Friday, November 26, 2010

The Mountain of Cash

The stock rally Wednesday has moved a re-buy of US stocks off the front burner for Krypto Fund. What now?

I wait. I sell when prices are high and buy when they are low. That applies to EVERY asset class. Over the past few months I sold all my TIPS and large amounts of US stocks and all classes of foreign stocks and even gold stocks, as those asset classes rose in value. The money all went to cash - money market funds. The model wants me to buy fixed income bonds, BUT those are in bubble stage, too.

Hence my wait. Waiting even a couple years can pay off quickly. For example, the prices of bonds can easily fall 10% from here, yet the coupons are in the 4% range. Avoiding a 10% or more fall gives a great 2.5 year payback on the cost of waiting (viz., foregoing the 4% yield).

A possible buy looms: the recent large drops in both municipal bonds and 30 year US treasury bonds brings both those asset classes closer to a buy point - 5%. That's my long term investment minimum goal. Why buy bonds that yield less than that & lock in a losing investment? Just wait. The buys will come, maybe later this year if the economy begins the faster growth as I expect.

Waiting and sitting can pay well. Patience, grasshopper.

Word of the Day

"Antinomy" noun [$10]
Antinomy means 1. a contradiction between two beliefs or conclusions that are in themseles reasonable; a paradox; 2. a conflict between two laws of authorities.
Sentence: For investing, the antinomy of buy and sell both being bad choices is resolved by wait - doing nothing. Let time and volatility provide a better investment action.

14 comments:

Spin-em said...

Hey Lucky Star...would it killya to give a guy a warning bark???...lol

Bunkerman said...

She rings a bell hanging on the doorknob when she wants out ....

I have a photo - will post soon.

mfl59 said...

the tank rants about the dollar....the dollar goes straight up...$6k indeed...

Bunkerman said...

lol, I was just going to post that since I've been hearing those rants here, the dollar has been rising.

Hmmmm ....

Bunkerman said...

and the talk about reserve currency ... with euro having doubters & N. Korea threatening Japan, I guess US is the the only safe nation on earth for a hundred year horizon.

sigh ...

I think I wrote that once here, many moons ago.

Bud said...

give me F'ng break Bman !!!!!!!!!!!!!


europe is a catastrophe...........yes......compared to that.............'dollar is rising'................what a load of crap

Bud said...

and if the dollar really is rising..............why was my thanksgiving dinner 210 bucks ????


i tell you why................my global purchasing power is in freefall

Bud said...

marc faber on wednesday said to get out of the USdollar on any rally..........it's a relic


is he 'blabbing' too ???

Bud said...

more blabbing



the USA is 13 trillion in debt................that's a fact..........the only way to pay it back......destroy the greenback


and that is what dr bernanke is doing with QE1 QE2 QE3 QE4........




PS........Bman shud dr bernanke be charged with treason ??

Spin-em said...

Bud and zeta sitting in a tree
K I S S I N G
first comes luv...
then come marriage
then lil merny in the baby carriage

Spin-em said...

Hey Derek Jeter hows Seattle sound??

Bunkerman said...

lol, Bud ...

If the dollar keeps going up like this, I will take two Euoprean vacations next year.

I figure Madrid in May ...

Hmm what else?

Vienna?

Bunkerman said...

or Berlin?

Bud said...

you prolly enjoy StPetersburg more............or as the Bman calls it.............Leningrad




'view from the politburo'