CASH versus BONDS

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Bama12
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Re: CASH versus BONDS

Post by Bama12 »

Cash is King!
Marseille07
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Re: CASH versus BONDS

Post by Marseille07 »

Cash is king. Just sold LTTs, good riddance. Thought I could hold LTTs for much longer but man, it's too much seeing equities rise and bonds tank.
Bernmaster
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Re: CASH versus BONDS

Post by Bernmaster »

Used to hold the fixed income portion of my portfolio in a long-term bank CD. The bank canceled the contract and transferred the money into my checking account. Now I hold cash but might start buying some global aggregate bond index.
GregG3
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Re: CASH versus BONDS

Post by GregG3 »

I have been holding ultra-short term bonds which do behave better than BND or AGG.
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tennisplyr
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Re: CASH versus BONDS

Post by tennisplyr »

Of my 55% fixed income, 5% is cash...retired 10 years.
Those who move forward with a happy spirit will find that things always work out.
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birdog
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Re: CASH versus BONDS

Post by birdog »

tennisplyr wrote: Wed Feb 17, 2021 8:48 am Of my 55% fixed income, 5% is cash...retired 10 years.
Retirement is just around the corner for me and I have been building a cash cushion. I’m trying to get up to about 5% as well.
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watchnerd
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Re: CASH versus BONDS

Post by watchnerd »

Marseille07 wrote: Wed Feb 17, 2021 12:01 am Cash is king. Just sold LTTs, good riddance. Thought I could hold LTTs for much longer but man, it's too much seeing equities rise and bonds tank.
I’m doing the opposite — pruning stocks, buying LTT.

Sell high, buy low
60% Global Market Stocks (VT,FM) | 38% Global Market Bonds | 2% crypto & securitized gold || LMP TIPS/STRIPS || RSU + ESPP
40 Years' Gatherin's
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Re: CASH versus BONDS

Post by 40 Years' Gatherin's »

SemiRetire wrote: Mon Feb 15, 2021 12:25 am Does anyone just hold cash as part of their portfolio? Bonds currently seem very close to cash anyway.

In terms of just bonds for safety, was wondering a mix of cash and bonds?
I recently sold what little bonds I had and put the money into my total stock market fund. Buffett says "bonds are dead", and I think he's right. All of my fixed income is currently sitting in a treasury money market fund.
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anon_investor
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Re: CASH versus BONDS

Post by anon_investor »

40 Years' Gatherin's wrote: Sun Sep 12, 2021 8:52 am
SemiRetire wrote: Mon Feb 15, 2021 12:25 am Does anyone just hold cash as part of their portfolio? Bonds currently seem very close to cash anyway.

In terms of just bonds for safety, was wondering a mix of cash and bonds?
I recently sold what little bonds I had and put the money into my total stock market fund. Buffett says "bonds are dead", and I think he's right. All of my fixed income is currently sitting in a treasury money market fund.
Why not some I Bonds?
40 Years' Gatherin's
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Re: CASH versus BONDS

Post by 40 Years' Gatherin's »

anon_investor wrote: Sun Sep 12, 2021 9:00 am
40 Years' Gatherin's wrote: Sun Sep 12, 2021 8:52 am
SemiRetire wrote: Mon Feb 15, 2021 12:25 am Does anyone just hold cash as part of their portfolio? Bonds currently seem very close to cash anyway.

In terms of just bonds for safety, was wondering a mix of cash and bonds?
I recently sold what little bonds I had and put the money into my total stock market fund. Buffett says "bonds are dead", and I think he's right. All of my fixed income is currently sitting in a treasury money market fund.
Why not some I Bonds?
Possibly. I hadn't really thought about that.
hulburt1
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Re: CASH versus BONDS

Post by hulburt1 »

Have no bonds. 68 single have 240000 in cash was thinking of putting 100000 in GNMA. Will need that money in about 4 years. I still have 1m+ in stocks. Can live on 2000 a month. Have not taken SS and work when I want to. I'm also moving $20000 to Roth Which has 250000 is all S&P and Appel
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1789
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Re: CASH versus BONDS

Post by 1789 »

SemiRetire wrote: Mon Feb 15, 2021 12:25 am Does anyone just hold cash as part of their portfolio? Bonds currently seem very close to cash anyway.

In terms of just bonds for safety, was wondering a mix of cash and bonds?
Yes we are holding CASH, but the reason is not the bond yields, it just happened that we never added any bonds to our portfolio yet.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)
hudson
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Re: CASH versus BONDS

Post by hudson »

SemiRetire wrote: Mon Feb 15, 2021 12:25 am Does anyone just hold cash as part of their portfolio? Bonds currently seem very close to cash anyway.

