What Percentage CASH are you?

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jebmke
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Re: What Percentage CASH are you?

Post by jebmke » Thu Aug 10, 2017 3:50 pm

lol, the current interest rate environment has been here for years.
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bradshaw1965
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Re: What Percentage CASH are you?

Post by bradshaw1965 » Thu Aug 10, 2017 3:52 pm

5%, mostly about my wife and I needing to talk about having a chunk go to taxable or a house project we've noodled around with.

itstoomuch
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Re: What Percentage CASH are you?

Post by itstoomuch » Thu Aug 10, 2017 4:14 pm

It varies. :oops: :mrgreen: :annoyed
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aj76er
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Re: What Percentage CASH are you?

Post by aj76er » Thu Aug 10, 2017 4:24 pm

Aptenodytes wrote:I've never understood the logic of cash as an asset category within an investment portfolio. If you need to hold onto some cash for liquidity or emergency uses, you take it out of your investment portfolio and it becomes part of your checking account or emergency fund. For me that's part of the definition of cash -- it is set aside for short-term, not long-term needs. And how much of it you need is totally independent of how much you are investing, so if your portfolio doubled that wouldn't make you need twice as much cash, or if your portfolio suffered a cash that wouldn't make you need less.

I know people talk about "buckets" in a portfolio when you are withdrawing, and that one of those buckets should have cash in it, but I never got that. It is supposed to enable you to avoid selling assets when they are down, but that's just alchemy. You have to refill the bucket with something, and how can you guarantee that you can do so without selling assets that are down.

If cash buckets really worked, then mutual funds oriented toward generating regular income would hold them. But look at the Vanguard Life Strategy Income Fund -- no cash.

So from where I sit asking "what percentage cash is your portfolio" is like asking "what is cash." The answer is, "0" and "the liquid holdings outside my portfolio."
Because both Bonds and Stocks can decline in value for extended periods of time. I believe the stagflation in the 70's was one such scenario. In this case, cash could be used for rebalancing.

Cash is short-term portfolio insurance.
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WhiteMaxima
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Re: What Percentage CASH are you?

Post by WhiteMaxima » Thu Aug 10, 2017 4:28 pm

cash 25%
Bond 5%
US 40%
intl 30

Daryl
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Re: What Percentage CASH are you?

Post by Daryl » Thu Aug 10, 2017 4:32 pm

4.8%. This includes the margin requirement for any futures positions I hold and "new car" funds. I'll be replacing my current car soon.

munemaker
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Re: What Percentage CASH are you?

Post by munemaker » Thu Aug 10, 2017 4:35 pm

I am retired and in the distribution phase. My portfolio is about 50% equities/ 40% bonds/ 10% cash.

The reason for the cash is it keeps my health insurance (ObamaCare) premium low because cash does not generate much taxable income these days. Investments are in IRAs so no taxable income.

foo.c
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Re: What Percentage CASH are you?

Post by foo.c » Thu Aug 10, 2017 4:48 pm

Higher than optimal over the long term, but feels like not enough right now. Probably means I'm about right.

pascalwager
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Re: What Percentage CASH are you?

Post by pascalwager » Thu Aug 10, 2017 6:57 pm

First of all, I don't care about cash as dry powder. I consider that to be active "investing" (betting) and market timing. In fact, I've stopped reading/recommending/quoting most of the "BH authors" as they all advise forms of active investing. They apparently don't really think that passive investing works, or is generally adequate.

I prefer to keep just below the FDIC limit in an online bank HY savings account and about 20 to $30k in a local landed-bank checking account. This defines my riskless portfolio, but it's an amount rather than a percentage. Yes, maybe it is excessive and I may decide to invest some of it in the near future, but it's not an important issue for me.

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yukonjack
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Re: What Percentage CASH are you?

Post by yukonjack » Thu Aug 10, 2017 8:33 pm

Less than 1%. I don't count the cash I hold to make quarterly tax payments. And I use after tax investments for my emergency fund.

