[Debt ceiling discussion mega-thread]

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hkcj
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Re: [Debt ceiling discussion mega-thread]

Post by hkcj »

vaylie wrote: Tue May 23, 2023 6:40 pm
hkcj wrote: Tue May 23, 2023 1:00 pm
  • Change my FDIC core position in my CMA to the bank I think is best capitalized & run (turns out you can do this). [Done]
May I ask how you're able to tell which bank your CMA's core position is in and how you managed to change it? All I see is an option to change the bank list but not the bank itself. Thanks!
The banks in the bank list are in order (it fills up $245k in each then moves on). When I tried to change the bank list they didn't offer me an alternative but said I could pick a different bank from the list to be my first. Not sure how this works if you have over $245k in there.
doogan
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T-bills

Post by doogan »

[Thread merged into here --admin LadyGeek]

What level of risk is associated with t-bills and this current debt ceiling default looming. I belive it's likely to be addressed, but I'm far from the smartest guy in the room... I have a significant $$ in bills with various maturities. Thoughts?
Empiricus
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Re: T-bills

Post by Empiricus »

See this link (Debt ceiling discussion mega-thread) for more discussion: viewtopic.php?t=395322
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Re: T-bills

Post by doogan »

Thanks
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Re: [Debt ceiling discussion mega-thread]

Post by LadyGeek »

I merged doogan's thread into the ongoing discussion.

(Thanks to the member who reported the post and provided a link to this thread.)
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Re: [Debt ceiling discussion mega-thread]

Post by Jack FFR1846 »

So a silver lining in all of this..... I have been wanting to get rid of dividend producing holdings in taxable but I also have not wanted to add to my income for this year as I will continue working until June 23rd and have a huge bonus coming (the reason I'm staying that long...have to be employed to receive the bonus) and with the market drops, I can actually do some tax loss harvesting, dumping dividend creating funds (SCHB and VTI) and purchasing non-dividend creating BRK/b shares. So the lower the market goes, the more conversions (so to speak) I can do and the happier I'll be going forward. Next year will start Roth conversions and every avoidance of dividend income will be quite welcome.
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Re: [Debt ceiling discussion mega-thread]

Post by bberris »

H-Town wrote: Tue May 23, 2023 3:35 pm
Beensabu wrote: Tue May 23, 2023 2:11 pm
H-Town wrote: Tue May 23, 2023 1:45 pm Wheee….. it’s happening. Stocks skydiving
They are not. It's just one day and ~1%. That happens fairly frequently.
Remember today is the day I almost correctly called the freefall.

Meanwhile I bought 1-month treasuries that has 6.106% yield. It's one way to cope with 1% stock drop. Being greedy while others are fearful, or something like that.
I like it. I have to believe that even if the payoff is late, you will get an extra interest payment. Even the IRS pays interest on late refunds.
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Re: T-bills

Post by ehh »

doogan wrote: Wed May 24, 2023 5:53 am [Thread merged into here --admin LadyGeek]

What level of risk is associated with t-bills and this current debt ceiling default looming. I belive it's likely to be addressed, but I'm far from the smartest guy in the room... I have a significant $$ in bills with various maturities. Thoughts?
Nobody knows. Some speculation upthread that interest on treasury debt and redemption of treasury debt will have priority. To minimize chaos in the global financial system. To be safe, have funds in a FDIC insured bank account to pay the next couple of months of anticipated expenses. Protecting against a temporary glitch in payment of treasury debt interest of a pause in redemptions. If there is a long term or permanent default on treasury debt (a very remote possibility) our problems will be much greater than losing money on what we thought was a risk free investment.
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Re: T-bills

Post by H-Town »

ehh wrote: Wed May 24, 2023 8:12 am
doogan wrote: Wed May 24, 2023 5:53 am [Thread merged into here --admin LadyGeek]

