dabuff Posted February 7, 2016 Share Posted February 7, 2016 What do you all do with your extra cash while waiting for opportunities? I keep mine in a high-yield online savings account (Ally), earning 1% per annum, but was wondering if anyone had any better options? Link to comment Share on other sites More sharing options...
NewbieD Posted February 7, 2016 Share Posted February 7, 2016 I most my cash in a similar account. In general I think you can't go far wrong letting your cash being as liquid as possible. This isn't where you will have a big edge, but the decision to hold cash might be. For the patience part I feel it helps to have yield. Therefore I've bought a stake in SAS preferred shares yielding about 10%. Time will tell if it's better or not:) I like that the cash flow looks very safe atm and that there is a high incentive in the terms to repurchase these in 2017 which should make them less sensitive to any rate hikes. Link to comment Share on other sites More sharing options...
scorpioncapital Posted February 7, 2016 Share Posted February 7, 2016 For cash that I am not investing I break it up into 80% and 20% buckets, the 20% sits in the bank and the 80% I use for cash paid merger arbitrage with a horizon of up 3-12 months. Link to comment Share on other sites More sharing options...
randomep Posted February 7, 2016 Share Posted February 7, 2016 I saw KCLI go from 52.5 to 36, it was selling at 1/2 book. So I bought a whole bunch with money designated for cash. I believe (hope) that the stock can't go any lower. If market goes south I can sell it to raise cash. Wonder if anyone has done something like that? Link to comment Share on other sites More sharing options...
StubbleJumper Posted February 7, 2016 Share Posted February 7, 2016 Well, first off, why do we hold cash? Unless you are in the withdrawal phase of your investing life-cycle, I would argue that we hold cash because we are awaiting market opportunities to deploy it in an interesting investment. I'd say that there are two broad situations where market opportunities might appear: 1) A security (or perhaps a collection of securities) fall in price and become attractive; or 2) A general market displacement occurs which drags down the price of most (all?) securities. Most of my investing career I have been snooping around looking for opportunities from cause #1, but on a couple of occasions (the tech wreck and the financial crisis) I exploited opportunities from cause #2. If you want to exploit only opportunities in cause #1, you can keep your cash in pretty much any security and you won't run into trouble. But if you think that cause #2 is possible/imminent, then you need to avoid any risky security, all money market funds, and all commercial paper. What we learned in 2008 is that during a financial crisis, prices of risky securities can decline for no reason, money market funds prohibit withdrawals, and that you might not be able to convert commercial paper to cash. So, I say if you are planning to keep cash around to deploy it opportunistically, you should be looking for two characteristics: 1) LIQUID 2) SOVEREIGN GUARANTEE An insured savings account or T-bills fulfil these exigencies nicely. Reaching for yield can finish badly. SJ Link to comment Share on other sites More sharing options...
doughishere Posted February 7, 2016 Share Posted February 7, 2016 Fondle it. ;) Link to comment Share on other sites More sharing options...
StubbleJumper Posted February 7, 2016 Share Posted February 7, 2016 Fondle it. ;) Are we still talking about cash? ::) Link to comment Share on other sites More sharing options...
thepupil Posted February 7, 2016 Share Posted February 7, 2016 i-bonds (liquid after 1 year). they are more for "long term" cash though in that you can't easily reduce/add to the position. i use it as my no risk fixed income allocation, my emergency fund, my "maybe one day I'll want to own a house and need a downpayment fund", my "oh shit interactive brokers just went under and that's where all my assets are" fund, etc. probably not what you were looking for but whenever these threads come up, I pimp the i-bonds because a 0% real return tax deferred with no credit risk, market risk, or duration risk is sexy as hell. they are also great for enlivening cocktail party conversation. Link to comment Share on other sites More sharing options...
dabuff Posted February 7, 2016 Author Share Posted February 7, 2016 I-bonds and the like seem to be yielding much less than my opportunity cost of simply using a high-yield online savings account - thoughts? Link to comment Share on other sites More sharing options...
