AphroditusParticipantAugust 7, 2020 at 12:54 PMPost count: 31
Howdy . . . hoping you guys can give me some advice. I recently had a financial advisor look through what I have and tell me I am too conservative, mainly because I moved a lot of profitable positions into cash after buying on the March dip. Of course, he is selling to me and wants to manage that money. But with our hero, Warren Buffett, holding tons of cash, I don’t feel like I’m doing anything wrong. But Warren Buffett is a smart guy; much of his seed money came from and continues to come from dividends, interest on his insurance float and of course his cash instruments are in treasuries. Should we keep dollars (or euros, pounds, etc) as our cash holdings? Or are there good, liquid treasuries like TIPS that we could keep cash in and get some kind of interest/dividend payment on the sidelines? Any thoughts, suggestions? Thank you!
Leslie HarvathParticipantAugust 7, 2020 at 12:59 PMPost count: 250
- This topic was modified 1 month, 1 week ago by Aphroditus.
My first thought is to advise you to run screaming from this advisor. Well, screaming is optional.AphroditusParticipantAugust 7, 2020 at 1:10 PMPost count: 31
LOL! They do have a fiduciary and the numbers they gave me were conservative (though I know they are sales numbers). In normal times I would agree with him that this proportion of cash is not effective. But what to do with the cash when you have it so it’s not dead cash? “Dead cash” comment just means sitting without much interest/dividends. That’s why I’m interested in the treasuries/TIPs.Sean HymanModeratorAugust 7, 2020 at 1:11 PMPost count: 2761
Yep, that’s a decision you’ll have to make. But financial advising in general looks after themselves first and you 2nd. Only you can make that judgment. But of course he’ll say you’re invested wrongly because he wants to be the solution. It pays him to do so. And he doesn’t earn anything on cash. So that doesn’t appeal to an advisor.
When dealing with financial guys, you have to see how they benefit. With me, I don’t benefit more if you have a million dollars in LI picks or $5000. I don’t profit off of your buys/sells, etc. so that’s as pure of a relationship as it gets. But in the end, only you can decide.Sean HymanModeratorAugust 7, 2020 at 1:14 PMPost count: 2761
Cash is dead is wrong thinking. If it were right, Warren Buffett wouldn’t have $128 billion in cash. And he’s got it in dollars.
Cash = opportunity for future outsized returns. Without it, you don’t have those opportunities. Something I learned from watching Buffett.AphroditusParticipantAugust 7, 2020 at 1:36 PMPost count: 31
Ok, I think we are getting to the question I am trying to ask. Is it better to hold “dollar cash” vs. “cash instruments” and if so why? Thank you.Sean HymanModeratorAugust 7, 2020 at 1:41 PMPost count: 2761
Hold in dollars and don’t turn into being a currency trader with your cash. And hold the cash in your brokerage account’s sweep money market account.Leslie HarvathParticipantAugust 7, 2020 at 1:42 PMPost count: 250
@aphroditus, my second thought is to consider how liquid you can actually make your holdings of cash. All my cash is tied to IRAs (Roth or Trad), so moving cash in and out of, say, a money market fund back to my brokerage acct to earn a few quid can’t happen–or can’t happen easily. Sean recently addressed TIP (just look on the Forum posts a few threads down), so that doesn’t look like a good option either. Personally, I want my cash at the ready to grab opportunities as they become available, which (as we saw with USO) doesn’t just come with the monthly newsletter. That liquidity is worth the trade off. 🙂Sean HymanModeratorAugust 7, 2020 at 1:49 PMPost count: 2761Clarence GilstadParticipantAugust 7, 2020 at 2:34 PMPost count: 25
Sean Buy good ear plugs with all the bad advise in the news and from advisers. People will be running at you screaming.Sean HymanModeratorAugust 7, 2020 at 4:35 PMPost count: 2761
Clarence, yeah, the news media and analysts will never give buy/sell indications when really needed.
As far as other people advising, I know God will connect those to me that get it. So I don’t worry about that. God has given me a very faithful crowd.Sean HymanKeymasterAugust 10, 2020 at 2:52 PMPost count: 3300
Notice that Buffett has $147 billion in in cash now and is perfectly fine with that. Notice that he’s not trying to convert it to euros or bitcoin, etc. Notice, he doesn’t worry about dollar erosion because he knows that cash = outsized opportunities. Notice that everything that Buffett touches doesn’t always turn to gold and he has his rough patches, etc. But his system still causes him to prevail over time. Also, notice that people have always underestimated him at market topping periods and some see him as a “has been”. They’ve been mistaken, every time, so far.Scott PearcyParticipantAugust 11, 2020 at 7:59 AMPost count: 296
Right now, I am about 30% cash…trying to get up to 50% as I sell positions from “other newsletters” as they become profitable…..Need to have a stockpile of cash to take advantage of the bargains that will exist when the market correction occurs and the market stabilizes….DANNY ABARParticipantAugust 11, 2020 at 8:17 AMPost count: 71
Good morning, Aphroditus
If your cash is making you crazy, and you just cannot go on living with your “Dead Cash” not at work for you …
You might consider investing a “limited amount of cash” and “Buy” a few long expiration (18 – 24 month) “Puts” in SPY (S&P500), QQQ (NASDAQ) or IWM (Russel 2000).
This will alleviate you “need” to use your “Dead Cash”, but still invest within the confines of Sean’s message as to where the market will continue to move.
It would be interesting if Warren Buffett is Buying Long Expriy Puts in the broad market indices??
Of course, I would wait to see if Sean confirms …
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