What level of risk is associated with t-bills and this current debt ceiling default looming. I belive it's likely to be addressed, but I'm far from the smartest guy in the room... I have a significant $$ in bills with various maturities. Thoughts?
Nobody knows. Some speculation upthread that interest on treasury debt and redemption of treasury debt will have priority. To minimize chaos in the global financial system. To be safe, have funds in a FDIC insured bank account to pay the next couple of months of anticipated expenses. Protecting against a temporary glitch in payment of treasury debt interest of a pause in redemptions. If there is a long term or permanent default on treasury debt (a very remote possibility) our problems will be much greater than losing money on what we thought was a risk free investment.
Risk & reward go hand in hand. Considering that 1-month T-Bill is trading at 6.263% yield is saying something.
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Re: [Debt ceiling discussion mega-thread]

Post by PoorHomieQuan »

protagonist wrote: Tue May 23, 2023 7:55 pm [...]
I just don't think it would work out the way you imagine. Your access to information is slower than the rest of the market. You're just not going to be able to jump out and in fast enough based on publicly accessible information to turn a profit.

And if stocks are only 40% of your portfolio anyway, then any loss would also be pretty muted, not to mention temporary.

What happens if a deal is announced, you miss a one day bump, buy back in higher, then the economy tanks anyway because less gov't spending leads to recession? Then you've lost X% on top of whatever the market loses later on.

The comparison of the market to real life Nazi Germany is I think a good illustration of the allure of market timing. The rest of life rewards you for being proactive, so if you're a successful and bright individual, you're used to your actions leading to positive outcomes. But Mr Market only consistently rewards those who do nothing.
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Re: [Debt ceiling discussion mega-thread]

Post by watchnerd »

PoorHomieQuan wrote: Wed May 24, 2023 11:35 am But Mr Market only consistently rewards those who do nothing.
And, when money is cheap, make smart use of leverage.
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Re: [Debt ceiling discussion mega-thread]

Post by Kevin M »

tl;dr for now. Just wanted to cross post this, as it relates to the debt ceiling:

Yield jump from 5/31 to 6/1
Kevin M wrote: Wed May 24, 2023 1:00 pm Image
Yowza! The ask yield for the 5/30 bill is 2.62%, while the yield for the 6/1 bill is 6.89%.

The lowest 5/31 yield is 2.06% for the 2.75% coupon note.

The high yield is 7.07% for the 6/6 and 6/8 bills.
If I make a calculation error, #Cruncher probably will let me know.
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Re: [Debt ceiling discussion mega-thread]

Post by watchnerd »

Kevin M wrote: Wed May 24, 2023 1:06 pm tl;dr for now. Just wanted to cross post this, as it relates to the debt ceiling:

Yield jump from 5/31 to 6/1
Kevin M wrote: Wed May 24, 2023 1:00 pm Image
Yowza! The ask yield for the 5/30 bill is 2.62%, while the yield for the 6/1 bill is 6.89%.

The lowest 5/31 yield is 2.06% for the 2.75% coupon note.

The high yield is 7.07% for the 6/6 and 6/8 bills.
Dang!!
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Re: [Debt ceiling discussion mega-thread]

Post by exodusing »

Janet Yellen Warns It Is ‘Almost Certain’ U.S. Would Miss Payments in Early June
The Treasury secretary says her agency isn’t getting ready for a potential debt default

https://www.wsj.com/articles/yellen-say ... g-8ceaee1e
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Re: [Debt ceiling discussion mega-thread]

Post by H-Town »

exodusing wrote: Wed May 24, 2023 1:18 pm Janet Yellen Warns It Is ‘Almost Certain’ U.S. Would Miss Payments in Early June
The Treasury secretary says her agency isn’t getting ready for a potential debt default

https://www.wsj.com/articles/yellen-say ... g-8ceaee1e
The Treasury should use ChatGPT to prioritize payments. There's nothing too big for AI. Just saying :mrgreen:
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Re: [Debt ceiling discussion mega-thread]

Post by exodusing »

Or they could issue callable consols - bonds with a maturity date. These are clearly legal under the debt ceiling law. They may be unusual, but that's better than the market disruption we're seeing from a potential default (let alone the consequences of an actual default) or risking violating the President's obligation to "take Care that the Laws be faithfully executed".