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Pajamas
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Re: What Percentage CASH are you?

Post by Pajamas » Thu Aug 10, 2017 8:36 pm

About negative 2% of investment portfolio. (Some margin debt, some cash, in different accounts.)

AlohaJoe
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Re: What Percentage CASH are you?

Post by AlohaJoe » Thu Aug 10, 2017 8:43 pm

aj76er wrote:Because both Bonds and Stocks can decline in value for extended periods of time. I believe the stagflation in the 70's was one such scenario. In this case, cash could be used for rebalancing.
This isn't true. Bonds never declined for an extended period in the 1970s.

The Bloomberg Barclays US Aggregate Bond index didn't have a single negative year from 1976-1983, much less an "extended period". (1976 is the earliest data available; stagflation is often said to have run from 1973 to 1983.)

According to SBBI 2016 intermediate-term government bonds didn't have a single down year during that period. For that matter, intermediate-term government bonds have never declined for an extended period of time according to SBBI. The only "extended" stretch was 1958-1959 when they were down -1.29% in 1958 and then down again by 0.39% in 1959 before going up 11.76% in 1960.

Stocks did fall in the crash of 1973 and took until 1976 to recover but other than that didn't have any substantial down years. And during the crash of 1973 using bonds to rebalance into stocks would have worked just fine. Even during the 1970s you would spent most of your time rebalancing OUT of stocks because they did so well in many years: 37% in 1975, 24% in 1976, 18% in 1979, 32% in 1980.

Where the 1970s hurt was that many things may not have declined in value but they also didn't keep up with inflation. But the same was true of cash. For instance in 1974 T-Bills returned 8% but inflation was 12.2%.

feh
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Re: What Percentage CASH are you?

Post by feh » Thu Aug 10, 2017 9:01 pm

Less than 1% of portfolio. Of course, that value depends on your definition of "cash". I do not consider money in CDs as cash.

dwickenh
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Re: What Percentage CASH are you?

Post by dwickenh » Thu Aug 10, 2017 9:36 pm

50/46/4 with the 4% being a years worth of cash. Also have 8% of the 46% bonds in short term taxable for 2 more years of living expenses.

Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

WL2034
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Re: What Percentage CASH are you?

Post by WL2034 » Thu Aug 10, 2017 9:51 pm

Usually somewhere between 1-3% of net worth, that includes all cash in checking and savings, emergency fund. 0% of investment portfolio other than the amount that is too little to buy another share of ETF.

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teacher
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Re: What Percentage CASH are you?

Post by teacher » Thu Aug 10, 2017 10:25 pm

We have 10% in a MM, but much of it is earmarked savings for insurance and taxes, and savings for repairs for house and car replacements, and for new appliances, carpet, roof, etc. These funds are not part of our Asset Allocation. We are both retired with one pension and one social security benefit.

gwrvmd
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Re: What Percentage CASH are you?

Post by gwrvmd » Thu Aug 10, 2017 10:47 pm

BW1985
I am also 85/15, 15% being cash, no bonds
If the market goes down, 15% cash represents 3 years spending, much cheaper than 40% bonds
Have done it all my life. Now there is a name for it, the new book "Investing at Level 3"......Gordon
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madbrain
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Re: What Percentage CASH are you?

Post by madbrain » Thu Aug 10, 2017 11:22 pm

0-2% . Currently about 2%.

itstoomuch
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Re: What Percentage CASH are you?

Post by itstoomuch » Thu Aug 10, 2017 11:25 pm

JimmyJammy wrote:I'm curious what percentage of assets people hold in cash? Also, if you didn't haven it in cash, where would you put it?

Personally, I'm 12% Cash right now. Maybe this is dumb, especially with the dollar falling. Feel free to let me know.

But, I do like the feeling of having some "dry powder" especially when a bull market is so long in the tooth.

