12 replies to this topic

[Mtrader]

{Still, if you have large cash balances, I'd put them in treasuries for maximum security} Do mean like buying SHY?

[nimblebear]

Semi,

This isn't about being Bearish on the market. This is about what could be making the market go down. That, and being rational about your risk and reward.

Money market's don't pay you enough to take risk. They HAVE risk, too. It's not a highly probable even, but the reward differential between having that risk and not having it is small. Why would you give yourself one more thing to worry about?

Anyone who thinks it can't happen again, especially in this derivatives heavy world is deluded. Will it? Probably not. But, what's the cost if I'm wrong? Nearly nil. Beer money on $100K of short-term reserves.

Mark

Any ideas for someone with Funds at Schwab? They don't appear to have treasury money funds.

[OEXCHAOS]

So long as the fund is government obligations only, you won't have to worry about repos or the tons of bank and broker debt that populates the money funds. I urge you to actually look at a quarterly report for a money market fund. When you see how much some funds are exposed to some sectors and then visualize a worst case scenario...well, I say, "That's not the type of thing I want to worry about with my 'safe' money". That said, there is absolutely no need to panic. It's not like any of these funds is LIKELY to go under, ever, even in the worst case scenario. It's more likely (in the very unlikely event of a major problem) that you simply wouldn't be able to redeem your fund at $1 for a time, until they worked things out. If possible, the sponsor would likely make you whole, too. I have never (as a RIA) allowed my clients funds to be held in anything other than standard interest bearing accounts (sweep) or government obligation money funds. I was only remotely concerned a bit in 98 and now. Mark