Apologies if this has been discussed.
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Risk of VMFXX breaking buck from Debt Ceiling Crisis Jun 2023

Post by pardo2k »

Let's say there is a technical default, what could happen to VMFXX? Nothing? Or it could break the buck? How bad could a loss be, if any?
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Re: [Debt ceiling discussion mega-thread]

Post by protagonist »

PoorHomieQuan wrote: Wed May 24, 2023 11:35 am

I just don't think it would work out the way you imagine. Your access to information is slower than the rest of the market. You're just not going to be able to jump out and in fast enough based on publicly accessible information to turn a profit.
The purpose would not be to turn a profit. The purpose would be to avert a huge loss in a bad scenario where the US defaults and no quick solution is found.
And if stocks are only 40% of your portfolio anyway, then any loss would also be pretty muted, not to mention temporary.
Like I said, in my case it is hypothetical...I would take a huge tax hit by selling , so if I did sell it would be a panic reaction. I am not selling. I am retired and I keep the rest of my portfolio in safe investments that should be enough (I hope) to comfortably fund my retirement anyway. So if the stock market falls 90% in the next decade I am not horribly worried, at least not for personal reasons (of course I would be for society).

All I intend to do is to move my cash from FZDXX to Fidelity's FDIC insured cash management account next Monday for liquidity reasons. I will give up a little yield.
What happens if a deal is announced, you miss a one day bump, buy back in higher, then the economy tanks anyway because less gov't spending leads to recession? Then you've lost X% on top of whatever the market loses later on.
Anything can happen. That is the nature of the future. The question one must ask, with limited info. available, is which scenario leaves you more exposed. Thus the Jew in Germany in the 30s analogy. Hitler becomes chancellor. You and your family can leave everything you have worked for behind other than the shirts on your backs and pray that a friendly country will accept you because you are a doomsayer, or you can "stay the course" and hope things get better. You stay the course. The Nuremberg laws are then passed. You face the same decision. Then Kristallnacht. What is the right decision, and when? These are easy questions to answer in retrospect but not easy at all a priori. (I am not equating a stock market crash with the Holocaust....just pointing out that making big decisions with limited information about a potential looming crisis and just a lot of opinions floating around about the future is not black and white).
But Mr Market only consistently rewards those who do nothing.
That is not true. That is recency bias (unless you are Japanese, or maybe Russian these days...there are other examples as well). Even recently in the US, it took 17 years for the Nasdaq to regain its March 2000 high in real terms, and at the bottom it lost something like 80% of its value. The Dow finally got back to its 1929 peak in 1954 (in 1933 it was down 89%). Even if one truly believes that was the worst possible scenario that is a bit too long to wait to be rewarded for a 70 y o retiree such as myself (or almost anybody really).
Last edited by protagonist on Wed May 24, 2023 2:59 pm, edited 8 times in total.
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Re: [Debt ceiling discussion mega-thread]

Post by Kevin M »

exodusing wrote: Wed May 24, 2023 1:18 pm Janet Yellen Warns It Is ‘Almost Certain’ U.S. Would Miss Payments in Early June
The Treasury secretary says her agency isn’t getting ready for a potential debt default

https://www.wsj.com/articles/yellen-say ... g-8ceaee1e
Here is an article on this not behind a paywall: Yellen says it’s ‘almost certain’ debt ceiling deadline would be in early June | The Hill
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Re: [Debt ceiling discussion mega-thread]

Post by Blue456 »

So what will happen to my VGIT (intermediate term treasury ETF) when US government defaults?
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Re: [Debt ceiling discussion mega-thread]

Post by Beensabu »

Blue456 wrote: Wed May 24, 2023 2:52 pm So what will happen to my VGIT (intermediate term treasury ETF) when US government defaults?
Maybe it'll see inflows from folks fleeing treasury-only money market funds that have broken the buck and who have no clue where else to put the darn money.
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Re: [Debt ceiling discussion mega-thread]

Post by Kendall »

Pardo2K's post has been merged into the ongoing discussion.

