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Musk trashes cash / defends bitcoin purchase. “I’m not an investor, I am an engineer.”

hank
edited February 2021 in Other Investing
"To be clear, I am not an investor, I am an engineer. I don't own any publicly-traded stock besides Tesla ... However, when fiat [regular] currency has negative real interest, only a fool wouldn't look elsewhere. Bitcoin is almost as BS as fiat money. The key word is 'almost'." Newsweek

Related - Earlier Story from USA Today Tesla buys $1.5 billion in bitcoin

Also related ... Another bump up for the 10 year treasury yield today. 1.34% at last glance. Seem low? Consider around 0.60% less than a year ago.

Question What rate on short term debt or cash would entice you to unload some of your equity holdings (if any) ?

Comments

  • CrashCrash
    Oh, dear. Good question. SHORT-term debt? Nope. Just, no. I'd rather buy a 10-year "zero" and hold it. Last one I had, I redeemed in 2013, almost doubled my original investment. Can a 5-plus percent rate be found anywhere on a 10-year "zero" today?
  • JonGaltIII
    edited February 2021
    @hank a 1.34% (no matter the history of lower) - would not get me out of bed. I just can't subscribe to it. It's tough. I now own 1 bond fund FXNAX and it's painful. I divested Intermediate and Long Term bonds last year. I just think... these days - with interest rates so low, it makes no sense for bonds. I know there are many that rely on them for income but I'd rather play the equity side long term. Own bonds for "diversification benefits?" - it hasn't panned out for me in a very long time. Here's CNBC's take ... it's got to be 1.75% but it will take more for me. https://www.cnbc.com/2021/02/19/the-10-year-treasury-still-has-higher-to-go-before-it-threatens-the-stock-market-strategists-say.html
  • Derf
    Different strokes for different folks, @JonGaltlll.
    Stay safe,Derf
  • hank
    edited February 2021
    Article in the FT today partially addresses the issue. Hard to link to it if no subscription. It’s the top one in the attached search query. Try this

    Article: Should equity investors worry about rising interest rates? - Michael Mackenzie

    Excerpt: “Bullish sentiment remains very high. The latest monthly survey of global fund managers by Bank of America this week highlighted that cash levels in portfolios are being cut to their lowest level in eight years”.
  • Sven
    Thanks @hank,

    I can read it using Safari's Private Window (this somewhat works less than 50%). Otherwise I search for the title when it is posted elsewhere.

    The comments below the article reveals various investor views. I tend to agree with this poster.
    What this article is missing is that the stock market starting point is already too high. All the good news mentioned here should already be discounted. The high market level has only one cause: money for nothing and QE galore. Furthermore, the level of indebtedness is such that a moderate interest rate rise will have a huge effect (unlike previous times). Any tightening in financial conditions (higher long-term yields for example) with the Fed margin for maneuver more limited (inflation ticking up) will cause a cataclysm in the markets. The timing is anyone's guess. Therefore advising readers to "stay in equities for a while yet" or worse buying the dips is totally irresponsible, given the current over-inflated stock levels.
  • WABACWABAC
    hank said:

    "
    Also related ... Another bump up for the 10 year treasury yield today. 1.34% at last glance. Seem low? Consider around 0.60% less than a year ago.

    Question What rate on short term debt or cash would entice you to unload some of your equity holdings (if any) ?

    I don't know. But I did sell all the bond funds in my IRA to lock in the profit I made over the past year or so.
  • JonGaltIII
    I hear you loud and clear @sven on valuations and equity P/E... BUT... the stories covering that topic and sending out the alarms have been have been increasing in frequency the last 3 years. Then in March it was an I told you so moment but it ended up not being.

    @derf I’m open to learning the value of bonds. Heck.. I’ve even admitted that I own a bond fund in each of my accounts. I’m trying to be conservative and note- I’m not yet relying on investments for retirement income. I’m not retired. When I do... perhaps I’ll pay even closer attention to them. It’s just for the last 10 plus years... I don’t understand how I benefitted from owning them when just comparing to an S&P 500 Index.

    Still - love the conversation here and learning different perspectives.
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