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What will they break first: short treasury bonds or SHORT IG BONDS?
The move fast and break things gang will, by design and or incompetence continue to break things. I have confidence in them. Since we have no need or willingness to take risks which type of fixed income fund is least likely to suffer catastrophic harm from the regimes worst impulses? Thanks for thoughts.
@BaluBalu. Thanks for your thoughts. I am of course aware of “the usual.” My concern in these unusual times is that conventional wisdom might not apply. My question , in plain language,,is which of these two short term fixed income classes will the regime fuck up less? In these times perhaps the classic flight to safety is the wrong ticket.
Google Mar-A-Lago Accord. What could possibly go wrong.
Treasury is less risky than that of corporate bonds. For now, treasury department operates independently from the executive branch.
Alternatively, take a page from Warren Buffet and buy T bills. He takes no chances with $360 billion in cash. He invests in short term T bill ladder while waiting for next big buying opportunities as he had done so in 2008 GRC.
@BaluBalu. Thanks for your thoughts. I am of course aware of “the usual.” My concern in these unusual times is that conventional wisdom might not apply. My question , in plain language,,is which of these two short term fixed income classes will the regime fuck up less? In these times perhaps the classic flight to safety is the wrong ticket.
Google Mar-A-Lago Accord. What could possibly go wrong.
Which two fixed income classes are you referring to? If it is short term Treasuries vs SGOV? I would go with short term Treasuries if higher level of apprehension.
Base on your OP, I understood loss of principal and liquidity are your only concerns. As such, my reco of short term Treasuries. I would keep a couple of weeks worth of spending money in your bank account in case the market is closed and you can not access market liquidity immediately. Above all, discuss your apprehensions with your spouse and agree on a plan because at the end of the day each team members has to cooperate / work as a team in a crisis you envision.
Treasury is definitely part of the Executive branch, under the Treasury Secretary who reports to the President. It's the Fed that has been independent in the recent times. In any federal department, all it takes now is for the DODGE Kids to holler fraud, stop the outgo until they investigate (understand?). Interest alone on outstanding federal debt is $1+ trillion or 3.4% of GDP. But DOGE seems not effective in the departments that now have confirmed Secretaries.
Edit/Add. Cabinet Secretaries or other positions yet to be confirmed:
Agriculture Commerce Labor
CDC FDA IRS Surgeon General Medicare/Medicaid SSA NATO UN
It doesn't seem like there is anywhere to hide. All forms of bonds are based in US dollars, "backed by the full faith and credit of the US gov't". Does anybody here have faith in the US gov't now? I am looking at Invesco currencyshares. Even those are tied into dollars if you want to cash out.
”It doesn't seem like there is anywhere to hide. All forms of bonds are based in US dollars, "backed by the full faith and credit of the US gov't". Does anybody here have faith in the US gov't now? I am looking at Invesco currencyshares. Even those are tied into dollars if you want to cash out.”
A source I follow likes the Japanese Yen. There are etfs (one at Invesco) that invest in the Yen - and many other currencies. As charts will show, the Yen has been in a downward spiral for years. I’m not biting - but do have a few % allocated to a CEF that invests in Japan’s stock market. I don’t think it’s hedged back to the dollar, so should benefit if the Yen appreciates.
I’m not as convinced as others in this thread that Dollar denominated bonds are a risky investment. Probably still one of the cleaner dirty shirts in the closet - TBD.
” I am looking at Invesco currencyshares. Even those are tied into dollars if you want to cash out.”
That doesn’t sound completely right. An etf invested in a foreign currency will rise & fall (in Dollar terms) as that currency appreciates or depreciates against the Dollar. While the investment can be purchased or redeemed in Dollars, that does not impact your ability to make or lose money on the currency. Personally, I don’t like playing in the currency markets. Requires a level of sophistication I (and few others) possess. You can get burnt pretty easily. If I wanted to play, I’d look for a basket of currencies rather than putting all my trust in just one.
Do I have faith in the U.S. government? That’s probably better fodder for OT.