Subject: [Debt ceiling discussion mega-thread]
pardo2k wrote: Wed May 24, 2023 2:09 pm Let's say there is a technical default, what could happen to VMFXX? Nothing? Or it could break the buck? How bad could a loss be, if any?
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Re: [Debt ceiling discussion mega-thread]

Post by watchnerd »

Blue456 wrote: Wed May 24, 2023 2:52 pm So what will happen to my VGIT (intermediate term treasury ETF) when US government defaults?
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Re: [Debt ceiling discussion mega-thread]

Post by Trance »

Would a very short term bond etf allow you to avoid a "break the buck" scenario? Where a money market fund goes below its $1.00 NAV and triggers a panic selloff?
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Re: [Debt ceiling discussion mega-thread]

Post by Blue456 »

watchnerd wrote: Wed May 24, 2023 3:46 pm
Blue456 wrote: Wed May 24, 2023 2:52 pm So what will happen to my VGIT (intermediate term treasury ETF) when US government defaults?
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Re: [Debt ceiling discussion mega-thread]

Post by GeraniumLover »

hkcj wrote: Wed May 24, 2023 5:03 am
vaylie wrote: Tue May 23, 2023 6:40 pm
hkcj wrote: Tue May 23, 2023 1:00 pm
  • Change my FDIC core position in my CMA to the bank I think is best capitalized & run (turns out you can do this). [Done]
May I ask how you're able to tell which bank your CMA's core position is in and how you managed to change it? All I see is an option to change the bank list but not the bank itself. Thanks!
The banks in the bank list are in order (it fills up $245k in each then moves on). When I tried to change the bank list they didn't offer me an alternative but said I could pick a different bank from the list to be my first. Not sure how this works if you have over $245k in there.
Fidelity will let you opt out of any of the banks on the list, you just need to call them to do it. Took me about 5 minutes.
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Re: [Debt ceiling discussion mega-thread]

Post by GeraniumLover »

Trance wrote: Tue May 23, 2023 7:44 pm Are money market funds insured by the FDIC? If not would it be reasonable to pull money out and move it to a checking account until this debt ceiling issue passes?
No they are not insured by the FDIC. In most cases, they'd be insured by the SIPC. But tI don't think they'd cover investment losses.
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Re: [Debt ceiling discussion mega-thread]

Post by exodusNH »

GeraniumLover wrote: Wed May 24, 2023 5:00 pm
Trance wrote: Tue May 23, 2023 7:44 pm Are money market funds insured by the FDIC? If not would it be reasonable to pull money out and move it to a checking account until this debt ceiling issue passes?
No they are not insured by the FDIC. In most cases, they'd be insured by the SIPC. But tI don't think they'd cover investment losses.
SIPC works nothing like FDIC. It's essentially insurance against fraud by the broker, which, for the big brokers, is essentially impossible.

SIPC only has about $5 billion vs $128 billion in FDIC. SIPC is private insurance and not backed by the Fed or US Government.

Vanguard's settlement fund has over $100 billion by itself. A 1% loss (i.e. $0.99 on the $1.00) would use up 20% of the SIPC fund if it worked like FDIC.
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Re: [Debt ceiling discussion mega-thread]

Post by H-Town »

exodusNH wrote: Wed May 24, 2023 5:10 pm
GeraniumLover wrote: Wed May 24, 2023 5:00 pm
Trance wrote: Tue May 23, 2023 7:44 pm Are money market funds insured by the FDIC? If not would it be reasonable to pull money out and move it to a checking account until this debt ceiling issue passes?
No they are not insured by the FDIC. In most cases, they'd be insured by the SIPC. But tI don't think they'd cover investment losses.
SIPC works nothing like FDIC. It's essentially insurance against fraud by the broker, which, for the big brokers, is essentially impossible.

SIPC only has about $5 billion vs $128 billion in FDIC. SIPC is private insurance and not backed by the Fed or US Government.