thepupil Posted February 7, 2016 Share Posted February 7, 2016 https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm The composite rate for I bonds issued November 1, 2015 April 30, 2016, is 1.64% the yield depends on inflation. the interest rate is a composite of a fixed coupon and inflation, but the fixed coupon is basically zero. this cool cat says you should buy your i-bonds later because the fixed coup may go up. http://seekingalpha.com/article/3799726-buying-bonds-2016-one-word-advice-wait they can't go down in value but they can go to 0% coupon if inflation is negative. here's what an i-bonds position built over time looks like in real life. i envy those who were buying with fixed coupons of like 3% back in the day. hope that helps, i'm off to play some bingo and get a colonoscopy Issue Date Interest Rate Status Amount Current Value 01-01-2016 1.64% $5,000.00 $5,000.00 01-01-2016 1.64% $5,000.00 $5,000.00 03-01-2015 0.00% $5,000.00 $5,038.00 01-01-2015 1.54% $5,000.00 $5,038.00 01-01-2014 1.74% $10,000.00 $10,256.00 05-01-2013 1.54% $10,000.00 $10,288.00 05-01-2012 1.54% $5,000.00 $5,246.00 05-01-2012 1.54% $5,000.00 $5,246.00 Totals: $50,000.00 $51,112.00 Link to comment Share on other sites More sharing options...
mbower Posted February 7, 2016 Share Posted February 7, 2016 Great quote from Tepper last summer on cash - "I'm not short, because I'm nervous about the liquidity. The market can go up, so that's why I have this cash, which is a great hedge. I'll tell you this: it's the best hedge; nothing else is as great a hedge. You can learn anything you want at Carnegie Mellon, I'm telling you right now, you can't hedge yourself like being only cash at a time." Link to comment Share on other sites More sharing options...
Patmo Posted February 7, 2016 Share Posted February 7, 2016 Fondle it. ;) Are we still talking about cash? ::) Why not both? Link to comment Share on other sites More sharing options...
dabuff Posted February 7, 2016 Author Share Posted February 7, 2016 https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm The composite rate for I bonds issued November 1, 2015 April 30, 2016, is 1.64% the yield depends on inflation. the interest rate is a composite of a fixed coupon and inflation, but the fixed coupon is basically zero. this cool cat says you should buy your i-bonds later because the fixed coup may go up. http://seekingalpha.com/article/3799726-buying-bonds-2016-one-word-advice-wait they can't go down in value but they can go to 0% coupon if inflation is negative. here's what an i-bonds position built over time looks like in real life. i envy those who were buying with fixed coupons of like 3% back in the day. hope that helps, i'm off to play some bingo and get a colonoscopy Issue Date Interest Rate Status Amount Current Value 01-01-2016 1.64% $5,000.00 $5,000.00 01-01-2016 1.64% $5,000.00 $5,000.00 03-01-2015 0.00% $5,000.00 $5,038.00 01-01-2015 1.54% $5,000.00 $5,038.00 01-01-2014 1.74% $10,000.00 $10,256.00 05-01-2013 1.54% $10,000.00 $10,288.00 05-01-2012 1.54% $5,000.00 $5,246.00 05-01-2012 1.54% $5,000.00 $5,246.00 Totals: $50,000.00 $51,112.00 Thanks the pupil. It's a small liquidity sacrifice though, no? Link to comment Share on other sites More sharing options...
Gamecock-YT Posted February 7, 2016 Share Posted February 7, 2016 Keep it in my mattress. Link to comment Share on other sites More sharing options...
