in answer to the 'Why you would refuse?' question, it's because while there's this positive return on cash, a lot of investor money has fled to cash, and out of longer-duration assets.billaster wrote: ↑Sat Apr 29, 2023 11:16 amWe are talking about cash, not 30-year bonds. Cash by definition is a short term investment. Why you would refuse a risk free positive real return for your cash?Marseille07 wrote: ↑Sat Apr 29, 2023 10:55 amCelebrating positive real return is the short-term view I'm talking about.billaster wrote: ↑Sat Apr 29, 2023 10:50 am I don't know what you mean about longer-term view unless you mean looking backwards. The current I-bond inflation rate is 3.4%. A 5% investment has a positive real return. 5% a year ago would not have a positive return. Why would you make your current investment decisions based on year-old data?
Obviously inflation flared up at 9% while the Fed played catch-up. Real return was negative; now positive. But then eventually the Fed will stop hiking, and possibly lowering the rates and cash equivalents would once again become 0% real if not negative real, and this is par for the course.
So right now you can buy some quite attractive long-term returns – like infrastructure at 5-6% with some inflation-linking .. As soon as the return on cash drops, the return on those long-duration assets is likely to do the same as they get bid up. So while cash seems like a no-brainer at the moment, the opportunity to secure attractive long-term returns may be as good as it gets right now (depending on whether we hike much more). I don't have an opinion on that, but I know right now there are quite a few things you can buy at much cheaper prices than you've been able to in a good 10-15 years.
I was well-positioned for the dip in 2022 (before people think I am talking about have a bunch of cash, they would be wrong; but effectively it became such by optionality), and it presented a lot of opportunities. Why in the world would I pass up guaranteed positive real yields in long-term TIPS, let alone buy a bit of everything else on discount? I ended up beating cash in 2022.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
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Re: How many are holding cash right now?
I don't think folks are chasing cash, but some folks keep it short to begin with and cash happens to be decent right now that's all. My general expectation of cash & cash equivalents is -2% real, anyway.secondopinion wrote: ↑Thu Jun 01, 2023 11:36 am Right. I do not see a reason to be chasing cash because it can dry up with returns in a moments notice. It really is overrated given the situation; the main problem (the real discount rate was very low) has been corrected mostly.
Re: How many are holding cash right now?
I'm keeping 2-3 months expenses in checking right now. In final phase of buying-selling houses and move across country. Will tighten up the cash on hand when things settle back to normal in a few months.
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Re: How many are holding cash right now?
Some are jumping out of other investments for cash; these people are chasing cash, and what are they really expecting to achieve with this maneuver?Marseille07 wrote: ↑Thu Jun 01, 2023 11:53 amI don't think folks are chasing cash, but some folks keep it short to begin with and cash happens to be decent right now that's all. My general expectation of cash & cash equivalents is -2% real, anyway.secondopinion wrote: ↑Thu Jun 01, 2023 11:36 am Right. I do not see a reason to be chasing cash because it can dry up with returns in a moments notice. It really is overrated given the situation; the main problem (the real discount rate was very low) has been corrected mostly.
If you are holding cash equivalents rain or shine, I would say that is okay.
The point is to hold what one needs, not endless chase after the best thing. If you need cash equivalents, then I am not going to question it and will actually endorse it for you. But what might be best for you might not be so for the next person.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
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Re: How many are holding cash right now?
Yes if they're jumping out of other investments then they are chasing. I don't think I see many of them but it's possible there are many.secondopinion wrote: ↑Thu Jun 01, 2023 12:11 pm Some are jumping out of other investments for cash; these people are chasing cash, and what are they really expecting to achieve with this maneuver?
If you are holding cash equivalents rain or shine, I would say that is okay.
The point is to hold what one needs, not endless chase after the best thing. If you need cash equivalents, then I am not going to question it and will actually endorse it for you. But what might be best for you might not be so for the next person.
Re: How many are holding cash right now?