Vanguard's settlement fund has over $100 billion by itself. A 1% loss (i.e. $0.99 on the $1.00) would use up 20% of the SIPC fund if it worked like FDIC.
I just want to point out FDIC and SIPC works differently.

FDIC: Banks take deposits and invest in treasuries. When SVB failed to meet withdrawal, FDIC will take over and guarantee your deposit. FDIC may have to sell bank's assets at a loss and use FDIC's fund to cover such loss.

SIPC: brokerage firms are required to separate your assets. Not like mutual funds that can participate in securities lending. Your shares in VTI is separated out and brokerage firms do not use it to invest. If your shares in money market lost money, brokerage firms do not have to make you whole. There is a big disclaimer everywhere: your investment might lose money. Not their fault if you didn't read or plead ignorance. SIPC won't step in because there is no fraud. So you're on your own with your investments if money market funds break the buck.
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Re: Risk of VMFXX breaking buck from Debt Ceiling Crisis Jun 2023

Post by ehh »

Trance wrote: Wed May 24, 2023 4:43 pm Would a very short term bond etf allow you to avoid a "break the buck" scenario? Where a money market fund goes below its $1.00 NAV and triggers a panic selloff?
Re: [Debt ceiling discussion mega-thread]Quote watchnerd
by watchnerd » Wed May 24, 2023 2:46 pm
pardo2k wrote: Wed May 24, 2023 2:09 pm Let's say there is a technical default, what could happen to VMFXX? Nothing? Or it could break the buck? How bad could a loss be, if any?
Nobody knows.

Some opine the treasury will prioritize timely payment of interest and timely payment of maturing bills/bonds - to minimize global financial chaos.

Here is a short statement Vanguard posted today: https://investor.vanguard.com/investor- ... transcript

As you might expect not much detail. Sara Devereux, the global head of Vanguard fixed income group does say
we’ve been working on this for a while. Since January, we’ve been taking precautionary steps in our portfolios in case that actually did happen.
Interesting situation, isn't it?
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Re: [Debt ceiling discussion mega-thread]

Post by watchnerd »

Blue456 wrote: Wed May 24, 2023 4:49 pm
watchnerd wrote: Wed May 24, 2023 3:46 pm
Blue456 wrote: Wed May 24, 2023 2:52 pm So what will happen to my VGIT (intermediate term treasury ETF) when US government defaults?
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Re: [Debt ceiling discussion mega-thread]

Post by nisiprius »

If there is a technical default lasting a few days, I think we will find that there are things buried in the fine print that will give mutual funds, brokerages, etc. wiggle room. For example, I think every mutual fund--so I think that would include money market [mutual] funds--actually are only required to settle within ten calendar days of redemption. And I don't know what the legalities involving NAV are, I think they could suspend the usual method of determining NAV and substitute something else... actually do it now and maybe get sued later, sort of thing.

I mean, when the Flash Crash hit, it turned out that they were able to reverse all of the transactions associated with it. There are apparently a lot of things brokerage and fund companies can do but "never" do.
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Re: [Debt ceiling discussion mega-thread]

Post by 000 »

nisiprius wrote: Wed May 24, 2023 6:49 pm If there is a technical default lasting a few days, I think we will find that there are things buried in the fine print that will give mutual funds, brokerages, etc. wiggle room. For example, I think every mutual fund--so I think that would include money market [mutual] funds--actually are only required to settle within ten calendar days of redemption.
All the more reason for ETFs.
And I don't know what the legalities involving NAV are, I think they could suspend the usual method of determining NAV and substitute something else... actually do it now and maybe get sued later, sort of thing.

I mean, when the Flash Crash hit, it turned out that they were able to reverse all of the transactions associated with it. There are apparently a lot of things brokerage and fund companies can do but "never" do.
Imagine trying to claw back funds that a few million Joe Investors got out of your MMF because you used an incorrect NAV calculation.

IMO suspension of withdrawals, if not an overall trading halt, is far more likely than NAV games if the market cannot effectively price Treasuries.

