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Thread: Cash Management

  1. #1
    Join Date
    Dec 1969
    Location
    Seattle, Washington USA
    Posts
    151

    Cash Management

    Hi Y'all,

    I wonder if I can draw out any comments about cash management.

    Some dividend stocks, such as ANGC and NLY, are very attractive for their dividends. (I've never held them, always selling for profit on the run up to ex-dividend.)

    Today I see this, from Bespoke:

    Name:  NLY.PNG
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    NLY downgraded to market perform.

    In any case: Any ideas?

    (Of course, I'll check the archives; but the NLY change and current Robot position seems to warrant a thread).

    Many thanks,

  2. #2
    Join Date
    Dec 1969
    Location
    Kalmthout, Belgium
    Posts
    35
    I think cash is the best cash management option. Depending on your broker you receive interest for your cash position.
    http://www.interactivebrokers.com/en/p.php?f=interest

    Of course in this environment where central banks have pushed interest rates close to zero one gets next to nothing. Before 2008 I remember getting similar interest rates as a standard savings account with a bank for my EUR cash position.

    One could try and pick the best currency but that's another thing.
    Last edited by Rembert; 11-18-2011 at 10:16 AM.

  3. #3
    Join Date
    Dec 1969
    Location
    Seattle, Washington USA
    Posts
    151

    interest rates

    I recall when interest paid on savings was over 10% in the early 80s. Many people cannot imagine suchs returns on simple savings.

    The highly leveraged REITS offer nice dividends. NLY is down, however, (1.04%) today. Such a vheicle is not insured by the federal government. It comes with risk.

  4. #4
    This is an interesting question. I think quite a bit about this too, because most of my life's savings is set aside in a "gone to hell" fund (for use only if everything else has, well, I won't write that twice). There is no safety like cash safety for immediate liquid purposes, but suspending disbelief on 2008-like scenarios, there are some exchange tradable instruments that can be risk-weighted with other dividend paying exchange-traded instruments. The goal here is simply to beat US money markets. The sitting period for some of these is 1 month to 2 years, unless you need a dump truck to hold the amount, in ascending order of risk;

    LQD paired with either TLT, IEF, or both. Both UST funds yield comparable to their govvy bases and weigh out the relatively small risk in the AAA corporates. All pay monthly, which is nicer than quarterly.

    An exchange traded income fund (PMX, PFN) paired with TLT, IEF, or both. Same as above, also paid monthly, has the advantage of smaller entry prices.

    A dividend aristocrat like EMR, paired with TLT, IEF, or both. Share volatility risk, of course, so this would have to be risk weighted.

    A HY flier MLP like LINE or BBEP paired with TIP + UUP. Risk weighting would be for inflation/deflation risk. The TIP has been on a bit of a tear lately, and the UUP pays no divvy, so the quantity of UUP would represent your outlook for deflation.

    One that I used myself last year was cyclical - under $48.50 I believed the FLAT (UST 2s10s flattener ETF) was a steal, and it was. Right now its inverse STPP is also a steal if held over the next 8 months - 1 year. I think it's good for 15-20%. The only drawback with these two lovely instruments is their relative illiquidity. STPP is lucky to trade 2000 shares a day. Still, if you believe that it is impossible for the 2s10s to remain historically supine for another year, then buying up the offer book a couple times a week is still a good bet - when the 10y hits 3.5% again with the 2y stuck at .65, the liquidity will be there.

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