Goldman Says Overweight Cash As Ray Dalio’s ‘Pretty Stupid’ Cash Holders Still Looking ‘Pretty Smart’
TINA is dead. Or maybe "sick" is better.
There is suddenly an alternative. And that alternative is cash.
Last week, BofAML was out suggesting the safe haven appeal of 10Y Treasurys might be diminishing and their rationale was simple. To wit:
The typical haven characteristic of Treasury debt is being hindered by the appealing rates of return on cash in the US. Historically during periods of market turbulence, money would flow from risky assets (such as stocks) into US Treasury bonds. But with
Dalio was interjecting the risk theme publicly at year end. So what is he really about?
Forgive me for being a novice trying to follow a usually very technical blog, but I am very confused about terms here. I understand stocks, I understand bonds, including Treasuries, and I thought I understood cash. I hold all three, but the cash I have at my online bank earns 0.25% and the cash I have in my brokerage account earns 0.17% annually. With inflation, those are negative returns. How is cash not invested in stocks or bonds generating any kind of real or nominal return? What is this idiot missing?
These are instruments held by portfolio managers/institutional investors and various funds. A retail investor would never have access to deposit cash with a bank at the LIBOR rates. However you can still buy yourself 2y treasuries or shorter-term bills from your broker if you can afford a few hundred thousands. You are not missing anything; you are just looking it from the wrong angle
That was very helpful and candid. Thank you for the information.
Cash just means money markets
HH–
the 3mo libor has been falling with bumps back up….yet the 90day tbill is climbing…..can you or anyone else quantify or factor the impact of the rising dollar on the 3mo libor? TEd spread vs $ tell us anything?