Anyway this is all pretty theoretical stuff at this point...
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Re: [Debt ceiling discussion mega-thread]

Post by VartAndelay »

I will say it again: I will be furious if I lose my money in VUSXX. I feel that I have been boxed into a corner and do not see a better option for me to store this money right now. If I actually lose money because of this, I will be completely furious.
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Re: [Debt ceiling discussion mega-thread]

Post by stevewolfe »

VartAndelay wrote: Wed May 24, 2023 7:37 pm I will say it again: I will be furious if I lose my money in VUSXX. I feel that I have been boxed into a corner and do not see a better option for me to store this money right now. If I actually lose money because of this, I will be completely furious.
Are you eligible for a Vanguard cash plus account? https://investor.vanguard.com/investmen ... nvestments
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Re: [Debt ceiling discussion mega-thread]

Post by stevewolfe »

Fitch put US credit rating on negative watch tonight: https://www.cnbc.com/2023/05/24/fitch-u ... iling.html.
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Re: [Debt ceiling discussion mega-thread]

Post by exodusNH »

VartAndelay wrote: Wed May 24, 2023 7:37 pm I will say it again: I will be furious if I lose my money in VUSXX. I feel that I have been boxed into a corner and do not see a better option for me to store this money right now. If I actually lose money because of this, I will be completely furious.
You might try writing your representatives in Washington, DC to let them know how you're feeling.
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Re: [Debt ceiling discussion mega-thread]

Post by VartAndelay »

stevewolfe wrote: Wed May 24, 2023 7:39 pm
VartAndelay wrote: Wed May 24, 2023 7:37 pm I will say it again: I will be furious if I lose my money in VUSXX. I feel that I have been boxed into a corner and do not see a better option for me to store this money right now. If I actually lose money because of this, I will be completely furious.
Are you eligible for a Vanguard cash plus account? https://investor.vanguard.com/investmen ... nvestments
Thank you for this. I have recently seen it, and it may be something I should look into more. However I do have more than $1.25 million involved. Also for some reason I have just never fully trusted these sort of things. I've seen a few of these offerings before advertising $1.25 million or so in FDIC protection, but I just feel like there may be some fine print or some sort of "catch", so I've never felt like it was as good and ironclad as I'd necessarily want. But that may just be undue paranoia on my part. I don't know.
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Re: [Debt ceiling discussion mega-thread]

Post by exodusNH »

VartAndelay wrote: Wed May 24, 2023 7:50 pm
stevewolfe wrote: Wed May 24, 2023 7:39 pm
VartAndelay wrote: Wed May 24, 2023 7:37 pm I will say it again: I will be furious if I lose my money in VUSXX. I feel that I have been boxed into a corner and do not see a better option for me to store this money right now. If I actually lose money because of this, I will be completely furious.
Are you eligible for a Vanguard cash plus account? https://investor.vanguard.com/investmen ... nvestments
Thank you for this. I have recently seen it, and it may be something I should look into more. However I do have more than $1.25 million involved. Also for some reason I have just never fully trusted these sort of things. I've seen a few of these offerings before advertising $1.25 million or so in FDIC protection, but I just feel like there may be some fine print or some sort of "catch", so I've never felt like it was as good and ironclad as I'd necessarily want. But that may just be undue paranoia on my part. I don't know.
It's undue paranoia. The products have been around forever. They basically shuffle your money between different FDIC accounts to keep you under the $250k limit.
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Re: [Debt ceiling discussion mega-thread]