Yes – although the dilemma is that, if we're in for a long period of rates creeping higher, cash being a very short-duration asset (of course), you'll have more capital when it comes time to buy the stock market on PE 8 and treasuries on >10% yields.secondopinion wrote: ↑Thu Jun 01, 2023 11:36 amRight. I do not see a reason to be chasing cash because it can dry up with returns in a moments notice. It really is overrated given the situation; the main problem (the real discount rate was very low) has been corrected mostly. At this point, cash holders are merely trying to lock in more real returns by delaying when the market is strongly suggesting it will be otherwise.Logan Roy wrote: ↑Wed May 31, 2023 3:54 pmThis is a dilemma for me. I think in answer to the 'Why you would refuse?' question, it's because while there's this positive return on cash, a lot of investor money has fled to cash, and out of longer-duration assets.billaster wrote: ↑Sat Apr 29, 2023 11:16 amWe are talking about cash, not 30-year bonds. Cash by definition is a short term investment. Why you would refuse a risk free positive real return for your cash?Marseille07 wrote: ↑Sat Apr 29, 2023 10:55 amCelebrating positive real return is the short-term view I'm talking about.billaster wrote: ↑Sat Apr 29, 2023 10:50 am I don't know what you mean about longer-term view unless you mean looking backwards. The current I-bond inflation rate is 3.4%. A 5% investment has a positive real return. 5% a year ago would not have a positive return. Why would you make your current investment decisions based on year-old data?
Obviously inflation flared up at 9% while the Fed played catch-up. Real return was negative; now positive. But then eventually the Fed will stop hiking, and possibly lowering the rates and cash equivalents would once again become 0% real if not negative real, and this is par for the course.
So right now you can buy some quite attractive long-term returns – like infrastructure at 5-6% with some inflation-linking .. As soon as the return on cash drops, the return on those long-duration assets is likely to do the same as they get bid up. So while cash seems like a no-brainer at the moment, the opportunity to secure attractive long-term returns may be as good as it gets right now (depending on whether we hike much more). I don't have an opinion on that, but I know right now there are quite a few things you can buy at much cheaper prices than you've been able to in a good 10-15 years.
I was well-positioned for the dip in 2022 (before people think I am talking about have a bunch of cash, they would be wrong; but effectively it became such by optionality), and it presented a lot of opportunities. Why in the world would I pass up guaranteed positive real yields in long-term TIPS, let alone buy a bit of everything else on discount? I ended up beating cash in 2022.
I think an interesting ceiling (you've clearly worked out) is that real yields probably can't climb much higher without triggering debt crises and defaults. So longer duration TIPS on positive yields might be a great deal already. But there's the duration risk, when it comes to dry powder and when it's the best time to buy stocks. So I'm certainly in funds that have gone big on TIPS. Personally, I'm buying more private infrastructure. This is BBGI Infrastructure. I like 3i Infrastructure maybe even more. And these are on rare discounts. They'll probably go further, if rates go to 6%. But these are 20 year contracts, often linked to inflation. I may be missing something. These discounts seem quite indiscriminate across core and core plus infrastructure. Seems like the thing no one's buying when everyone's excited about cash and tech/AI.
Re: How many are holding cash right now?
Just holding my usual e fund(s) worth. Currently roughly 5% of my portfolio.
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Re: How many are holding cash right now?
