T-Bill Yields Turn Negative
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I Shrugged
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Re: T-Bill Yields Turn Negative
Negative T bill rates bother me. It tells me that foreigners are piling their money into bills for safekeeping. Which is fine and all. But they are depressing the yields for those of us who don't want to pay for privilege. I guess this is a burden of having the world's favorite currency.
Stay free, my friends.
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dualstow
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Re: T-Bill Yields Turn Negative
These rates botehr me, too. I've been buying 2- and 3-year notes for a while now, and negative rates certainly don't tempt me to begin buying T-bills. Even several years ago, there were those who wrote how they refused to hold cash, there were a rash of 3-asset-pp threads and talk of alternatives to cash. If you can't hold everything in i-bonds, how are you all holding cash?
Or, how do you plan to hold cash when your current holdings mature?
Or, how do you plan to hold cash when your current holdings mature?
Re: T-Bill Yields Turn Negative
Dualstow, I am guessing that very few people with a decent amount of assets in their PP are holding 25% in cash that yields nothing. Having just set up my PP this year, I probably have too much 'deep cash' in savings bonds and too little as dry powder in T-Bills. So I am building UP my T-Bills in each account. I guess the thing to keep in mind with ZIRP is that you want to have enough available cash to be able to pounce when one of the 'big three' gets punished.
Last edited by barrett on Sun Sep 28, 2014 12:23 pm, edited 1 time in total.
Re: T-Bill Yields Turn Negative
I am one of those few people... 25% of my cash portion is in "dry powder" yielding nothing.... (1 month duration up to 12 months duration T-bills)... and I have a decent amount of assets in my PPI am guessing that very few people with a decent amount of assets in their PP are holding 25% in cash that yields nothing
I just trust the PP system...
Re: T-Bill Yields Turn Negative
Guys,
I haven't abandoned anything. I'm just not writing about this topic much now. I don't have that much to add. If I change what I'm doing I'll let everyone know. But really each person has their own unique circumstances and life strategy they need to work out for themselves in terms of their finances.
As for the book sales, I would have made FAR MORE working at McDonald's as a fry cook with the hours spent writing it than actually publishing the thing. Really. And Tex can backup that statement. We wrote the book because we wanted to, not because we are after mass fortunes pushing a niche investing strategy that is over the heads of 99% of the investing public.
The main thing from the Permanent Portfolio is not that I think it should be followed blindly, but work as a core idea which encompasses basically:
1) Own some stocks.
2) Own some cash.
3) Own some fixed income.
4) Own some hard assets.
Now we can quibble around the edges such as govt. vs. corporate bonds or gold vs. real estate. We all have our opinions on these matters. But the core for me in my research into this area is it's best to own some exposure to all these assets all the time, and not go overboard on any of them unless you can take the punishment if it goes south.
FWIW. I have not changed my portfolio at all except to work in with my own circumstances. Other than that, I still use the basic principles outlined above along with keeping things passive and low-cost.
I am focusing on other things and just don't want to spend much time talking about the topic. It's not to say I won't post on it again at my blog, etc. It's just that I don't want to be bothered with having to come up with new things to write about that don't involve following the financial news cycle which I find destructive to profits long-term.
I haven't abandoned anything. I'm just not writing about this topic much now. I don't have that much to add. If I change what I'm doing I'll let everyone know. But really each person has their own unique circumstances and life strategy they need to work out for themselves in terms of their finances.
As for the book sales, I would have made FAR MORE working at McDonald's as a fry cook with the hours spent writing it than actually publishing the thing. Really. And Tex can backup that statement. We wrote the book because we wanted to, not because we are after mass fortunes pushing a niche investing strategy that is over the heads of 99% of the investing public.
The main thing from the Permanent Portfolio is not that I think it should be followed blindly, but work as a core idea which encompasses basically:
1) Own some stocks.
2) Own some cash.
3) Own some fixed income.
4) Own some hard assets.
Now we can quibble around the edges such as govt. vs. corporate bonds or gold vs. real estate. We all have our opinions on these matters. But the core for me in my research into this area is it's best to own some exposure to all these assets all the time, and not go overboard on any of them unless you can take the punishment if it goes south.
FWIW. I have not changed my portfolio at all except to work in with my own circumstances. Other than that, I still use the basic principles outlined above along with keeping things passive and low-cost.
I am focusing on other things and just don't want to spend much time talking about the topic. It's not to say I won't post on it again at my blog, etc. It's just that I don't want to be bothered with having to come up with new things to write about that don't involve following the financial news cycle which I find destructive to profits long-term.
Last edited by craigr on Mon Sep 29, 2014 8:26 pm, edited 1 time in total.
Re: T-Bill Yields Turn Negative
And as for T-Bills going negative. Honestly I haven't been paying attention so this is the first I've heard of it. It is an extension of the Fed's stupid policy since 2008 so there isn't much to do. You can try chasing yield, but if we get another 2008 style crash that credit risk shows up in spades. I just got into this talk with a good friend who was going to go into peer to peer lending to get some yield. I told him in strong terms that if the markets tank, there will likely be widespread defaults in the p2p lending space and he should not use that as a cash alternative.
Note that the dollar policy is causing other central banks to respond to defend themselves. For instance the NZ Central Bank made statements recently that they were going to react to stop the rise of the NZD against the USD. The Japanese Yen is also at new lows, same with the Ruble, etc. So all these countries are trying to outdo each other in terms of staying ahead of the USD. Since the USD is the biggest player, they are also the slowest and least able to act effectively. Everyone can outmaneuver them. So even if you want to hop into another currency to get yield, realize that those countries may make policy decisions that cause you to lose money as well in the exchange rate.
The interest rate and currency markets are just too unpredictable to know what would happen.
Note that the dollar policy is causing other central banks to respond to defend themselves. For instance the NZ Central Bank made statements recently that they were going to react to stop the rise of the NZD against the USD. The Japanese Yen is also at new lows, same with the Ruble, etc. So all these countries are trying to outdo each other in terms of staying ahead of the USD. Since the USD is the biggest player, they are also the slowest and least able to act effectively. Everyone can outmaneuver them. So even if you want to hop into another currency to get yield, realize that those countries may make policy decisions that cause you to lose money as well in the exchange rate.
The interest rate and currency markets are just too unpredictable to know what would happen.
Last edited by craigr on Mon Sep 29, 2014 8:21 pm, edited 1 time in total.
Re: T-Bill Yields Turn Negative
The law of supply and demand suggests to us that the supply of saved funds available must be very large, and the demand from people who have an idea for something to for which to use them must be relatively smaller. There is more cash savings than there is need/demand for that cash.dualstow wrote:http://online.wsj.com/articles/treasury ... 1411516748A scramble for safe, short-term debt left some investors on Tuesday paying for the privilege of lending to the U.S. government.
This is despite the fact that the US federal government needs a very large quantity of the cash on a constant basis. There simply is more cash sitting around begging to be used than there are parties wanting to use it.
Will this change? When will this change? Nobody knows. Just stay the course and keep your money safe.