I'm under-exposed to International, so I guess I would deploy the cash in International. And some kind of bonds - probably Vanguard Short Term Bonds.
Your question is too vague.
A year ago maybe ~3% of retirement funds in cash :D .
By December we were 85% cash in Discretionary, maybe 10% of retirement funds.
Today maybe 10% of retirement funds in cash because we are buying a condo and this is for the down payment and Discretionay is now ~10%:wink:
Hopefully by September, Retirenment accounts will be again be <5% cash, depending on how I feel about stuff. :confused
Ymmv
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Shackal
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Re: What Percentage CASH are you?

Post by Shackal » Thu Aug 10, 2017 11:42 pm

Assets? About 5% in checking account, but that's the EF buffer and flow in and out. And that %-number is gonna change fast too as investments get larger.

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catdude
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Re: What Percentage CASH are you?

Post by catdude » Fri Aug 11, 2017 1:15 am

sreynard wrote:
3wood wrote:6%. Not sure why but it has worked out that way. Just an emotional need to see a certain $ amount in cash.
My wife is like that. She gets nervous if her savings account gets below a certain dollar amount. Its funny that she doesn't index for inflation. :)
I'm like this too. I've got roughly 6.5% in cash. I just like having a certain amount of money in cash... :moneybag
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Tamarind
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Re: What Percentage CASH are you?

Post by Tamarind » Fri Aug 11, 2017 5:53 am

Excluding EF and short term savings: around 1% due to the cash holdings of my mutual funds. No direct allocation to cash, and I don't hold "powder" in any of my accounts. All incoming transfers are set to auto-purchase in line with my AA and all distributions are auto-reinvested.

Including EF and short term savings: 26% are cash or cash equivalents, because I keep a year of essential expenses in EF due to working for a startup. This percentage shrinks a percentage point or two each month as I continue to accumulate. I also have a wedding fund to be spent next year, house reno fund and some cash in my HSA that I'm not allowed to invest due to plan rules.

student
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Re: What Percentage CASH are you?

Post by student » Fri Aug 11, 2017 6:10 am

I have between 5% and 6% in cash. This includes emergency fund but not the investment in stable value fund. To put this in context. I use TIAA Traditional as close to my entire bond allocation.

FCM
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Re: What Percentage CASH are you?

Post by FCM » Fri Aug 11, 2017 9:53 am

I'm currently holding about 8% in money market funds, 2-year treasury notes, and checking accounts.

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ruralavalon
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Re: What Percentage CASH are you?

Post by ruralavalon » Fri Aug 11, 2017 10:13 am

JimmyJammy wrote:I'm curious what percentage of assets people hold in cash? Also, if you didn't haven it in cash, where would you put it?

Personally, I'm 12% Cash right now. Maybe this is dumb, especially with the dollar falling. Feel free to let me know.

But, I do like the feeling of having some "dry powder" especially when a bull market is so long in the tooth.

I'm under-exposed to International, so I guess I would deploy the cash in International. And some kind of bonds - probably Vanguard Short Term Bonds.
We have about 0.24% in cash, in Vanguard Federal Money Market Fund (VMFFX) and a local bank checking account.
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JimmyJammy
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Re: What Percentage CASH are you?

Post by JimmyJammy » Fri Aug 11, 2017 12:43 pm

Are Vanguard's brokered CDs worth checking out?

And, if they're not competitive, then why do they even bother selling them?

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Meg77
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Re: What Percentage CASH are you?

Post by Meg77 » Fri Aug 11, 2017 1:34 pm

I'm currently 5% cash (and 9% bonds) not including my emergency fund. I may make an investment real estate purchase in the next year so I'm not immediately investing all cash.
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thangngo
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Re: What Percentage CASH are you?

Post by thangngo » Fri Aug 11, 2017 2:14 pm

Fluctuating between 1% and 5%. I'm in my working years so cash in-flows are used for investing/saving, living expense, traveling, and immediate cash holdings.

Keim
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Re: What Percentage CASH are you?

Post by Keim » Fri Aug 11, 2017 2:18 pm

Usually under 1%. Currently 9.5%.

jpdion
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Re: What Percentage CASH are you?

