CASH is King

Julia · 1 February 2009

beerwm said:
Woah!! 5.5%... aren't your ambitions high!!

The exact reason people are in financial trouble now is because they didnt react to what was happening. A firm buy & hold strategy where they locked the money in.... sound familiar?

I'm not knocking your decision to go into cash, but its a tad narrowminded to suggest 'CASH IS KING FOR 3 YEARS!!'

I don't see that MR is necessarily suggesting that. Clearly, for his own reasons, he's most comfortable knowing he has the money earning the 5.5% that he has on his 3 year deposit. And if the recovery is in fact three years away, then he'll be feeling pretty damn good.

-so you've basically told yourself,
;there will not be any good investing /recovery opportunities for atleast 3 years
;interest rates will not reach 5.5% on a savings account until 3 years
;a 1-4% premium of that money [in comparison to a variable savings account] is worth the risk of the 2 above.

Well, there isn't such a thing as a perfect decision. Especially at present.
All any of us can do is consider all the advantages and disadvantages and reach the compromise with which we will feel most OK.

None of us know what will happen in the next three years. No idea.

Fair point Julia, but isnt the rate like >2.00% if you pull out?

I honestly don't know, but yes I'd expect there would be a significant reduction to deter people from stuffing about with term deposits.

MR. said:
And the bank, more likely then not, will release me from my term if things are looking alot better. Will add I should have divided into smaller parcels at the same rates. Have 2 or 3 instead of 1. Now that I didn't give enough thought.

Do you mean the bank will release you from the term without penalty?
Why would they do that?

Re amounts invested: I do individual term deposits of just $50K each.
The bank staff aren't very impressed about all the paperwork but it does mean you have more flexibility.

pilots · 1 February 2009

Julia said:
Pilots, obviously you meant to include "don't" in your initial sentence.
OK, that might seem lucky, but didn't you think about what best to do and then make a reasoned decision to take your profit on WPL?
Congratulations on such a good decision.
Perhaps it's about how you define 'lucky'? I'd say you'd be lucky if an out of control aircraft crashed to the ground and just avoided you and your property.
Ah but then you could say you'd have been unlucky to have even been in the vicinity of a crashing aircraft!
But hopefully I've made a bit clearer what I mean.

On living in Australia, I couldn't agree more.

Julia, sorry I missed the DON'T.

beerwm · 1 February 2009

Personally, i wouldnt feel comfortable with limiting my options for the next 3 years.

but each to his own, i'm sure your reasons suit your goals.
good luck MR.

nulla nulla · 1 February 2009

"And btw, nun, what's your own survival strategy in these times?"

Eat drink & be merry for tomrrow....................

nunthewiser · 1 February 2009

nulla nulla said:
"And btw, nun, what's your own survival strategy in these times?"

Eat drink & be merry for tomrrow....................

LOL amen !

MR. · 1 February 2009

nunthewiser said:
Yes i definately missed the cream of the top and really regret not being as good as most here who seem to buy at the very bottom and sell at the very top

nunthewiser said:
i live to play again unlike some of the more unfortunate newer bright eyed bushy tailed punters that thought markets only went up

nunthewiser said:
People dont want to listen 90% of the time when the going is good .

MY trading /investing plans/actions are of no use to anyone BUT me .. ppl would have (and did) scoffed at me for saying we had hit close to the top around march and it was time for care .

like i said ppl only wanna hear what they want to hear and after the facts are proven ONLY then do they look back and wonder why they didnt act sooner

(I have cut down the above a little)
Its all about greed....... Knowing when enough is enough....... regardless if they missed out or not. I think I can use some of your comments even in this current climate. Alot strongly believe a term deposit rate at 5.5% is laughable! Maybe they have had it too good?

Also funny, I also have a sticky note. I have recently found it on my forehead and it appears to have a single "L" written on it?
Suppose now I have to live with it, its only three years being hobbled.

Julia said:
Well, there isn't such a thing as a perfect decision. Especially at present.
All any of us can do is consider all the advantages and disadvantages and reach the compromise with which we will feel most OK.

Do you mean the bank will release you from the term without penalty?
Why would they do that?

a-men ..... now....."watch out for sticky notes!"

No, there will be a penalty. I just wouldn't be completly suprised if they didn't let me break the term without a GOOD reason. If times were really bad this might be the case. I will say, I have gone into this term with the intention of NOT breaking it.

beerwm said:
Personally, i wouldnt feel comfortable with limiting my options for the next 3 years.

but each to his own, i'm sure your reasons suit your goals.
good luck MR.

No-one here appears comfortable with this term except me.
Its simple. If the masses have huge debts "CASH is king".
Hope I have planted at least a small seed.

How long do you really think it will be before the good times return?

beerwm · 1 February 2009

MR.

my interests are in trading,
so i guess there are always good times

i am comfortable with the term 'cash is king'
and while i learn and create a trading system, my money is in cash/ most of it.

its just not going to be king for ever,its the timeframe i am not comfortable with.

no one knows the future, the best you can do it react to the present.

i think it was julia who said she had her cash in 3/6 month term deposits, which rotated her availability - which i consider a better approach

but this is just my opinion

wayneL · 1 February 2009

MR. said:
Are shares not liquid? Cash is still King

Yes they are, and there are still opportunities in stocks (and their options).