In terms of just bonds for safety, was wondering a mix of cash and bonds?
Old discussion...
Ally is paying .5% FDIC insured
Vanguard Total Bond paid out 1.83% annualized on Sep. 1
Inflation Protected Bonds funds keep up with inflation
Vanguard Long Term Treasuries paid out 1.92% annualized on Sep. 1
Vanguard Long-Term Tax-Exempt Fund Admiral Shares (VWLUX) paid out 2.51% annualized on Sep. 1

Bottom Line: Fixed income pays; cash doesn't
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SquawkIdent
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Re: CASH versus BONDS

Post by SquawkIdent »

hudson wrote: Tue Sep 14, 2021 6:44 am
SemiRetire wrote: Mon Feb 15, 2021 12:25 am Does anyone just hold cash as part of their portfolio? Bonds currently seem very close to cash anyway.

In terms of just bonds for safety, was wondering a mix of cash and bonds?
Old discussion...
Ally is paying .5% FDIC insured
Vanguard Total Bond paid out 1.83% annualized on Sep. 1
Inflation Protected Bonds funds keep up with inflation
Vanguard Long Term Treasuries paid out 1.92% annualized on Sep. 1
Vanguard Long-Term Tax-Exempt Fund Admiral Shares (VWLUX) paid out 2.51% annualized on Sep. 1

Bottom Line: Fixed income pays; cash doesn't
Do you have any concern about lower future NAVs on those funds?
hudson
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Re: CASH versus BONDS

Post by hudson »

SquawkIdent wrote: Tue Sep 14, 2021 6:54 am
hudson wrote: Tue Sep 14, 2021 6:44 am
SemiRetire wrote: Mon Feb 15, 2021 12:25 am Does anyone just hold cash as part of their portfolio? Bonds currently seem very close to cash anyway.

In terms of just bonds for safety, was wondering a mix of cash and bonds?
Old discussion...
Ally is paying .5% FDIC insured
Vanguard Total Bond paid out 1.83% annualized on Sep. 1
Inflation Protected Bonds funds keep up with inflation
Vanguard Long Term Treasuries paid out 1.92% annualized on Sep. 1
Vanguard Long-Term Tax-Exempt Fund Admiral Shares (VWLUX) paid out 2.51% annualized on Sep. 1

Bottom Line: Fixed income pays; cash doesn't
Do you have any concern about lower future NAVs on those funds?
Great question!

I speculate that the payouts on the above are likely gradually declining on most of the above....maybe not TIPS....but that's not what you asked.

Lower NAVs in the future? I disregard future predictions on NAVs because I have no control; my predictions have consistently been wrong.
For falling NAVs or fund prices, I try to watch falling prices. If they drop below my buying price, I'll sell, tax loss harvest, and buy a suitable replacement.

For example, I hold some VWIUX...Vanguard Intermediate Muni. If it falls below my purchase price, my plan is to either move to BMBIX...Baird's very safe intermediate muni or VWLUX...Vanguard's long muni fund. I would also tax loss harvest any losses. You likely have a similar plan.

Bottom Line: Fund prices are crazy at times. I don't think about future increases or decreases. I focus on the payouts. The NAV chips can fall where they may.
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SquawkIdent
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Re: CASH versus BONDS

Post by SquawkIdent »

hudson wrote: Tue Sep 14, 2021 7:33 am
SquawkIdent wrote: Tue Sep 14, 2021 6:54 am
hudson wrote: Tue Sep 14, 2021 6:44 am
SemiRetire wrote: Mon Feb 15, 2021 12:25 am Does anyone just hold cash as part of their portfolio? Bonds currently seem very close to cash anyway.

In terms of just bonds for safety, was wondering a mix of cash and bonds?
Old discussion...
Ally is paying .5% FDIC insured
Vanguard Total Bond paid out 1.83% annualized on Sep. 1
Inflation Protected Bonds funds keep up with inflation
Vanguard Long Term Treasuries paid out 1.92% annualized on Sep. 1
Vanguard Long-Term Tax-Exempt Fund Admiral Shares (VWLUX) paid out 2.51% annualized on Sep. 1

Bottom Line: Fixed income pays; cash doesn't
Do you have any concern about lower future NAVs on those funds?
Great question!

I speculate that the payouts on the above are likely gradually declining on most of the above....maybe not TIPS....but that's not what you asked.

Lower NAVs in the future? I disregard future predictions on NAVs because I have no control; my predictions have consistently been wrong.
For falling NAVs or fund prices, I try to watch falling prices. If they drop below my buying price, I'll sell, tax loss harvest, and buy a suitable replacement.

