How do you invest the Cash portion?

Discussion of the Cash portion of the Permanent Portfolio

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drumminj
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Re: How do you invest the Cash portion?

Post by drumminj » Sun Nov 24, 2019 10:14 pm

vnatale wrote:
Sun Nov 24, 2019 9:32 pm
"STT" = ??
Presumably "Short-term Treasury"
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Kbg
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Re: How do you invest the Cash portion?

Post by Kbg » Mon Nov 25, 2019 9:28 am

drumminj wrote:
Sun Nov 24, 2019 10:14 pm
vnatale wrote:
Sun Nov 24, 2019 9:32 pm
"STT" = ??
Presumably "Short-term Treasury"
Yes
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jhogue
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Re: How do you invest the Cash portion?

Post by jhogue » Mon Nov 25, 2019 2:36 pm

dualstow wrote:
Sun Nov 24, 2019 2:51 pm
by jhogue » Today, 3:26 pm \
I am alternately fascinated and perplexed by the endless hunt for yield in Cash that populates this thread and others like it.
I'm too lazy to chase yield, but I do enjoy reading the threads of those who chase it.

Setting aside the long bonds I bought for the vp, I have a small set of notes of various maturities that pay between 1 and 2% overall.
Some began life (in my holdings) as ten year notes, others as 5-years, and so on. Putting them in order by maturity date, there will be one reaching the finish line about every year or year and a half.

I used to think what a mistake it was to buy them. Now the yield is looking pretty good. I want to draw a tacky analogy, but I'll resist.
But, I like watching what was pathetic deep cash turn into pretty good cash.

The pp has notes paying 2.6% and 2.75%, hooray. But what happens when they mature? I'll probably be buying notes at 1% or VUSXX which is going down (the yield) every week. 1.71% compounded, right now.
dualstow,

Looking in the rear view mirror, your ten year ladder of CDs must seem like a sure-fire-no-brainer-strategy for any amount of cash up to the $250,000 FDIC limit. Low inflation and Trump’s tax cut didn’t hurt either.

Here’s the problem as I see it:

Domestic STTs and ITTs are now stuck in a lower-bound range of 1.5 - 1.8%, and trillions in negative yielding euro and Swiss franc bonds are piling ever higher in Europe. There is no way that you can build a new ladder of of ten year CDs going forward that will bring you the after-inflation and after-tax yield your old CD ladder did. Interest rates can stay the same or they can rise, but they cannot continue to fall at the rate they did over the last decade for the next decade.
“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!"
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dualstow
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Re: How do you invest the Cash portion?

Post by dualstow » Mon Nov 25, 2019 3:20 pm

Who knows what the future holds, jhogue.
It's very tempting to just have a large stock-heavy vp with zaftig dividends.
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ochotona
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Re: How do you invest the Cash portion?

Post by ochotona » Mon Nov 25, 2019 3:48 pm

dualstow wrote:
Mon Nov 25, 2019 3:20 pm
Who knows what the future holds, jhogue.
It's very tempting to just have a large stock-heavy vp with zaftig dividends.
DWX foreign dividend stock ETF yielding 3.3% now. I own this one.
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Re: How do you invest the Cash portion?

Post by dualstow » Mon Nov 25, 2019 3:53 pm

Nice
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Kbg
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Re: How do you invest the Cash portion?

Post by Kbg » Mon Nov 25, 2019 6:09 pm

ochotona wrote:
Mon Nov 25, 2019 3:48 pm
dualstow wrote:
Mon Nov 25, 2019 3:20 pm
Who knows what the future holds, jhogue.
It's very tempting to just have a large stock-heavy vp with zaftig dividends.
DWX foreign dividend stock ETF yielding 3.3% now. I own this one.
SCHD yields 3.18 (SEC yield) and no foreign currency risk...
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ochotona
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Re: How do you invest the Cash portion?

Post by ochotona » Mon Nov 25, 2019 6:48 pm

Kbg wrote:
Mon Nov 25, 2019 6:09 pm
ochotona wrote:
Mon Nov 25, 2019 3:48 pm
dualstow wrote:
Mon Nov 25, 2019 3:20 pm
Who knows what the future holds, jhogue.
It's very tempting to just have a large stock-heavy vp with zaftig dividends.
DWX foreign dividend stock ETF yielding 3.3% now. I own this one.
SCHD yields 3.18 (SEC yield) and no foreign currency risk...
Yup, that's a good one too
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Re: How do you invest the Cash portion?

Post by mathjak107 » Tue Nov 26, 2019 7:50 am

no stock fund ever should be used as a proxy for cash and interest . dividends are not interest ...

they serve two different purposes ... stocks are stocks whether they distribute a piece of your share price back to you as a dividend or not . they are never a proxy for interest and the safety of cash instruments .
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dualstow
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Re: How do you invest the Cash portion?

Post by dualstow » Tue Nov 26, 2019 9:10 am

mathjak107 wrote:
Tue Nov 26, 2019 7:50 am
no stock fund ever should be used as a proxy for cash and interest . dividends are not interest ...

they serve two different purposes ... stocks are stocks whether they distribute a piece of your share price back to you as a dividend or not . they are never a proxy for interest and the safety of cash instruments .
Totally agree. Not a proxy. All the same, I have cash in the vp that will probably become dividend stocks.
PP cash is sacrosanct with regard to both quality and proportion of the whole.

Even notes longer than 3-years don't belong in the pp cash section. They've got the quality, but they are just not cash.
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jhogue
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Re: How do you invest the Cash portion?

Post by jhogue » Tue Nov 26, 2019 1:26 pm

I haven’t bought a T-bill with a maturity longer than one year for several years now.

Unless you have some specific liability matching in mind, which would rather buy today?

-A one year Treasury bill at 1.64%, or ,
-A three year Treasury bill at 1.57%,.
“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!"
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dualstow
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Re: How do you invest the Cash portion?

Post by dualstow » Tue Nov 26, 2019 4:23 pm

One of each, please. O0
Seriously, it depends on which way you think rates are going. I do in fact buy both.
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