cash: using 6 month bonds vs 3 year bonds

[Arturo]

Hi all,

backtesting usa pp thanks to PeaktoTrough tool

http://www.peaktotrough.com/hbpp.cgi

i realize one detail about cash. If you use 3 year bond cash, you obtain better CAGR with very similar Standard Deviation if you use 1 year. Harry Browne advised to use the shorter the better for cash, above all for recession periods. But if we double check the number of recessions since 1972:

http://en.wikipedia.org/wiki/List_of_re ... ion_onward

we can deduct that 3 year cash bonds performed very very similar to 1 year, but you got better CAGR, the same number of negative years (2), and similar MaxDD also.

So if you could purchase 6 month short term bonds directly to the treasury, or a 2-3 years maturity ETF bond product, what would you advise to me? Harry Browne and Craig advise short term, but later, the statistics says that you get better results with longer bonds and similar volatility variables.

some reflections?

thanks and regards!

[LazyInvestor]

I just put 50% of cash in 1 year bills and 50% in 3 year bonds. You can make a 3 year bond ladder with bonds spread 6 months apart and eventually you'll be buying just 3 year bonds and have awesome cash returns.

[Arturo]

I just put 50% of cash in 1 year bills and 50% in 3 year bonds. You can make a 3 year bond ladder with bonds spread 6 months apart and eventually you'll be buying just 3 year bonds and have awesome cash returns.

Hi Lazy,

thanks for the answer. i don't get the point with your last sentence.

[frugal]

Maybe its not perfect but 1-3 years can be used

regards