For example, I hold some VWIUX...Vanguard Intermediate Muni. If it falls below my purchase price, my plan is to either move to BMBIX...Baird's very safe intermediate muni or VWLUX...Vanguard's long muni fund. I would also tax loss harvest any losses. You likely have a similar plan.

Bottom Line: Fund prices are crazy at times. I don't think about future increases or decreases. I focus on the payouts. The NAV chips can fall where they may.
I have a slightly different take on this.

I buy the longer term funds when the NAV price is low and the payout is high. That way my “margin of safety” for the principal is at its greatest. I wait for the NAV to recover, all the while collecting my monthly dividends (another safety bonus).

I buy shorter term funds when the price is high and the yield is low. Again, “margin of safety of the principal”. Protecting and building my principal balance drives every decision. Collecting the higher monthly dividends does me no good to do watching my principal balance get slaughtered.

Yes, I realize that this is market timing. I look at it as I take the risk when it presents itself to be worth it and decease my risk exposure when it’s not there.

All of that said, at these prices/yields I am short on the yield curve. Collecting the lower dividends and waiting for the NAVs to come down and offer me “the fat pitch”. It takes patience but in the end, it works. Time and time again… :sharebeer
patrick
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Re: CASH versus BONDS

Post by patrick »

hudson wrote: Tue Sep 14, 2021 6:44 am
SemiRetire wrote: Mon Feb 15, 2021 12:25 am Does anyone just hold cash as part of their portfolio? Bonds currently seem very close to cash anyway.

In terms of just bonds for safety, was wondering a mix of cash and bonds?
Old discussion...
Ally is paying .5% FDIC insured
Vanguard Total Bond paid out 1.83% annualized on Sep. 1
Inflation Protected Bonds funds keep up with inflation
Vanguard Long Term Treasuries paid out 1.92% annualized on Sep. 1
Vanguard Long-Term Tax-Exempt Fund Admiral Shares (VWLUX) paid out 2.51% annualized on Sep. 1

Bottom Line: Fixed income pays; cash doesn't
I get a weighted average of 3.22% interest on my cash. Here are some option much better than Ally:

1% with no limit - T-Mobile Money
2% on the first $20,000 - Elements Financial Credit Union, requires 15 withdrawal transactions (bill pays qualify) per month
2.25% on the first $25,000 - Presidential Bank, requires $500 in direct deposits and 7 withdrawal transactions (bill pays qualify) per month, minimum balance $500
3% on the first $15,000 - Porte, requires a one-time electronic deposit of $1,000 to activate
3% on 10% of direct deposits - One Finance, max $1,000 per month into the 3% account, the rest only gets 1% but can be spent or withdrawn
3.3% on the first $20,000 - Evansville Teachers Federal Credit Union, requires 15 debit card purchases per month and a monthly electronic deposit
4.07% on the first $7,500 - Genisys Credit Union, requires 10 debit card purchase per month of at least $5 each
5% on the first $500 and 3% on another $3,000 - Service Credit Union
6.17% on the first $1,000 - Digital Credit Union
hudson
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Re: CASH versus BONDS

Post by hudson »

patrick wrote: Tue Sep 14, 2021 8:39 am
hudson wrote: Tue Sep 14, 2021 6:44 am
SemiRetire wrote: Mon Feb 15, 2021 12:25 am Does anyone just hold cash as part of their portfolio? Bonds currently seem very close to cash anyway.

In terms of just bonds for safety, was wondering a mix of cash and bonds?
Old discussion...
Ally is paying .5% FDIC insured
Vanguard Total Bond paid out 1.83% annualized on Sep. 1
Inflation Protected Bonds funds keep up with inflation
Vanguard Long Term Treasuries paid out 1.92% annualized on Sep. 1
Vanguard Long-Term Tax-Exempt Fund Admiral Shares (VWLUX) paid out 2.51% annualized on Sep. 1

Bottom Line: Fixed income pays; cash doesn't
I get a weighted average of 3.22% interest on my cash. Here are some option much better than Ally:

1% with no limit - T-Mobile Money
2% on the first $20,000 - Elements Financial Credit Union, requires 15 withdrawal transactions (bill pays qualify) per month
2.25% on the first $25,000 - Presidential Bank, requires $500 in direct deposits and 7 withdrawal transactions (bill pays qualify) per month, minimum balance $500
3% on the first $15,000 - Porte, requires a one-time electronic deposit of $1,000 to activate
3% on 10% of direct deposits - One Finance, max $1,000 per month into the 3% account, the rest only gets 1% but can be spent or withdrawn
3.3% on the first $20,000 - Evansville Teachers Federal Credit Union, requires 15 debit card purchases per month and a monthly electronic deposit
4.07% on the first $7,500 - Genisys Credit Union, requires 10 debit card purchase per month of at least $5 each
5% on the first $500 and 3% on another $3,000 - Service Credit Union
6.17% on the first $1,000 - Digital Credit Union
Good stuff!
Anything that works is good technique!
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SquawkIdent
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Re: CASH versus BONDS

