Where are you putting your cash?

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AVRenter_IHB

AVRenter_IHB

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With so many renters on IHB I was wondering where you all are socking away your cash, especially given the bleak outlook for the economy. I sold my place a little while ago and I haven't been able to decide where to put the cash. Any ideas? Have you all been reduced to mattresses?



Personally I'd like to hold out on a purchase for at least 2 years but it might be a battle with the spouse who seems ready to buy, "...if the right place becomes available," God help me. This might affect where we put our money if I have to at least give the appearance that our asset is readily liquid for a purchase.





Btw, thanks for all the daily input. I've been lurking for a while and this place really validates and makes me feel better about what I've always known about this market.
 
[quote author="AVRenter" date=1229135184]With so many renters on IHB I was wondering where you all are socking away your cash, especially given the bleak outlook for the economy. I sold my place a little while ago and I haven't been able to decide where to put the cash. Any ideas? Have you all been reduced to mattresses?



Personally I'd like to hold out on a purchase for at least 2 years but it might be a battle with the spouse who seems ready to buy, "...if the right place becomes available," God help me. This might affect where we put our money if I have to at least give the appearance that our asset is readily liquid for a purchase.





Btw, thanks for all the daily input. I've been lurking for a while and this place really validates and makes me feel better about what I've always known about this market.</blockquote>


IPO, is your man. He knows where all the best CD and Money market rates are.
 
At Orchard Hill Plaza. There is a new McDonanlds being built and if you face the north side of it, find the mid-point of that side, walk forward 14 spaces, and then 3 space to the left. Dig 5 feet under, and you will find a giant black vault.



Besides that, I have a little money stashed away in the stock market.
 
[quote author="blackvault_cm" date=1229137311]At Orchard Hill Plaza. There is a new McDonanlds being built and if you face the north side of it, find the mid-point of that side, walk forward 14 spaces, and then 3 space to the left. Dig 5 feet under, and you will find a giant black vault.</blockquote>


Thanks for sharing that with us. What's the combination to the vault?
 
[quote author="WINEX" date=1229140580][quote author="blackvault_cm" date=1229137311]At Orchard Hill Plaza. There is a new McDonanlds being built and if you face the north side of it, find the mid-point of that side, walk forward 14 spaces, and then 3 space to the left. Dig 5 feet under, and you will find a giant black vault.</blockquote>


Thanks for sharing that with us. What's the combination to the vault?</blockquote>


It's at the Chevron station next door, don't tell anyone!
 
[quote author="tenmagnet" date=1229140681][quote author="WINEX" date=1229140580][quote author="blackvault_cm" date=1229137311]At Orchard Hill Plaza. There is a new McDonanlds being built and if you face the north side of it, find the mid-point of that side, walk forward 14 spaces, and then 3 space to the left. Dig 5 feet under, and you will find a giant black vault.</blockquote>


Thanks for sharing that with us. What's the combination to the vault?</blockquote>


It's at the Chevron station next door, don't tell anyone!</blockquote>


I found the combination pad and what do I do now to gain access to the cash.



<img src="http://cache.daylife.com/imageserve/01hO6Mdf8KfAb/610x.jpg" alt="" />
 
<img src="http://www.bbc.co.uk/comedy/littlebritain/images/396/mccooney.jpg" alt="" />



"Yeeeees!", "Ye know too much!"
 
Wow, this thread got hijacked in a big way.



Seriously though, what defines a "safe" place to invest?



The corporate bond market is full of high yield issues, but how much of that is due to the credit crunch and how much of that is due to a high probability that decimated consumer spending will cause defaults across all spectrums of business?



Treasuries are a ticking time-bomb; as soon as the rush for the exit begins, prices will plummet and the last ones holding them will either take a loss or be getting less than 2.5% until maturity. Even PIMCO says they aren't buying them anymore.



Equities look attractive but who wants to jump on that rollercoaster when there could be another 4000-point drop over the next year?



I've thought about gold, but you have to watch the COMEX like a hawk to make sure you don't get caught when the bottom falls out. To complicate matters, there isn't any obvious spike in inflation to goose the price up and any concerted effort by the central banks could drive the price down in a slow and steady manner.



At this point, our 3% APY interest-bearing savings account is looking like our best choice. At least we're "beating" inflation.



Anyone have any better ideas that don't involve day-trading or a 1-year commitment?
 
Oscar. Stock market is the safest place to put your money. I'm serious too. I can engineer an investment that gives me 95% protection loss and a 10.5% return. So thats 5% total risk loss with 10.5% return VS. a CD with 0.0001% risk loss with a 2.25% gain. That beats a CD imo, but others might not want to take the 5% total risk loss. (that would happen if Dow went to 0)



However, "safe" is defined by your own risk tolerance and your understanding of the investment.
 