Post by jpdion » Fri Aug 11, 2017 2:23 pm

About 7.5% -- about 2 years of current withdrawal needs in Vanguard Prime Money Market Fund inside TIRAs. BUT. I'm beginning to question this v. just putting it in a bond fund.

MarkRoulo
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Re: What Percentage CASH are you?

Post by MarkRoulo » Fri Aug 11, 2017 2:44 pm

JimmyJammy wrote:I'm curious what percentage of assets people hold in cash? Also, if you didn't haven it in cash, where would you put it?
Your question, as written, suggests that money in the Vanguard Short-Term Treasury Fund Investor Shares (SEC yield 1.14%, average duration 2.3 years) is different enough from cash in a credit union checking account (mine currently pays 1.15%) that cash vs. non-cash matters.

I suspect that this is NOT what you are trying to get at.

So ... what aspect of cash as an asset do you find interesting compared to non-cash?

The Vanguard Short-Term Government Bond Index Fund Admiral Shares is a bit better (SEC yield of 1.31% and an average duration of 1.9 years), but this is still so similar to 1.15% yield with NCUA insurance and no duration that I think the basic point that there is so little difference still holds.

So ... what do you care about here?

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welderwannabe
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Re: What Percentage CASH are you?

Post by welderwannabe » Fri Aug 11, 2017 2:55 pm

JimmyJammy wrote:Are Vanguard's brokered CDs worth checking out?

And, if they're not competitive, then why do they even bother selling them?
You should open a new thread to ask this, it will get lost in this one.

However, to answer your question a 5 year brokered CD is yielding around 2.35% right now. This is compared to Total Bond Market Index with an effective duration of 6.1years yielding only 2.26%. So, for 1 year less duration you get 9 basis points more with the CD. The CD is also FDIC insured.

So yes, I think a CD can be a very effective part of a bond strategy.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

moneywise3
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Re: What Percentage CASH are you?

Post by moneywise3 » Fri Aug 11, 2017 3:02 pm

About 37%, not including bonds. That includes emergency fund and down payment for the house. My target AA calls for 20% cash and 15% bonds. Sounds high?

JimmyJammy
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Re: What Percentage CASH are you?

Post by JimmyJammy » Sat Aug 12, 2017 1:47 pm

Most of my "cash" is in the Vanguard Prime Money Market Fund - A SEC yield of 1.1% isn't terrible right?

Someone in this thread mentioned the Vanguard Short-Term Treasury Fund - I think that's yielding 1.24%. So I guess that's a better option for me without much extra risk?

The problem with CDs is they're not liquid.

Any ideas about other vehicles out there that yield at least 2% and minimal extra risk? (Some kind of stable value fund; people have mentioned that kind of thing here)?

From another recent thread, I saw Christine Benz's article: http://news.morningstar.com/articlenet/ ... ?id=820698

"Opportunistic investors, meanwhile, may want to set aside some liquid assets in case they'd like to deploy cash at a later date, if and when stocks fall. (No, I don't have a crystal ball, but it's a safe bet that value-minded buyers will have better buying opportunities at some point in the future than they do today.)"

I guess she's advocating market timing with a small portion of one's portfolio, and I guess I want to do the same (I know it's a no-no here).

So, yes, I'm feeling jittery (for the first time since the market dip in 2010).

As someone else opined on this thread, I would have most of my "cash" in bonds except that bonds don't seem as safe as they have been traditionally (I know that's a much discussed topic in other threads).

My current asset allocation is:
US Stocks: 62%
Foreign Stocks: 12%
Bonds: 14%
Cash or similar: 12%

If the huge chunk of cash weren't in "cash" it'd be in "bonds".

longinvest
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Re: What Percentage CASH are you?

Post by longinvest » Sat Aug 12, 2017 2:32 pm

JimmyJammy wrote:
Thu Aug 10, 2017 11:43 am
I'm curious what percentage of assets people hold in cash? Also, if you didn't haven it in cash, where would you put it?