Post by SquawkIdent »

patrick wrote: Tue Sep 14, 2021 8:39 am
hudson wrote: Tue Sep 14, 2021 6:44 am
SemiRetire wrote: Mon Feb 15, 2021 12:25 am Does anyone just hold cash as part of their portfolio? Bonds currently seem very close to cash anyway.

In terms of just bonds for safety, was wondering a mix of cash and bonds?
Old discussion...
Ally is paying .5% FDIC insured
Vanguard Total Bond paid out 1.83% annualized on Sep. 1
Inflation Protected Bonds funds keep up with inflation
Vanguard Long Term Treasuries paid out 1.92% annualized on Sep. 1
Vanguard Long-Term Tax-Exempt Fund Admiral Shares (VWLUX) paid out 2.51% annualized on Sep. 1

Bottom Line: Fixed income pays; cash doesn't
I get a weighted average of 3.22% interest on my cash. Here are some option much better than Ally:

1% with no limit - T-Mobile Money
2% on the first $20,000 - Elements Financial Credit Union, requires 15 withdrawal transactions (bill pays qualify) per month
2.25% on the first $25,000 - Presidential Bank, requires $500 in direct deposits and 7 withdrawal transactions (bill pays qualify) per month, minimum balance $500
3% on the first $15,000 - Porte, requires a one-time electronic deposit of $1,000 to activate
3% on 10% of direct deposits - One Finance, max $1,000 per month into the 3% account, the rest only gets 1% but can be spent or withdrawn
3.3% on the first $20,000 - Evansville Teachers Federal Credit Union, requires 15 debit card purchases per month and a monthly electronic deposit
4.07% on the first $7,500 - Genisys Credit Union, requires 10 debit card purchase per month of at least $5 each
5% on the first $500 and 3% on another $3,000 - Service Credit Union
6.17% on the first $1,000 - Digital Credit Union
Wow, that seems like an awful lot of work and record keeping for accounts that you earn those rates on smaller amounts of money.

But if it works for you… :sharebeer
hudson
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Joined: Fri Apr 06, 2007 9:15 am

Re: CASH versus BONDS

Post by hudson »

SquawkIdent wrote: Tue Sep 14, 2021 8:37 am
hudson wrote: Tue Sep 14, 2021 7:33 am
SquawkIdent wrote: Tue Sep 14, 2021 6:54 am
hudson wrote: Tue Sep 14, 2021 6:44 am
SemiRetire wrote: Mon Feb 15, 2021 12:25 am Does anyone just hold cash as part of their portfolio? Bonds currently seem very close to cash anyway.

In terms of just bonds for safety, was wondering a mix of cash and bonds?
Old discussion...
Ally is paying .5% FDIC insured
Vanguard Total Bond paid out 1.83% annualized on Sep. 1
Inflation Protected Bonds funds keep up with inflation
Vanguard Long Term Treasuries paid out 1.92% annualized on Sep. 1
Vanguard Long-Term Tax-Exempt Fund Admiral Shares (VWLUX) paid out 2.51% annualized on Sep. 1

Bottom Line: Fixed income pays; cash doesn't
Do you have any concern about lower future NAVs on those funds?
Great question!

I speculate that the payouts on the above are likely gradually declining on most of the above....maybe not TIPS....but that's not what you asked.

Lower NAVs in the future? I disregard future predictions on NAVs because I have no control; my predictions have consistently been wrong.
For falling NAVs or fund prices, I try to watch falling prices. If they drop below my buying price, I'll sell, tax loss harvest, and buy a suitable replacement.

For example, I hold some VWIUX...Vanguard Intermediate Muni. If it falls below my purchase price, my plan is to either move to BMBIX...Baird's very safe intermediate muni or VWLUX...Vanguard's long muni fund. I would also tax loss harvest any losses. You likely have a similar plan.

Bottom Line: Fund prices are crazy at times. I don't think about future increases or decreases. I focus on the payouts. The NAV chips can fall where they may.
I have a slightly different take on this.

I buy the longer term funds when the NAV price is low and the payout is high. That way my “margin of safety” for the principal is at its greatest. I wait for the NAV to recover, all the while collecting my monthly dividends (another safety bonus).