Post by VartAndelay »

exodusNH wrote: Wed May 24, 2023 7:54 pm
VartAndelay wrote: Wed May 24, 2023 7:50 pm
stevewolfe wrote: Wed May 24, 2023 7:39 pm
VartAndelay wrote: Wed May 24, 2023 7:37 pm I will say it again: I will be furious if I lose my money in VUSXX. I feel that I have been boxed into a corner and do not see a better option for me to store this money right now. If I actually lose money because of this, I will be completely furious.
Are you eligible for a Vanguard cash plus account? https://investor.vanguard.com/investmen ... nvestments
Thank you for this. I have recently seen it, and it may be something I should look into more. However I do have more than $1.25 million involved. Also for some reason I have just never fully trusted these sort of things. I've seen a few of these offerings before advertising $1.25 million or so in FDIC protection, but I just feel like there may be some fine print or some sort of "catch", so I've never felt like it was as good and ironclad as I'd necessarily want. But that may just be undue paranoia on my part. I don't know.
It's undue paranoia. The products have been around forever. They basically shuffle your money between different FDIC accounts to keep you under the $250k limit.
Ok, thank you.
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Re: [Debt ceiling discussion mega-thread]

Post by jebmke »

Does the prospectus for VUSXX state that it is 100% safe under any condition? I don't use MM funds except for brief settlement stays so I have to confess, that was the one fund whose prospectus I have not read.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
VartAndelay
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Re: [Debt ceiling discussion mega-thread]

Post by VartAndelay »

jebmke wrote: Wed May 24, 2023 8:02 pm Does the prospectus for VUSXX state that it is 100% safe under any condition? I don't use MM funds except for brief settlement stays so I have to confess, that was the one fund whose prospectus I have not read.
I highly doubt it would say that, but what bothers me is that I don't really feel like there is any totally "safe" option for me in this bizarre scenario.
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arcticpineapplecorp.
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Re: Risk of VMFXX breaking buck from Debt Ceiling Crisis Jun 2023

Post by arcticpineapplecorp. »

ehh wrote: Wed May 24, 2023 5:50 pm Here is a short statement Vanguard posted today: https://investor.vanguard.com/investor- ... transcript

As you might expect not much detail. Sara Devereux, the global head of Vanguard fixed income group does say
we’ve been working on this for a while. Since January, we’ve been taking precautionary steps in our portfolios in case that actually did happen.
Interesting situation, isn't it?
this part was interesting:
Sara Devereux: Well, we’ve been taking a number of steps within our bond and money market funds, such as not investing in Treasuries where the maturity dates fall in the potential default window whenever we can avoid it.

Since the government will ultimately make good on its debt, managing the risk of default is largely an operational exercise in timing cash flows. We at Vanguard are mitigating that risk for investors so they can tune out the noise and stay focused on the long term.

That said, there will be volatility, and no one can totally escape that, which is true for all asset managers, not just Vanguard.
and regarding the equity markets:
Greg Davis: Yeah, unfortunately, we’ve seen volatility many times before. Although an actual debt default would be very unique and, hopefully, we don’t go there.

The message we’re giving to our investors has been consistent because it stands the test of time: If you’re already well diversified in an allocation that suits your goals, your time horizon, and your risk tolerance, then of course, stay the course

That includes maintaining the appropriate level of cash reserves, which will help prevent needing to sell securities in a potential down market. But the other thing we want people to remember is that volatility goes both ways—up and down. Time in the markets is better than trying to time the markets. So that’s our thoughts.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
exodusNH
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Re: [Debt ceiling discussion mega-thread]

Post by exodusNH »

VartAndelay wrote: Wed May 24, 2023 8:07 pm
jebmke wrote: Wed May 24, 2023 8:02 pm Does the prospectus for VUSXX state that it is 100% safe under any condition? I don't use MM funds except for brief settlement stays so I have to confess, that was the one fund whose prospectus I have not read.
I highly doubt it would say that, but what bothers me is that I don't really feel like there is any totally "safe" option for me in this bizarre scenario.
Because there isn't. It's unprecedented.
H-Town
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Re: [Debt ceiling discussion mega-thread]

Post by H-Town »

VartAndelay wrote: Wed May 24, 2023 7:37 pm I will say it again: I will be furious if I lose my money in VUSXX. I feel that I have been boxed into a corner and do not see a better option for me to store this money right now. If I actually lose money because of this, I will be completely furious.
You know that investment can lose money right? You know that you don’t have to invest right? You know the risk of default since January 2023 right? You should be furious at yourself.
Time is the ultimate currency.
VartAndelay
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Re: [Debt ceiling discussion mega-thread]