At Hank. If I didn’t have confidence in the management of let’s say PIMCO that would be a legitimate topic ,,, not in OT. RIGHT? If I didn’t have confidence in the US government that made me question investing in US GOVERNMENT Securities that would also be a legitimate topic for discussion too. Right now,,, this month , this week. This day, this minute the US Government is impacting all aspects of our lives in general and our investments in particular. It’s not off topic .
@LarryB . I did not say this thread or anyone’s comments therein contained should be in off-topic. Just that my own feelings regarding politics go there. You are welcome to post anything you want. If you want me to delete my last remark directed to @Soupkitchen so as not to soil your outstanding thread I can do so. Sorry you didn’t find my discussion of currencies more helpful.
@LarryB. Would you mind sharing how you are invested? ISTM even 2 or 3 years ago you were pretty much sitting in cash … Still the case?
At Hank. My point is that many here, not you, object to bringing up the government or government policy in an investment forum. This is the Boglehead model. I will admit it’s a slippery slope and partisan political remarks cross the line. That being said, we live in unprecedented times and it’s now impossible to ignore the impact of the government’s action on our portfolios. As for me I have no need to take risk except for sport and not much of that. I have not a bit of FOMO..I have been very content to have a portfolio of risk free 5+% stuff in the manner of DT CONROE, who used to discuss his investments here. The whole point of this thread was to discuss declining safety in areas that were safe but might not be much longer. Because of a reckless and destructive government out of control.
“The whole point of this thread was to discuss declining safety in areas that were safe but might not be much longer. Because of a reckless and destructive government out of control.”
Fair enough. But sometimes inside a thread a poster asks a non-related question or makes a comment that’s not entirely accurate. Others, including myself, should be able to answer or assist that poster even if the topic is different from the thread caption. However, in this case, I don’t think consideration of foreign currencies violates the thread’s focus. Indeed, it’s quite logical to think about alternatives to the Dollar if you feel it (or dollar denominated bonds) constitute a poor investment. @Soupkitchen’s remarks / question about FX trading were fully appropriate.
I’d invite people troubled by recent government issues to visit OT. There’s an amazing variety of comments in that regard, along with an occasional post about sports, the arts, travel which might help sooth the soul in troubled times. The fact it’s less visible should not bother one. It’s a spirited and knowledgeable bunch over there.
The focus here is investing. That’s a noble goal in any financial or political environment. To bury one’s head in the sand and not invest for growth and protection of principal against inflation because of fear, disdain or distrust of government or personalities does no good. Can only harm the investor long term.
I don't think of investing in foreign currencies as an investment. More like protection against a currency that used to be the world standard. When I mentioned that investing in FC is still tied to the dollar, I meant that when you decide to cash out, you will still be getting dollars. If holding foreign currency through etfs or even in a US bank, (correct me if I'm wrong) when you want to redeem that money it will be in dollars. The point would be to have other currencies as savings to protect against a dollar that could crash, being the people we have running the show. Maybe it is time to buy rubles? THAT is something I would not do.
”I meant that when you decide to cash out, you will still be getting dollars.”
Yes. I would hope so. After watching a cashier at Walmart try to count change for the $50 Bill I handed her yesterday, I shudder to think what she’d have done had I handed over a 1,000 Yen Note instead.
”The point would be to have other currencies as savings to protect against a dollar that could crash “
I don’t know why that wouldn’t work if you just kept the money in the currency ETF until you needed to spend it. Settlement period (from sale to usable cash) is now only 1 day.
Alternatively, you can go to a large bank / FX exchange inside the U.S. and trade dollars for a foreign currency. It might take a few days for them to fill the order and there would be a fee. For large orders there would be some government reporting as well. Wells Fargo will do it mail order. But, unless you flee the U.S. for a foreign country, spending the currency would seem problematic. If you do opt for paper currency you’ll want a good fireproof safe or bank vault. Not a big fan of gold at these prices, but it is often considered an alternative currency.
Buying a new car or truck? I don’t think it would take more than 24 hours to convert your investment in a foreign currency ETF into Dollars and be able to write a check to the dealership. Fido is very helpful in matters of that sort. I had to move dollars from a different account into my cash management account for that purpose recently and Fido accomplished it in a matter of minutes. Albeit, selling an etf and having proceeds available to spend would likely take an extra day.
* Gains from foreign currency investments are generally taxable as ordinary income. So it would be best to hold them in a tax-deferred / tax-except account.
