Money Market Question

I use VMMXX that currently pays 2.58%, anyone know of anything better to use for cash between transactions? JDJ

I use VMMXX that currently pays 2.58%, anyone know of anything better to use for cash between transactions?


JDJ

my prime money market accounts thru american century are paying 2.73%. the accounts also allow free check writing.

ed rader

Edited by ed rader, 13 April 2008 - 01:47 PM.

JDJ,

Never, EVER reach for yield. NEVER.

I'm a professional and I have been since 1986. I've been trading seriously since '83. The single most important thing I can tell you, is do NOT take any risk with your safe money. A money market is NOT an investment. It's a parking place to keep cash until you can find something productive that has a good risk/reward ratio to do with it. You want that money to be liquid and perfectly secure when you need to use it.

The very best time to have that is when the poop is hitting the fan. The problem is when the poop hits the fan, repos and non-governmental debt instruments can suddenly become illiquid. For another 50 basis points, it's just not worth the risk AND it's a bad strategy anyway.

I could go on and on, but in the current environment, my opinion on this is vehement.

BTW, nothing on this site should be construed as investment advice EXCEPT my comments just above.

Mark Young
Founder
Traders-Talk.com

JDJ,

Never, EVER reach for yield. NEVER.

The very best time to have that is when the poop is hitting the fan. The problem is when the poop hits the fan, repos and non-governmental debt instruments can suddenly become illiquid. For another 50 basis points, it's just not worth the risk AND it's a bad strategy anyway.

Mark Young
Founder
Traders-Talk.com

Absolutely right. Furthermore, from here on out you should ONLY be buying TREASURY money market funds. "US Government" MMF's are crap. They contain toxic junk like Fannie Mae which is hurtling towards hell and they are NOT government guaranteed, despite widely held belief to the contrary. One of these days commercial MMF's are going to break the buck. Don't be among the patsies. Just be sure, however, that with short-term rates low and going lower, the expenses of the fund you own do not outweigh the yield. This can and will happen. In that case stay in cash or buy the T-bills themselves (from treasurydirect).

Edited by TradingUp, 13 April 2008 - 05:17 PM.

I had a good thing going with some of my long-term monies I moved into cash last July to the Vanguard Prime Money Market Fund. It held out longer than most but, now it's paying only 2.58%

I have other long-term monies in a retirement program I had with my last employer that I also moved to cash in July. This retirement program is through Vanguard and its money market, the Vanguard Retirement Savings Trust IV, is still paying 4.49% which I find amazing. Nonetheless, it's is not something anyone but those in the program or some other employer program could get into.

Mark is, of course, totally correct. My reason for moving the long-term stuff out of the equity markets this past July wasn't to make money but, to protect what I had built.

Unless you are into active trading, there is no place to make money long-term right now. No place. If you have capital you want to preserve, just look at it as that and wait until there is a better time to re-deploy it. The better time? Ahhhhh that is the $64 trillion dollar question!

I still think there's going to be a large rally, the "the sharks are gone. It's all clear to jump back in the water" rally sucking in a lot of people before the ultimate low is made.

Be especially wary if you see this guy on CNBC some morning telling you to...

Edited by milbank, 13 April 2008 - 05:29 PM.

One other thing you can consider. Just buy short treasuries in your brokerage account. If you don't go out too far, you shouldn't have a problem and they are marginable at a higher rates. I think 90%, but I could be wrong on that. It has been a long time since I've done that. That means you can just borrow against your treasuries to go long or short. This isn't a long term strategy, but if you're in and out and spending a good amount of time in cash and you can't find a MM fund that you like, this'll probably keep you on par with inflation. Mark

One may enhance money markrt return by transfering monthly mm dividends into high yield fund(VWEHX) in a uptrended market.

one may trade VFIIX(5.07%)

one may buy stocks yielding 5%+

There aren't higher returns without taking a little risk!

http://finance.yahoo... vweh...0&a=&c=

ANNUAL TOTAL RETURN (%) HISTORY 2000..2001..2002 bear market

http://finance.yahoo.com/q/pm?s=vfinx
http://finance.yahoo.com/q/pm?s=vwehx
http://finance.yahoo.com/q/pm?s=vfiix

VFIIX..long term range

http://finance.yahoo...FIIX&...&q=l&c=

I use VMMXX that currently pays 2.58%, anyone know of anything better to use for cash between transactions?