[quote author="blackvault_cm" date=1229499990]Oscar. Stock market is the safest place to put your money. I'm serious too. I can engineer an investment that gives me 95% protection loss and a 10.5% return. So thats 5% total risk loss with 10.5% return VS. a CD with 0.0001% risk loss with a 2.25% gain. That beats a CD imo, but others might not want to take the 5% total risk loss. (that would happen if Dow went to 0)



However, "safe" is defined by your own risk tolerance and your understanding of the investment.</blockquote>
Primarily this is 401(k) money that won't be used for another 30-40 years.



There are not a lot of choices offered for the 401(k) but everything was moved from the various mutual funds into a moneymarket fund in 11/07 and has been sitting there ever since. In hindsight this looks like brilliance considering how much of the equity loss was avoided, but it was the result of nothing more than a vague feeling that we wouldn't be seeing 14k on the DOW again for a while. But with today's Fed action and the reactions in the USD index and the Gold futures, I want to move everything, except the $5k the government has guaranteed, out of the MMF. I just don't quite know where to allocate the money yet.



Like I said before, equities look attractive. I just don't have the time to babysit a bunch of options in order to minimize my risk. I define "safe" as "it's not going to disappear while I'm still putting in the order to get out".
 
[quote author="Oscar" date=1229507860][quote author="blackvault_cm" date=1229499990]Oscar. Stock market is the safest place to put your money. I'm serious too. I can engineer an investment that gives me 95% protection loss and a 10.5% return. So thats 5% total risk loss with 10.5% return VS. a CD with 0.0001% risk loss with a 2.25% gain. That beats a CD imo, but others might not want to take the 5% total risk loss. (that would happen if Dow went to 0)



However, "safe" is defined by your own risk tolerance and your understanding of the investment.</blockquote>
Primarily this is 401(k) money that won't be used for another 30-40 years.



There are not a lot of choices offered for the 401(k) but everything was moved from the various mutual funds into a moneymarket fund in 11/07 and has been sitting there ever since. In hindsight this looks like brilliance considering how much of the equity loss was avoided, but it was the result of nothing more than a vague feeling that we wouldn't be seeing 14k on the DOW again for a while. But with today's Fed action and the reactions in the USD index and the Gold futures, I want to move everything, except the $5k the government has guaranteed, out of the MMF. I just don't quite know where to allocate the money yet.



Like I said before, equities look attractive. I just don't have the time to babysit a bunch of options in order to minimize my risk. I define "safe" as "it's not going to disappear while I'm still putting in the order to get out".</blockquote>


Well if you have money in the 401K you don't have the option to babysit options anyway. Unless you leave your job and roll it over to an IRA. This is why I have a strong dislike for 401Ks...Lack of flexibility.



Not that long ago I posted whether I should take this particular job....I took it regardless. So far so good. I'm also taking advantage of the 401K for couple of reasons. Tax benefits and matching contributions. Saying this I'm also allocating money into a FIF/MMF where my losses are very limited but so are my gains. However, the matching is giving me 100% return on my money not counting tax benefits. Simply put...I'm treating it as a savings account.



One day I will probably leave this job, and then I have the benefit of rolling over this money into an IRA giving me an opportunity to invest in various equities as I see fit. However, I'm not investing in any mutual fund no matter how attractive they seem.



So I gave you a scenario as to what I'm doing. Treating it as a savings account with 100% returns.



Now to your babysitting comment. You know I didn't like it and it disappoints me to be frank. I've said it many times...I lost nothing during this downturn and I was invested in equities. Even better, I have a chance to buy low for free. So if you aren't willing to put an extra effort into managing your future, can't say next time you'll avoid this economic crisis. No pain...no gain.



Good Luck and let me know if you have other specific questions.
 
[quote author="PANDA" date=1229135658][quote author="AVRenter" date=1229135184]With so many renters on IHB I was wondering where you all are socking away your cash, especially given the bleak outlook for the economy. I sold my place a little while ago and I haven't been able to decide where to put the cash. Any ideas? Have you all been reduced to mattresses?



Personally I'd like to hold out on a purchase for at least 2 years but it might be a battle with the spouse who seems ready to buy, "...if the right place becomes available," God help me. This might affect where we put our money if I have to at least give the appearance that our asset is readily liquid for a purchase.





Btw, thanks for all the daily input. I've been lurking for a while and this place really validates and makes me feel better about what I've always known about this market.</blockquote>


IPO, is your man. He knows where all the best CD and Money market rates are.</blockquote>


Alas, I haven't been keeping up with rates since my money is locked up in short-term CDs at Wamu, US Bank formerly Downey, Schools First CU, and First New England CU at an average yield of 4.25%. I am using the dollarsavingsdirect.com money market right now, which has been at 4%. I expect it to drop soon.
 