Post by VartAndelay »

H-Town wrote: Wed May 24, 2023 8:20 pm
VartAndelay wrote: Wed May 24, 2023 7:37 pm I will say it again: I will be furious if I lose my money in VUSXX. I feel that I have been boxed into a corner and do not see a better option for me to store this money right now. If I actually lose money because of this, I will be completely furious.
You know that investment can lose money right? You know that you don’t have to invest right? You know the risk of default since January 2023 right? You should be furious at yourself.
I have needed to keep significant cash or cash-like funds for a pending real estate purchase since well before January 2023, and it still hasn't closed yet.
H-Town
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Re: [Debt ceiling discussion mega-thread]

Post by H-Town »

VartAndelay wrote: Wed May 24, 2023 8:23 pm
H-Town wrote: Wed May 24, 2023 8:20 pm
VartAndelay wrote: Wed May 24, 2023 7:37 pm I will say it again: I will be furious if I lose my money in VUSXX. I feel that I have been boxed into a corner and do not see a better option for me to store this money right now. If I actually lose money because of this, I will be completely furious.
You know that investment can lose money right? You know that you don’t have to invest right? You know the risk of default since January 2023 right? You should be furious at yourself.
I have needed to keep significant cash or cash-like funds for a pending real estate purchase since well before January 2023, and it still hasn't closed yet.
You should move the fund to bank account to avoid any risk of default. Don’t play with fire.
Time is the ultimate currency.
VartAndelay
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Re: [Debt ceiling discussion mega-thread]

Post by VartAndelay »

H-Town wrote: Wed May 24, 2023 8:37 pm
VartAndelay wrote: Wed May 24, 2023 8:23 pm
H-Town wrote: Wed May 24, 2023 8:20 pm
VartAndelay wrote: Wed May 24, 2023 7:37 pm I will say it again: I will be furious if I lose my money in VUSXX. I feel that I have been boxed into a corner and do not see a better option for me to store this money right now. If I actually lose money because of this, I will be completely furious.
You know that investment can lose money right? You know that you don’t have to invest right? You know the risk of default since January 2023 right? You should be furious at yourself.
I have needed to keep significant cash or cash-like funds for a pending real estate purchase since well before January 2023, and it still hasn't closed yet.
You should move the fund to bank account to avoid any risk of default. Don’t play with fire.
I already have multiple bank accounts with about $250k each. I didn't open more because I read that opening too many bank accounts could result in problems.
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HomerJ
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Re: [Debt ceiling discussion mega-thread]

Post by HomerJ »

VartAndelay wrote: Wed May 24, 2023 8:41 pm
H-Town wrote: Wed May 24, 2023 8:37 pm
VartAndelay wrote: Wed May 24, 2023 8:23 pm
H-Town wrote: Wed May 24, 2023 8:20 pm
VartAndelay wrote: Wed May 24, 2023 7:37 pm I will say it again: I will be furious if I lose my money in VUSXX. I feel that I have been boxed into a corner and do not see a better option for me to store this money right now. If I actually lose money because of this, I will be completely furious.
You know that investment can lose money right? You know that you don’t have to invest right? You know the risk of default since January 2023 right? You should be furious at yourself.
I have needed to keep significant cash or cash-like funds for a pending real estate purchase since well before January 2023, and it still hasn't closed yet.
You should move the fund to bank account to avoid any risk of default. Don’t play with fire.
I already have multiple bank accounts with about $250k each. I didn't open more because I read that opening too many bank accounts could result in problems.
Well, use those multiple bank accounts for your pending real estate purchase.

Unless you are buying North Dakota or something, I guess.
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spencydub
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Re: [Debt ceiling discussion mega-thread]

Post by spencydub »

I’m sure this has been discussed, but wanted to ask.

I’m think of moving my money from fidelity treasury money market to their cash account. Would this be prudent or paranoid? Would it even be helpful in the event of a default?
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