I buy shorter term funds when the price is high and the yield is low. Again, “margin of safety of the principal”. Protecting and building my principal balance drives every decision. Collecting the higher monthly dividends does me no good to do watching my principal balance get slaughtered.

Yes, I realize that this is market timing. I look at it as I take the risk when it presents itself to be worth it and decease my risk exposure when it’s not there.

All of that said, at these prices/yields I am short on the yield curve. Collecting the lower dividends and waiting for the NAVs to come down and offer me “the fat pitch”. It takes patience but in the end, it works. Time and time again… :sharebeer
I can see a case for long term/strategic market timing like yours.
Bookmarked for further study!
Thanks!
goblue100
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Re: CASH versus BONDS

Post by goblue100 »

000 wrote: Mon Feb 15, 2021 2:15 am
Marseille07 wrote: Mon Feb 15, 2021 2:10 am I see. I'm ready to be outta here, not liking LTTs at all. Almost feeling like I should've moved out earlier.
I bought EDV during the March 2020 liquidity crunch and sold a month later :D

Then I bought EDV again in December and am now down 10%+ on the position :oops:

The rising rates of the last two months don't feel real to me. Not because rising rates aren't coming (they are), but because the last two months feel more like the optimism tap has been turned up to 11.
This has to be most un-Bogleheadish conversation ever. I feel obliged to post the Boglehead principles, which apply to bonds as well as equities.
Develop a workable plan
Invest early and often
Never bear too much or too little risk
Never try to time the market
Use index funds when possible
Keep costs low
Diversify
Minimize taxes
Keep it simple
Stay the course
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns
hudson
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Joined: Fri Apr 06, 2007 9:15 am

Re: CASH versus BONDS

Post by hudson »

goblue100 wrote: Tue Sep 14, 2021 9:02 am
000 wrote: Mon Feb 15, 2021 2:15 am
Marseille07 wrote: Mon Feb 15, 2021 2:10 am I see. I'm ready to be outta here, not liking LTTs at all. Almost feeling like I should've moved out earlier.
I bought EDV during the March 2020 liquidity crunch and sold a month later :D

Then I bought EDV again in December and am now down 10%+ on the position :oops:

The rising rates of the last two months don't feel real to me. Not because rising rates aren't coming (they are), but because the last two months feel more like the optimism tap has been turned up to 11.
This has to be most un-Bogleheadish conversation ever. I feel obliged to post the Boglehead principles, which apply to bonds as well as equities.
Develop a workable plan
Invest early and often
Never bear too much or too little risk
Never try to time the market
Use index funds when possible
Keep costs low
Diversify
Minimize taxes
Keep it simple
Stay the course
goblue100,
Agree!....but....
Once you know the rules exceptions are OK after you've done your homework....maybe not for beginners?
W. Bernstein always makes comments about "Dry Powder."
You don't have to diversify if you buy CDs or treasuries.
I always chase yield for fixed income; is that timing?
Different situations call for different solutions.
Be wary of rules of thumb: do the math yourself. (Your asset allocation should always be at least 20% fixed or 20% stocks. Not me)
Last edited by hudson on Wed Sep 15, 2021 8:33 am, edited 1 time in total.
Tom_T
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Re: CASH versus BONDS

Post by Tom_T »

Aren't bonds supposed to be ballast for stocks? When there's a big market drop, my bond fund generally goes up to lessen the blow. That is not going to happen with cash.

Also: if I have to read "rates have nowhere to go but up" one more time, I may scream. :) Remember the pandemic shock last year? The 10-year rate fell below 0.6 percent! That's half of what it is today. You never know what the next "shock" is going to be.
dbr
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Re: CASH versus BONDS

Post by dbr »

Tom_T wrote: Wed Sep 15, 2021 8:28 am Aren't bonds supposed to be ballast for stocks? When there's a big market drop, my bond fund generally goes up to lessen the blow. That is not going to happen with cash.

Also: if I have to read "rates have nowhere to go but up" one more time, I may scream. :) Remember the pandemic shock last year? The 10-year rate fell below 0.6 percent! That's half of what it is today. You never know what the next "shock" is going to be.
The concept of ballast does not include bonds necessarily going up when stocks go down. In general the correlation is zero. Long Treasury bonds may have a little bit of a negative correlation with stocks. The concept does mean that the volatility of bonds is much less than the volatility of stocks. The volatility of cash is less than the volatility of stocks, making it good ballast, and less than the volatility of bonds, making cash a possible better option for ballast. What is different between stocks and bonds is that bonds usually, on the whole, return more than cash. That is not true to a very large degree at the moment.