Personally, I'm 12% Cash right now. Maybe this is dumb, especially with the dollar falling. Feel free to let me know.

But, I do like the feeling of having some "dry powder" especially when a bull market is so long in the tooth.

I'm under-exposed to International, so I guess I would deploy the cash in International. And some kind of bonds - probably Vanguard Short Term Bonds.
It really depends on what you want to know.

If you want to know if I keep any "dry powder" for market timing, then the answer is clearly no, I don't feel the need to time any market to reach my financial goals.

If you want to know about my portfolio's target allocation to cash, when I do mild mental accounting (wiki) and separate what I call my portfolio from money intended for spending in a near future, my target allocation to cash is 0%. I don't feel the need to add cash, given my significant allocation (50% of portfolio) to total-market nominal and inflation-indexed bond ETFs which contain, like the market, lots of short-term bonds.

If you want to know about the proportion of cash in my net worth, then it's rather complex to answer accurately. How should I account for amounts on my credit card between the time I buy items and my monthly full payment (to avoid interest charges)? Does this represent negative cash? Anyway, I keep enough cash (e.g. money in my bank account) to cover upcoming expenses. My emergency fund is my portfolio. (This is something I have learned from Taylor Larimore).
Bogleheads investment philosophy | Lifelong Portfolio: 25% each of (domestic/international)stocks/(nominal/inflation-indexed)bonds | VCN/VXC/VAB/ZRR

Bacchus01
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Re: What Percentage CASH are you?

Post by Bacchus01 » Sat Aug 12, 2017 2:39 pm

We don't have a % target, but a dollar target. We try to hold around $100K in cash. Anything over that gets invested. $100K gives us flexibility to do just about anything we need to do, with enough buffer that we don't need to save up for it or liquidate an investment. Need a new car? Need to put a down payment on a new property? Need to pay for a vacation? Etc.

I'm actually running a little under that right now because of buying a new car.

TigerNest
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Re: What Percentage CASH are you?

Post by TigerNest » Sat Aug 12, 2017 2:42 pm

We're in our mid-30s, and 40% of our assets are in cash + short-term CDs. That's our emergency fund + saving up to buy a house, which we hope to purchase in the next ~2 years. The rest is in retirement accounts with 75%/25% stock bond split.

goingup
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Re: What Percentage CASH are you?

Post by goingup » Sat Aug 12, 2017 3:35 pm

Right now 7% of investable assets is cash. That's a bit higher than the 5% target.

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John151
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Re: What Percentage CASH are you?

Post by John151 » Sat Aug 12, 2017 3:46 pm

Defining “cash” as my checking account and my Vanguard money market fund, I keep 2% to 3% of my investments in cash. I classify all of my other fixed income investments as “bonds.”

selftalk
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Re: What Percentage CASH are you?

Post by selftalk » Sat Aug 12, 2017 4:27 pm

10% per Warren Buffett`s thinking.

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teacher
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Re: What Percentage CASH are you?

Post by teacher » Sun Aug 13, 2017 10:54 am

self talk wrote:
10% per Warren Buffett`s thinking.
I wasn't aware Warren Buffett has instructed the trustee of his wife’s inheritance to put 90% of her money into a very low-fee stock index fund and 10% into short-term government bonds until I googled it after reading your comment.

Does a 90/10 asset allocation work?
This article shows research putting 90/10 to the test beginning with the 1900–1929 period and ending with 1985–2014, 84 intervals, rebalancing the funds each year.
"As it turned out, Buffett’s aggressive asset mix was surprisingly resilient, “failing” in only 2.3% of the intervals tested."
Even a 2.3% failure rate is too great in my opinion, so enough cash outside of the portfolio to cover expenses for X years would be required for sleeping purposes if we were to undertake Buffet's advice. According to the research in the article, "the safest asset mix was actually 60% stocks and 40% bonds, which had a remarkable 0% failure rate."

Is Buffett's 90/10 Asset Allocation Sound?
http://www.investopedia.com/articles/pe ... -sound.asp

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