Comments
Google Mar-A-Lago Accord. What could possibly go wrong.
Alternatively, take a page from Warren Buffet and buy T bills. He takes no chances with $360 billion in cash. He invests in short term T bill ladder while waiting for next big buying opportunities as he had done so in 2008 GRC.
The other choices are high quality corporate bonds, or money market.
Base on your OP, I understood loss of principal and liquidity are your only concerns. As such, my reco of short term Treasuries. I would keep a couple of weeks worth of spending money in your bank account in case the market is closed and you can not access market liquidity immediately. Above all, discuss your apprehensions with your spouse and agree on a plan because at the end of the day each team members has to cooperate / work as a team in a crisis you envision.
Edit/Add. Cabinet Secretaries or other positions yet to be confirmed:
Agriculture
Commerce
Labor
CDC
FDA
IRS
Surgeon General
Medicare/Medicaid
SSA
NATO
UN
I’m not as convinced as others in this thread that Dollar denominated bonds are a risky investment. Probably still one of the cleaner dirty shirts in the closet - TBD.
” I am looking at Invesco currencyshares. Even those are tied into dollars if you want to cash out.”
That doesn’t sound completely right. An etf invested in a foreign currency will rise & fall (in Dollar terms) as that currency appreciates or depreciates against the Dollar. While the investment can be purchased or redeemed in Dollars, that does not impact your ability to make or lose money on the currency. Personally, I don’t like playing in the currency markets. Requires a level of sophistication I (and few others) possess. You can get burnt pretty easily. If I wanted to play, I’d look for a basket of currencies rather than putting all my trust in just one.
Do I have faith in the U.S. government? That’s probably better fodder for OT.
@LarryB. Would you mind sharing how you are invested? ISTM even 2 or 3 years ago you were pretty much sitting in cash … Still the case?
Fair enough. But sometimes inside a thread a poster asks a non-related question or makes a comment that’s not entirely accurate. Others, including myself, should be able to answer or assist that poster even if the topic is different from the thread caption. However, in this case, I don’t think consideration of foreign currencies violates the thread’s focus. Indeed, it’s quite logical to think about alternatives to the Dollar if you feel it (or dollar denominated bonds) constitute a poor investment. @Soupkitchen’s remarks / question about FX trading were fully appropriate.
I’d invite people troubled by recent government issues to visit OT. There’s an amazing variety of comments in that regard, along with an occasional post about sports, the arts, travel which might help sooth the soul in troubled times. The fact it’s less visible should not bother one. It’s a spirited and knowledgeable bunch over there.
The focus here is investing. That’s a noble goal in any financial or political environment. To bury one’s head in the sand and not invest for growth and protection of principal against inflation because of fear, disdain or distrust of government or personalities does no good. Can only harm the investor long term.
Regards
Yes. I would hope so. After watching a cashier at Walmart try to count change for the $50 Bill I handed her yesterday, I shudder to think what she’d have done had I handed over a 1,000 Yen Note instead.
”The point would be to have other currencies as savings to protect against a dollar that could crash “
I don’t know why that wouldn’t work if you just kept the money in the currency ETF until you needed to spend it. Settlement period (from sale to usable cash) is now only 1 day.
Alternatively, you can go to a large bank / FX exchange inside the U.S. and trade dollars for a foreign currency. It might take a few days for them to fill the order and there would be a fee. For large orders there would be some government reporting as well. Wells Fargo will do it mail order. But, unless you flee the U.S. for a foreign country, spending the currency would seem problematic. If you do opt for paper currency you’ll want a good fireproof safe or bank vault. Not a big fan of gold at these prices, but it is often considered an alternative currency.
Buying a new car or truck? I don’t think it would take more than 24 hours to convert your investment in a foreign currency ETF into Dollars and be able to write a check to the dealership. Fido is very helpful in matters of that sort. I had to move dollars from a different account into my cash management account for that purpose recently and Fido accomplished it in a matter of minutes. Albeit, selling an etf and having proceeds available to spend would likely take an extra day.
* Gains from foreign currency investments are generally taxable as ordinary income. So it would be best to hold them in a tax-deferred / tax-except account.