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But why don't you just keep it in 1-3 month T-notes and then sell that in a downturn so you can buy cheap stuff? 3 month T-notes are called the risk-free rate
by mruts 8y ago
But why don't you just keep it in 1-3 month T-notes and then sell that in a downturn so you can buy cheap stuff?
3 month T-notes are called the risk-free rate for a reason...
- mpweiher 8y agoNot risk-free when you're outside the US. "Tagesgeld" here is generally at 0%, excepting "switcher" offers that are limited in volume etc. BUNDs are often negative these days.
- mruts 8y agohmm, that's a good point. Do you have access to the US equity markets? If so you could go with a short-term gov bond ETF.
- mpweiher 8y ago>> Not risk-free when you're outside the US. > Do you have access to the US equity markets? Sure. You just have the additional exchange-rate risk, to which I am already amply exposed, and quite a bit of regulatory overhead that I can do without. I am not saying that cash is the 100% optimal strategy here, but so far I haven't seen any obvious/easy alternatives. And again, it's not a 100% cash strategy, cash is still a minority instrument right now, just larger than it would be in other climates.
- mruts 8y agoThere are S&P ETF’s that hedge out the dollar risk and pay out in euro’s. Not saying your concerns aren’t valid, just that modern financial instruments are varied and sophisticated enough to hedge most exposure concerns that an individual might have.
- mpweiher 8y agoHedging is not free, and not risk free. See 2008. Closer to home, one of my investments did quite a bit of hedging against risks last year, for threats that in the end failed to materialise, and due in large part to this underperformed significantly.