Despite the state of the economy/market, it's still business as usual for me.

If cash is king, liquidity is God.

Cash => 2% PA

Stock/option trading => some figure hugely in excess of that.

Glen48 · 1 February 2009

What happens if the USD tanks? won't the yank up IR to get money in to help with the bail out , what is to stop USA paying 10% or much more?
That why I keeping my cash handy.

nunthewiser · 1 February 2009

wayneL said:
Cash => 2% PA

Stock/option trading => some figure hugely in excess of that.

roll up roll up everyones a winner , step right up

MR. · 1 February 2009

wayneL said:
Yes they are, and there are still opportunities in stocks (and their options).

Despite the state of the economy/market, it's still business as usual for me.

If cash is king, liquidity is God.

Yes I see, it would be God for some!

wayneL said:
Cash => 2% PA

Stock/option trading => some figure hugely in excess of that.

+/- ? With every winner a loser.
In a falling market = more losers than winners.

beerwm · 1 February 2009

MR. said:
Yes I see, it would be God for some!

+/- ? With every winner a loser.
In a falling market = more losers than winners.

i guess it depends which way you are trading

ie. short selling

MrBurns · 1 February 2009

wayneL said:
.
Cash => 2% PA
Stock/option trading => some figure hugely in excess of that.

Yes but to beat cash you have to put ALL your cash into trading, a bit risky eh ?

nunthewiser · 1 February 2009

Dont get me wrong .i reckon wayne more than capable of making better than bank intrest in ANY market .but how many other normal odds and sods trader/investors would be ?

MR. · 1 February 2009

nunthewiser said:
Dont get me wrong .i reckon wayne more than capable of making better than bank intrest in ANY market .but how many other normal odds and sods trader/investors would be ?

Yes my opinion is of the same. However did even wayne disappear for a while just lately? With a final post "You think you lost money"

Trevor_S · 1 February 2009

MR. said:
No-one here appears comfortable with this term except me.

Which might tell you something. That aside, be contrarian and don't follow the masses best of luck to you then (truly), you made a choice, sure I don't agree with it, but it ain't my money... I am too much of a pussy to predict 3 years out, I have no friggin' idea, 10 or 20 years, I am prepared to take a punt though and any discussion that makes you think (even if you don't necessarily agree with it) is good to my mind.

How long do you really think it will be before the good times return?

Depends what your definition of good times is and what perspective you are looking at it from, eg lots of people are better off these days then 18-24 months ago, those that have a PPOR (what care they of retreating house prices) and are paying it off and have a job where they drive to work, have it "pretty good". Low variable mortgage rates, lots of welfare for them if they have kids, tax breaks coming up, fuel is much cheaper, input costs are coming down, so things like food etc are a little cheaper

Self funded retires on the other had.. low interest rates typically = crappy income. When interest rates where high, they were happy, nice income stream, those paying off mortgages, whoa is me... shrug.... turns and round-a-bouts.

tech/a · 1 February 2009

For now for many cash maywell be the best option for many.

When and not if---inflation bites then cash will be the last place you'll want to be as its eroded,in value.

Personally I like it to be working for me---well most of it.

robots · 1 February 2009

MR. said:
Yes my opinion is of the same. However did even wayne disappear for a while just lately? With a final post "You think you lost money"

hello,

thats why its a bit of a myth that people think banks arent lending at the moment!

spot on Nun, there are so many if's & but's, on writing, selling, calls, puts etc yet you rock up to work and the dollars just flow risk free brother

anything else a bonus

thankyou
robots

MR. · 1 February 2009

tech/a said:
When and not if---inflation bites then cash will be the last place you'll want to be as its eroded,in value.

Yes have given that some thought well before the T/D.
And inflation will bite.
This is the reason I think the bank offers such a rate.
My opinion is that inflation will not take off as quickly as many think with these very low rates. So rates will stay low for longer.

wayneL · 1 February 2009

MrBurns said:
Yes but to beat cash you have to put ALL your cash into trading,

No. I still have a lot of cash earning unprincely sums

a bit risky eh ?

Well this is where so many people have become confused in the boom. Generally, there is an interplay between risk, reward and probability.

There is no reward above "risk free" (which isn't really risk free) without risks greater than risk free. However, get your probabilities right and eventual reward is almost guaranteed.

eg

risk = x
reward = 2 X x
probability = 1:1

= profit over a high number of transactions.

The hidden risk in the above is "knowledge risk". Not knowing the probabilities or how to skew them in your favour. Also capacity risk if you leverage yourself too highly.

I'm taking a few punts on direction, but most of my punts are on "non-direction".... where I don't think the price will go within a certain time frame, (via options) and shifting the goal posts when necessary.

nunthewiser said:
roll up roll up everyones a winner , step right up

Haha! Point taken. But for $5,000, you can buy my e-book, How To Be As Rich As Warren Buffett By The End Of The Month.

CASH is King

Julia

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pilots

beerwm

nulla nulla

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nunthewiser

MR.

beerwm

wayneL

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nunthewiser

MR.

beerwm

MrBurns

nunthewiser

MR.

Trevor_S

tech/a

No Ordinary Duck

robots

hello

MR.

wayneL

VIVA LA LIBERTAD, CARAJO!

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