[quote author="blackvault_cm" date=1229512945]Now to your babysitting comment. You know I didn't like it and it disappoints me to be frank. I've said it many times...I lost nothing during this downturn and I was invested in equities. Even better, I have a chance to buy low for free. So if you aren't willing to put an extra effort into managing your future, can't say next time you'll avoid this economic crisis. No pain...no gain.</blockquote>
I think you took my comment the wrong way. What I meant is that my access to stock information during the trading day is very limited and I am not sophisticated enough to pre-select trades and set stops before the day begins with any confidence that they will work out. You've lost nothing because you can actively manage your portfolio. Anyone who has read the daytrading thread can see that. I don't have the ability to catch more than news headlines, much less actively manage a portfolio, during the day. Also, as you pointed out, 401k money is limited to certain choices.



My concern with a MMF is that with the effective Fed Funds Rate at or near 0%, management fees begin to erode the yield into a negative return. While the matching contribution could be considered 100% return, I prefer to look at it as part of my compensation and would prefer to allocate it in a way that allows me to get a return without having to run to a computer everytime the market moves. Unfortunately, that leaves me with some form of mutual fund.



Didn't mean to make you defensive.
 
Oscar - Without reading through the whole thread, my guess is that you and bv are talking two different strategies. My guess, (like I said, I haven't read the whole thread), is that bv is talking covered calls. Covered calls are a conservative strategy that takes very little daily scrutiny, probably less revue time than being long equities without the covered call hedge. In the simplest of covered call strategies, you sell your calls based only on the present price, and then you just wait to sell them AGAIN next month or in a couple of months. Even the most complicated covered call strategy requires you access to Greeks for the propective options and some technical analysis of the stock, and some further equity buy possibilities if your stock price rises above execution and you determine it advantageous to purchase more stock so as not to lose your position.



By the way, I think gold is much "safer" than equities presently.
 
What awgee said. Fore more details read my "Benefiting from Covered Calls" thread.

You don't have to even sell year out covered calls. If you want full protection buy year out puts and forget about it. It's like buying year long insurance. Hell if you want..buy 2-3 year insurance, or sell the insurance 2-3 years out and forget about it.



I didn't mean to sound defensive. I simply just shook my head since I wrote a thread for the "non-sophisticated"...so no excuses... but you might not have read it so its cool ;)
 
[quote author="awgee" date=1229555264]

By the way, I think gold is much "safer" than equities presently.</blockquote>


What do you think about platinum prices? I don't recall ever seeing platinum cheaper than gold. I realize that industrial demand for usage in catalytic converters is down, but this seems ridiculous.
 
Gold has been on fire. I bought a few Jan 09 calls on GLD when it was at 75(85 currently). But few as in only 10. I have no clue how gold behaves, and if I don't understand it well like my three stocks (aa, csco, xom) then I tend to shy away from it.



Saying that, I really hope gold goes to 1500+ so all you gold holders like Awgee and Panda can have a fantastic return. You deserve it.
 
[quote author="blackvault_cm" date=1229559052]Gold has been on fire. I bought a few Jan 09 calls on GLD when it was at 75(85 currently). But few as in only 10. I have no clue how gold behaves, and if I don't understand it well like my three stocks (aa, csco, xom) then I tend to shy away from it.



Saying that, I really hope gold goes to 1500+ so all you gold holders like Awgee and Panda can have a fantastic return. You deserve it.</blockquote>


Gold behavior is relatively easy to predict. Just look at what you expect to happen to the dollar. The recent rise in prices before yesterday was based on expectations of what the Fed would do. When the Fed exceeded expectations, any idea of buying the rumor and selling the news was dashed.



I expect gold to do well until about Jan. 10th, but it will weaken as we get closer to Obama taking office. I also believe that the Obama administration takes over, they will try to jaw-bone the dollar higher. I believe they will be successful at first, but that it won't last.



Watch the charts to find out dates for the macro thesis.
 
[quote author="WINEX" date=1229557621][quote author="awgee" date=1229555264]

By the way, I think gold is much "safer" than equities presently.</blockquote>


What do you think about platinum prices? I don't recall ever seeing platinum cheaper than gold. I realize that industrial demand for usage in catalytic converters is down, but this seems ridiculous.</blockquote>


Sorry, I do not know much about platinum. I do not know what a reasonable or ridiculous price is for platinum.



Blackvault - When I speak of gold being a safer asset, I am not talking about a trade. I am thinking of a minimum of a two year hold.
 
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