Seriously, it was a odd set of events that drove me to invest at a good time. I understood the power of add-on CDs (opened with no intention to fill them unless rates drop), but I did not know that yields would drop so drastically in 2020 (allowing me to funnel all my fixed income into it for a sizable profit and a considerably better yield for four years) and that the yields would pop up so drastically in 2022 (in which I broke into the CD with a fixed penalty so I could take advantage of the discounts + have a better yield on my actually allocated short-term fixed income from the very short rates being inverted + open unfunded add-on CDs that can I catch a potential sharp drop in rates if it happens yet again). Some luck, but I definitely did not set myself up for failure either if it did not happen.Logan Roy wrote: ↑Thu Jun 01, 2023 3:22 pmYes – although the dilemma is that, if we're in for a long period of rates creeping higher, cash being a very short-duration asset (of course), you'll have more capital when it comes time to buy the stock market on PE 8 and treasuries on >10% yields.secondopinion wrote: ↑Thu Jun 01, 2023 11:36 amRight. I do not see a reason to be chasing cash because it can dry up with returns in a moments notice. It really is overrated given the situation; the main problem (the real discount rate was very low) has been corrected mostly. At this point, cash holders are merely trying to lock in more real returns by delaying when the market is strongly suggesting it will be otherwise.Logan Roy wrote: ↑Wed May 31, 2023 3:54 pmThis is a dilemma for me. I think in answer to the 'Why you would refuse?' question, it's because while there's this positive return on cash, a lot of investor money has fled to cash, and out of longer-duration assets.billaster wrote: ↑Sat Apr 29, 2023 11:16 amWe are talking about cash, not 30-year bonds. Cash by definition is a short term investment. Why you would refuse a risk free positive real return for your cash?Marseille07 wrote: ↑Sat Apr 29, 2023 10:55 am
Celebrating positive real return is the short-term view I'm talking about.
Obviously inflation flared up at 9% while the Fed played catch-up. Real return was negative; now positive. But then eventually the Fed will stop hiking, and possibly lowering the rates and cash equivalents would once again become 0% real if not negative real, and this is par for the course.
So right now you can buy some quite attractive long-term returns – like infrastructure at 5-6% with some inflation-linking .. As soon as the return on cash drops, the return on those long-duration assets is likely to do the same as they get bid up. So while cash seems like a no-brainer at the moment, the opportunity to secure attractive long-term returns may be as good as it gets right now (depending on whether we hike much more). I don't have an opinion on that, but I know right now there are quite a few things you can buy at much cheaper prices than you've been able to in a good 10-15 years.
I was well-positioned for the dip in 2022 (before people think I am talking about have a bunch of cash, they would be wrong; but effectively it became such by optionality), and it presented a lot of opportunities. Why in the world would I pass up guaranteed positive real yields in long-term TIPS, let alone buy a bit of everything else on discount? I ended up beating cash in 2022.
I think an interesting ceiling (you've clearly worked out) is that real yields probably can't climb much higher without triggering debt crises and defaults. So longer duration TIPS on positive yields might be a great deal already. But there's the duration risk, when it comes to dry powder and when it's the best time to buy stocks. So I'm certainly in funds that have gone big on TIPS. Personally, I'm buying more private infrastructure. This is BBGI Infrastructure. I like 3i Infrastructure maybe even more. And these are on rare discounts. They'll probably go further, if rates go to 6%. But these are 20 year contracts, often linked to inflation. I may be missing something. These discounts seem quite indiscriminate across core and core plus infrastructure. Seems like the thing no one's buying when everyone's excited about cash and tech/AI.
The point is not set oneself for failure. I much rather be partially wrong than all wrong. This time, it seems like I ended up being mostly right and did well as a result.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
Re: How many are holding cash right now?