thepupil Posted February 8, 2016 Share Posted February 8, 2016 https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm The composite rate for I bonds issued November 1, 2015 April 30, 2016, is 1.64% the yield depends on inflation. the interest rate is a composite of a fixed coupon and inflation, but the fixed coupon is basically zero. this cool cat says you should buy your i-bonds later because the fixed coup may go up. http://seekingalpha.com/article/3799726-buying-bonds-2016-one-word-advice-wait they can't go down in value but they can go to 0% coupon if inflation is negative. here's what an i-bonds position built over time looks like in real life. i envy those who were buying with fixed coupons of like 3% back in the day. hope that helps, i'm off to play some bingo and get a colonoscopy Issue Date Interest Rate Status Amount Current Value 01-01-2016 1.64% $5,000.00 $5,000.00 01-01-2016 1.64% $5,000.00 $5,000.00 03-01-2015 0.00% $5,000.00 $5,038.00 01-01-2015 1.54% $5,000.00 $5,038.00 01-01-2014 1.74% $10,000.00 $10,256.00 05-01-2013 1.54% $10,000.00 $10,288.00 05-01-2012 1.54% $5,000.00 $5,246.00 05-01-2012 1.54% $5,000.00 $5,246.00 Totals: $50,000.00 $51,112.00 Thanks the pupil. It's a small liquidity sacrifice though, no? yes, it is a small liquidity sacrifice for the first year and like i said, it's not really to be used for cash that you'll move around a lot so it may not suit your purpose Year 0-1: not liquid Year 1-5: liquid, forfeit 3 months' interest (the amount shown in your account and above is net of this penalty) Year 5-30: liquid with no penalty Year 30: you must redeem federally taxable at ordinary rates upon redemption unless used to make qualifying educational expenses if bondholder falls under a a certain income limit; not subject to state tax. Link to comment Share on other sites More sharing options...
Nelson Posted February 8, 2016 Share Posted February 8, 2016 We use Tangerine here in Canada. Getting 2.4% on a "high interest" savings account. Usually have to complain after the grace period is up to get them to extend the rate, but they always say yes. EQ Bank (part of Equitable Group, a subprime mortgage lender that trades on the TSX) is offering 3% as a promo. Both are guaranteed by the government up to $100k. I'm not a big enough baller to get above that. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted February 8, 2016 Share Posted February 8, 2016 Count it. Link to comment Share on other sites More sharing options...
merkhet Posted February 8, 2016 Share Posted February 8, 2016 Always an option: http://45.media.tumblr.com/582ac648525bb1a49c5b62526a60875b/tumblr_nzbt19UjjB1rrrncdo1_250.gif Link to comment Share on other sites More sharing options...
Jurgis Posted February 8, 2016 Share Posted February 8, 2016 I prefer http://media.giphy.com/media/Kerg053G7ZJUQ/giphy.gif nowadays. Link to comment Share on other sites More sharing options...
fareastwarriors Posted February 8, 2016 Share Posted February 8, 2016 I prefer http://media.giphy.com/media/Kerg053G7ZJUQ/giphy.gif nowadays. hahah that's how my portfolio looks like these days. Link to comment Share on other sites More sharing options...
CorpRaider Posted February 8, 2016 Share Posted February 8, 2016 Always an option: http://45.media.tumblr.com/582ac648525bb1a49c5b62526a60875b/tumblr_nzbt19UjjB1rrrncdo1_250.gif I totally tried to respond with the GIF with peter griffin from family guy trying to dive into coins like scrooge mcduck, but I failed miserably. I am getting old. Link to comment Share on other sites More sharing options...
CorpRaider Posted February 8, 2016 Share Posted February 8, 2016 I prefer http://media.giphy.com/media/Kerg053G7ZJUQ/giphy.gif nowadays. Buying BAC-WTA, eh? Link to comment Share on other sites More sharing options...
Jurgis Posted February 8, 2016 Share Posted February 8, 2016 Buying BAC-WTA, eh? BAC without WTA. And some others. Link to comment Share on other sites More sharing options...
CorpRaider Posted February 8, 2016 Share Posted February 8, 2016 Yeah i need to buy some common so I can at least vote no on all the management proposals. It won't accomplish anything, but it will make me feel better. ;D Link to comment Share on other sites More sharing options...
fareastwarriors Posted February 8, 2016 Share Posted February 8, 2016 Yeah i need to buy some common so I can at least vote no on all the management proposals. It won't accomplish anything, but it will make me feel better. ;D I been voting No to all management proposal since 2009... :-\ (bought a bit of common last week). Link to comment Share on other sites More sharing options...
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