Towards a new Economics?

[jk]

Re: Towards a new Economics?

Thank you sharing your allocations. I've often wondered how much cash very good investors (which I feel that you are) hold especially since we all know that long term, cash as managed by the Federal Reserve is garbage. I'm sitting on the largest cash position I've ever had in my life on a quantity basis and as a percentage of assets and I'm constantly worrying that the Fed or the U.S. government will screw me some way. It's somewhat reassuring to know that someone smart has chosen a similar boat. Here are the asset buckets where I've put my money:

20% cash
30% precious metals
30% private equity
11% stocks
9% bonds of which one-third is long duration USTs and the remaining two-thirds is short-term corporate trash in a 401K that doesn't even yield 1%

Meanwhile, the money I save from working my job is going in to cash but I'll probably starting trickling some money into equities because the central banks have shown that they will stop at nothing to force people to buy stocks.

Related to TINA (forcing people out on the risk curve), from various readings and conversations with friends and acquaintances, I am under the distinct impression that the Federal Reserve is setting everyone up for yet another credit bubble, either intentionally or due to hubris/stupidity. It seems everyone sees any correction in the stock markets as an opportunity to buy the indices (at least the 2008 crash did a good job of killing actively-managed funds) and housing, at least in the areas where I look and have contacts, is a can't miss proposition: You can never lose money on housing. You just have to have enough cash on-hand to make the P&I payments for a year or two before everything will recover.

why bother with the short term corporates? they seem all risk [both corporate and systemic] and no reward. what is the scenario in which they do some good?

[Milton Kuo]

Re: Towards a new Economics?

why bother with the short term corporates? they seem all risk [both corporate and systemic] and no reward. what is the scenario in which they do some good?

This short-term corporate debt is in my 401K and I have it because I don't have many choices for investment. It is, in my opinion, the most cash-like investment option. I have the following investment choices:

1. Something that approximates the S&P 500
2. Some sort of European stock index (woof, woof)
3. Some target date funds
4. A long-term bonds fund (a lot of corporate trash)
5. The short-term trash fund where I have the bulk of my 401K money.

If I could have, I would have put the money into an FDIC-insured CD or something like that.

I have a self-directed account option which I will probably do soon. I didn't do so earlier because I didn't have that much money in the 401K and there's a yearly "maintenance" fee. I've got enough money in the 401K now that the vigorish is getting close to a rounding error.

The long-term Treasuries I have are in a Rollover IRA. I don't have very much exposure to bonds and only opened the Treasury position December of last year.

[jk]

Re: Towards a new Economics?

makes sense given your options.

[jk]

Re: Towards a new Economics?

embedding dalio's economic machine in a game theoretic framework