I agree with your comment about interest rates.
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goodenyou
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Re: CASH versus BONDS

Post by goodenyou »

Tom_T wrote: Wed Sep 15, 2021 8:28 am Aren't bonds supposed to be ballast for stocks? When there's a big market drop, my bond fund generally goes up to lessen the blow. That is not going to happen with cash.

Also: if I have to read "rates have nowhere to go but up" one more time, I may scream. :) Remember the pandemic shock last year? The 10-year rate fell below 0.6 percent! That's half of what it is today. You never know what the next "shock" is going to be.
Stocks and bonds have had a negative correlation for the past 20 years. In the prior 30 years, the correlation was relatively positive. Inflation has a negative effect on stocks, bonds and cash. Predicting inflation is not easy. Some investors hedge their bet against inflation with TIPS and I-Bonds, but do so with the realization that it may be a "drag" on performance. It is in effect an insurance product (hence a cost) against inflation. It has been costly over the past few years. It could pay off handsomely in the future.

https://www.thinkadvisor.com/2021/05/25 ... t-forever/
"Ignorance more frequently begets confidence than does knowledge" | “At 50, everyone has the face he deserves”
goblue100
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Re: CASH versus BONDS

Post by goblue100 »

hudson wrote: Wed Sep 15, 2021 8:19 am
goblue100 wrote: Tue Sep 14, 2021 9:02 am
000 wrote: Mon Feb 15, 2021 2:15 am
Marseille07 wrote: Mon Feb 15, 2021 2:10 am I see. I'm ready to be outta here, not liking LTTs at all. Almost feeling like I should've moved out earlier.
I bought EDV during the March 2020 liquidity crunch and sold a month later :D

Then I bought EDV again in December and am now down 10%+ on the position :oops:

The rising rates of the last two months don't feel real to me. Not because rising rates aren't coming (they are), but because the last two months feel more like the optimism tap has been turned up to 11.
This has to be most un-Bogleheadish conversation ever. I feel obliged to post the Boglehead principles, which apply to bonds as well as equities.
Develop a workable plan
Invest early and often
Never bear too much or too little risk
Never try to time the market
Use index funds when possible
Keep costs low
Diversify
Minimize taxes
Keep it simple
Stay the course
goblue100,
Agree!....but....
Once you know the rules exceptions are OK after you've done your homework....maybe not for beginners?
W. Bernstein always makes comments about "Dry Powder."
You don't have to diversify if you buy CDs or treasuries.
I always chase yield for fixed income; is that timing?
Different situations call for different solutions.
Be wary of rules of thumb: do the math yourself. (Your asset allocation should always be at least 20% fixed or 20% stocks. Not me)
The beauty of our lives are that everyone is free to do whatever they want. I was certainly not trying to talk anyone into or out of anything, but I presume that anyone here is at least interested in the Boglehead way, so I wanted to highlight it.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns
hudson
Posts: 4416
Joined: Fri Apr 06, 2007 9:15 am

Re: CASH versus BONDS

Post by hudson »

goblue100 wrote: Wed Sep 15, 2021 2:36 pm
hudson wrote: Wed Sep 15, 2021 8:19 am
goblue100 wrote: Tue Sep 14, 2021 9:02 am
000 wrote: Mon Feb 15, 2021 2:15 am
Marseille07 wrote: Mon Feb 15, 2021 2:10 am I see. I'm ready to be outta here, not liking LTTs at all. Almost feeling like I should've moved out earlier.
I bought EDV during the March 2020 liquidity crunch and sold a month later :D

Then I bought EDV again in December and am now down 10%+ on the position :oops:

The rising rates of the last two months don't feel real to me. Not because rising rates aren't coming (they are), but because the last two months feel more like the optimism tap has been turned up to 11.
This has to be most un-Bogleheadish conversation ever. I feel obliged to post the Boglehead principles, which apply to bonds as well as equities.
Develop a workable plan
Invest early and often
Never bear too much or too little risk
Never try to time the market
Use index funds when possible
Keep costs low
Diversify
Minimize taxes
Keep it simple
Stay the course
goblue100,
Agree!....but....
Once you know the rules exceptions are OK after you've done your homework....maybe not for beginners?
W. Bernstein always makes comments about "Dry Powder."
You don't have to diversify if you buy CDs or treasuries.
I always chase yield for fixed income; is that timing?
Different situations call for different solutions.
Be wary of rules of thumb: do the math yourself. (Your asset allocation should always be at least 20% fixed or 20% stocks. Not me)
The beauty of our lives are that everyone is free to do whatever they want. I was certainly not trying to talk anyone into or out of anything, but I presume that anyone here is at least interested in the Boglehead way, so I wanted to highlight it.
Thanks for your reply!
You did a good job reviewing some of the Boglehead best practices! Those practices are all good.
Those practices have worked for me. I've swallowed the Boglehead hook. I'm all in...but....
Should we follow those "best practices" blindly or absolutely?