JDJ

Edited by vitaminm, 13 April 2008 - 09:34 PM.

JDJ,

Never, EVER reach for yield. NEVER.

I'm a professional and I have been since 1986. I've been trading seriously since '83. The single most important thing I can tell you, is do NOT take any risk with your safe money. A money market is NOT an investment. It's a parking place to keep cash until you can find something productive that has a good risk/reward ratio to do with it. You want that money to be liquid and perfectly secure when you need to use it.

The very best time to have that is when the poop is hitting the fan. The problem is when the poop hits the fan, repos and non-governmental debt instruments can suddenly become illiquid. For another 50 basis points, it's just not worth the risk AND it's a bad strategy anyway.

I could go on and on, but in the current environment, my opinion on this is vehement.

BTW, nothing on this site should be construed as investment advice EXCEPT my comments just above.

Mark Young
Founder
Traders-Talk.com

Thanks Mark & everyone else,

By better I wasn't just looking for higher interest rate but safety also. My broker just suggested that we more the money to this Vangaurd Money Market Reserves (VMMXX) and I thought I'd check with the people here as I find this group to be quite sharp.
Mark, do you know anything about this particular fund? My brokers thought in using this is that it is safe and we could even transfer money daily if I wanted to start buying, currently flat & in cash. With 38% CDs & 45% US Government & Agency I thought this looked pretty safe.

Distribution By Issuer (% of fund) as of 02/29/2008

Prime Money Mkt Fund
Bankers Acceptances 1.4%
Certificates of Deposit 37.8%
Commercial Paper 12.5%
Other 3.2%
U.S. Government & Agency 45.2%
Yankee/Foreign 0.0%
Total 100.0%


Distribution By Credit Quality* (% of fund) as of 02/29/2008

Prime Money Mkt Fund
Aaa 51.9%
Aa 46.9%
A 1.2%
Baa 0.0%
Ba 0.0%
B 0.0%
Not Rated 0.0%
Total 100.0%


JDJ

http://stockcharts.c...id=p93794352926

JDJ,

Never, EVER reach for yield. NEVER.

I'm a professional and I have been since 1986. I've been trading seriously since '83. The single most important thing I can tell you, is do NOT take any risk with your safe money. A money market is NOT an investment. It's a parking place to keep cash until you can find something productive that has a good risk/reward ratio to do with it. You want that money to be liquid and perfectly secure when you need to use it.

The very best time to have that is when the poop is hitting the fan. The problem is when the poop hits the fan, repos and non-governmental debt instruments can suddenly become illiquid. For another 50 basis points, it's just not worth the risk AND it's a bad strategy anyway.

I could go on and on, but in the current environment, my opinion on this is vehement.

BTW, nothing on this site should be construed as investment advice EXCEPT my comments just above.

Mark Young
Founder
Traders-Talk.com

Thanks Mark & everyone else,

By better I wasn't just looking for higher interest rate but safety also. My broker just suggested that we more the money to this Vangaurd Money Market Reserves (VMMXX) and I thought I'd check with the people here as I find this group to be quite sharp.
Mark, do you know anything about this particular fund? My brokers thought in using this is that it is safe and we could even transfer money daily if I wanted to start buying, currently flat & in cash. With 38% CDs & 45% US Government & Agency I thought this looked pretty safe.

Ordinarily, I'd say it's fine. Right now? I'll say probably OK.

In a market dealing with huge credit issues, over-kill is the OK you probably ought to be doing.

As for which particular fund, I just don't have strong recommendations, other than lean to treasuries and avoid BA's and commercial paper and stick with a quality outfit so, if something does go wrong, they'll be able, if not inclined to make it right.

Mark