I basically got out of everything ultra-long-duration in Q4 2021.. The run up in growth stocks had been phenomenal – something like a 120-150% return in 9 months. Probably my best year in the market. Then this huge stimulus bill coupled with the supply and demand shocks from the pandemic .. The Bank of England and UK media had been forecasting inflation for 2022, back in 2020. We knew there'd be a spike, and that it would likely come down. Stickiness of this inflation is still something no one really knows.secondopinion wrote: ↑Thu Jun 01, 2023 5:12 pmSeriously, it was a odd set of events that drove me to invest at a good time. I understood the power of add-on CDs (opened with no intention to fill them unless rates drop), but I did not know that yields would drop so drastically in 2020 (allowing me to funnel all my fixed income into it for a sizable profit and a considerably better yield for four years) and that the yields would pop up so drastically in 2022 (in which I broke into the CD with a fixed penalty so I could take advantage of the discounts + have a better yield on my actually allocated short-term fixed income from the very short rates being inverted + open unfunded add-on CDs that can I catch a potential sharp drop in rates if it happens yet again). Some luck, but I definitely did not set myself up for failure either if it did not happen.Logan Roy wrote: ↑Thu Jun 01, 2023 3:22 pmYes – although the dilemma is that, if we're in for a long period of rates creeping higher, cash being a very short-duration asset (of course), you'll have more capital when it comes time to buy the stock market on PE 8 and treasuries on >10% yields.secondopinion wrote: ↑Thu Jun 01, 2023 11:36 amRight. I do not see a reason to be chasing cash because it can dry up with returns in a moments notice. It really is overrated given the situation; the main problem (the real discount rate was very low) has been corrected mostly. At this point, cash holders are merely trying to lock in more real returns by delaying when the market is strongly suggesting it will be otherwise.Logan Roy wrote: ↑Wed May 31, 2023 3:54 pmThis is a dilemma for me. I think in answer to the 'Why you would refuse?' question, it's because while there's this positive return on cash, a lot of investor money has fled to cash, and out of longer-duration assets.
So right now you can buy some quite attractive long-term returns – like infrastructure at 5-6% with some inflation-linking .. As soon as the return on cash drops, the return on those long-duration assets is likely to do the same as they get bid up. So while cash seems like a no-brainer at the moment, the opportunity to secure attractive long-term returns may be as good as it gets right now (depending on whether we hike much more). I don't have an opinion on that, but I know right now there are quite a few things you can buy at much cheaper prices than you've been able to in a good 10-15 years.
I was well-positioned for the dip in 2022 (before people think I am talking about have a bunch of cash, they would be wrong; but effectively it became such by optionality), and it presented a lot of opportunities. Why in the world would I pass up guaranteed positive real yields in long-term TIPS, let alone buy a bit of everything else on discount? I ended up beating cash in 2022.
I think an interesting ceiling (you've clearly worked out) is that real yields probably can't climb much higher without triggering debt crises and defaults. So longer duration TIPS on positive yields might be a great deal already. But there's the duration risk, when it comes to dry powder and when it's the best time to buy stocks. So I'm certainly in funds that have gone big on TIPS. Personally, I'm buying more private infrastructure. This is BBGI Infrastructure. I like 3i Infrastructure maybe even more. And these are on rare discounts. They'll probably go further, if rates go to 6%. But these are 20 year contracts, often linked to inflation. I may be missing something. These discounts seem quite indiscriminate across core and core plus infrastructure. Seems like the thing no one's buying when everyone's excited about cash and tech/AI.
The point is not set oneself for failure. I much rather be partially wrong than all wrong. This time, it seems like I ended up being mostly right and did well as a result.
And we knew the response would be tightening.. I actually reduced cash, because it was a guaranteed loser in the event of inflation. But I had everything in All Weather funds, which had all gone very short duration, very defensive.. What disappointed me was having a two year warning; being right; and not being able to profit from things. Loses offset winners pretty perfectly since then. It was really only energy stocks and commodities that kept things up, and it would've been unusual to over-allocate to those, given how they'd been for years prior.
Re: How many are holding cash right now?
Sideline cash is a myth I’m told. In order to buy a security, there has to be a seller. This is true even in an IPO.Yesterdaysnews wrote: ↑Thu Apr 27, 2023 7:40 pm Anecdotally, reports are saying there is a record amount of money on the sideline in MMF.
My portfolio is currently 16% in 5% T-bills currently.
Who is holding higher than normal cash right now?
What’s it going to take to see all that MMF sideline cash enter the market any time soon??
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Re: How many are holding cash right now?
They seem to just say that there's a record amount of money in MMF in terms of assets under management. Assuming it is true, that's just an observable fact not a myth.
Re: How many are holding cash right now?
Maybe because people are moving money from savings accounts into MMFs.Marseille07 wrote: ↑Fri Jun 02, 2023 1:04 amThey seem to just say that there's a record amount of money in MMF in terms of assets under management. Assuming it is true, that's just an observable fact not a myth.