The beauty of this forum is that you can get all sides. You can read about creative strategies that you could never figure out on your own...even market timing strategies...For example SquawkIdent's bond fund buying strategy from upthread.
I buy the longer term funds when the NAV price is low and the payout is high. That way my “margin of safety” for the principal is at its greatest. I wait for the NAV to recover, all the while collecting my monthly dividends (another safety bonus).
I buy shorter term funds when the price is high and the yield is low. Again, “margin of safety of the principal”. Protecting and building my principal balance drives every decision. Collecting the higher monthly dividends does me no good to do watching my principal balance get slaughtered.
I'd never heard of or considered that strategy. I'll probably have to study it some more to understand what's happening. The chances of me adopting that are slim. SquawkIdent's strategy has worked; it doesn't seem to be at all risky. He or she is likely buying high quality safe bond funds.
Last edited by hudson on Thu Sep 16, 2021 6:42 am, edited 1 time in total.
UpperNwGuy
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Re: CASH versus BONDS

Post by UpperNwGuy »

hudson wrote: Thu Sep 16, 2021 6:26 am Should we follow those "best practices" blindly or absolutely?
Not blindly or absolutely, but nearly always, especially now. Frankly I'm seeing a lot of unwarranted panic in this thread and other threads. I don't think a change of course is justified.
goblue100
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Re: CASH versus BONDS

Post by goblue100 »

hudson wrote: Thu Sep 16, 2021 6:26 am
Thanks for your reply!
You did a good job reviewing some of the Boglehead best practices! Those practices are all good.
Those practices have worked for me. I've swallowed the Boglehead hook. I'm all in...but....
Should we follow those "best practices" blindly or absolutely?

The beauty of this forum is that you can get all sides. You can read about creative strategies that you could never figure out on your own...even market timing strategies...For example SquawkIdent's bond fund buying strategy from upthread.
I buy the longer term funds when the NAV price is low and the payout is high. That way my “margin of safety” for the principal is at its greatest. I wait for the NAV to recover, all the while collecting my monthly dividends (another safety bonus).
I buy shorter term funds when the price is high and the yield is low. Again, “margin of safety of the principal”. Protecting and building my principal balance drives every decision. Collecting the higher monthly dividends does me no good to do watching my principal balance get slaughtered.
I'd never heard of or considered that strategy. I'll probably have to study it some more to understand what's happening. The chances of me adopting that are slim. SquawkIdent's strategy has worked; it doesn't seem to be at all risky. He or she is likely buying high quality safe bond funds.
I used to worry about bond funds more, until I read some posts by poster nsipirius. Here is an example of one thread. I wish I had more bookmarked.

viewtopic.php?t=240012

From what I gather from the quote above Squawkident is buying long term bonds, which is bearing more risk than most of us choose. Take some time and review the thread I linked. We are lucky to have posters like nsipirius.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns
patrick
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Re: CASH versus BONDS

Post by patrick »

UpperNwGuy wrote: Thu Sep 16, 2021 6:42 am
hudson wrote: Thu Sep 16, 2021 6:26 am Should we follow those "best practices" blindly or absolutely?
Not blindly or absolutely, but nearly always, especially now. Frankly I'm seeing a lot of unwarranted panic in this thread and other threads. I don't think a change of course is justified.
If you hold total bond market and plan to hold it for the long term, it makes no sense to panic about the possibility of interest rates increases. Instead, you should panic about the possibility that interest rates will fail to increase.
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SquawkIdent
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Re: CASH versus BONDS

Post by SquawkIdent »

hudson wrote: Thu Sep 16, 2021 6:26 am
goblue100 wrote: Wed Sep 15, 2021 2:36 pm
hudson wrote: Wed Sep 15, 2021 8:19 am
goblue100 wrote: Tue Sep 14, 2021 9:02 am
000 wrote: Mon Feb 15, 2021 2:15 am

I bought EDV during the March 2020 liquidity crunch and sold a month later :D

Then I bought EDV again in December and am now down 10%+ on the position :oops:

The rising rates of the last two months don't feel real to me. Not because rising rates aren't coming (they are), but because the last two months feel more like the optimism tap has been turned up to 11.
This has to be most un-Bogleheadish conversation ever. I feel obliged to post the Boglehead principles, which apply to bonds as well as equities.
Develop a workable plan
Invest early and often
Never bear too much or too little risk
Never try to time the market
Use index funds when possible
Keep costs low
Diversify
Minimize taxes
Keep it simple
Stay the course
goblue100,
Agree!....but....
Once you know the rules exceptions are OK after you've done your homework....maybe not for beginners?
W. Bernstein always makes comments about "Dry Powder."
You don't have to diversify if you buy CDs or treasuries.
I always chase yield for fixed income; is that timing?
Different situations call for different solutions.
Be wary of rules of thumb: do the math yourself. (Your asset allocation should always be at least 20% fixed or 20% stocks. Not me)
The beauty of our lives are that everyone is free to do whatever they want. I was certainly not trying to talk anyone into or out of anything, but I presume that anyone here is at least interested in the Boglehead way, so I wanted to highlight it.
Thanks for your reply!
You did a good job reviewing some of the Boglehead best practices! Those practices are all good.
Those practices have worked for me. I've swallowed the Boglehead hook. I'm all in...but....
Should we follow those "best practices" blindly or absolutely?

The beauty of this forum is that you can get all sides. You can read about creative strategies that you could never figure out on your own...even market timing strategies...For example SquawkIdent's bond fund buying strategy from upthread.
I buy the longer term funds when the NAV price is low and the payout is high. That way my “margin of safety” for the principal is at its greatest. I wait for the NAV to recover, all the while collecting my monthly dividends (another safety bonus).
I buy shorter term funds when the price is high and the yield is low. Again, “margin of safety of the principal”. Protecting and building my principal balance drives every decision. Collecting the higher monthly dividends does me no good to do watching my principal balance get slaughtered.
I'd never heard of or considered that strategy. I'll probably have to study it some more to understand what's happening. The chances of me adopting that are slim. SquawkIdent's strategy has worked; it doesn't seem to be at all risky. He or she is likely buying high quality safe bond funds.
Yes, I am buying “high quality” bond funds. I only use Vanguard tax exempt bond funds in this strategy. I use high yield, long term, intermediate, limited and short term tax exempt funds.

When the NAV of a particular longer term fund is low enough (I know my usual buy in point) I buy it. I then collect the tax free monthly dividends while waiting for the NAV to increase. Those high monthly dividends allow me to be very patient. When the NAV does recover to get close to a pre determined high (again…I’ve done this for years and I know my basic sell price) I do sell the shares and move to a shorter term fund or cash position.

I then collect the lower monthly dividends and wait to start the process all over again.

Again, I understand this is market timing but preservation of principal at all times is paramount. YMMV.
hudson
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Re: CASH versus BONDS

Post by hudson »

SquawkIdent,
Thanks for the reply! With the exception of maybe the high yield fund, you are holding quality stuff.
The prices of those funds have gone up and stayed up for a while. It's hard to sell those funds without paying capital gains.
The Vanguard intermediate and long muni funds payout decently.

Bottom line: Your strategy seems to be very low risk; the payouts beat cash, savings accounts, CDs and treasuries.
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SquawkIdent
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Re: CASH versus BONDS

Post by SquawkIdent »

hudson wrote: Thu Sep 16, 2021 11:19 am SquawkIdent,
Thanks for the reply! With the exception of maybe the high yield fund, you are holding quality stuff.
The prices of those funds have gone up and stayed up for a while. It's hard to sell those funds without paying capital gains.
The Vanguard intermediate and long muni funds payout decently.

Bottom line: Your strategy seems to be very low risk; the payouts beat cash, savings accounts, CDs and treasuries.
Even the high yield fund is a quality fund. Much higher quality than the normal high yield fund.

Yes, paying capital gains is all part of the deal here. Obviously, I try very hard to make them long term but the market/NAV dictates my actions.

I’m not saying my strategy is very low risk because it involves putting capital into assets that fluctuate. Through my actions I try to get as many things on my side as possible before deploying the capital. That’s where the higher monthly tax fee dividends help a lot while I wait for the NAV to recover. Your patience is rewarded every month. And buying this stuff after the pandemic really kicked into gear last spring was not for the faint of heart. But I was rewarded this spring when those shares were sold and a shorter term fund was bought.

I’ve done well with this the last decade or so. But the rest of my portfolio is rather boring and very Bogleheadish. It makes for an interesting combo.
hudson
Posts: 4416
Joined: Fri Apr 06, 2007 9:15 am

Re: CASH versus BONDS

Post by hudson »

SquawkIdent,
Anything that works is good technique!
I agree that Vanguard's high yield muni fund ain't bad. It's just not for me.
I would love to swap VWIUX (Van. Intermediate Muni) for VWLUX (Van. Long Muni) to get that nice additional payout. The long muni fund fits my duration needs better. VWLUX isn't that long.
I don't want the capital gains, so I'll just wait it out.
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