Have The Bank Failures Caused You To Re-evaluate Where You Are Keeping Your Savings?

mathjak107 said:
the problem is that even the largest banks only keep a low percentage in reserves …

if people get scared in a severe down turn and want their money the reserves can’t cover it …..

they would have to try to liquidate assets , which in a severe down turn may be impossible to liquidate or not bring enough .

so a bank can have huge amounts of assets and worth but they are deemed failed when they can’t cover the withdrawals demanded on any given day.
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Understood, which is why the millions (or billions) the first failed bank had in reserves still wasn't enough. That surprised me. Thank you for answering.
 

we are sitting on a powder keg right now ….

insurance companies , pension plans , institutions, many funds , etc , own corporate bonds .

70% of the entire corporate bond market is in the BBB rating ….that is the sweet spot .

it is the last rung of investment grade .

any down grade in a down turn can see trillions dumped as the bond are no longer investment grade with few takers .

the companies that rate insurers say this is the elephant in the room .

if these bonds get down graded the highest rated financial institutions will be down graded .

just a one notch down in rating requires 4x the reserves …with few takers many financial institutions will not be able to come up with that with poor liquidity.

life and and annuity companies can implode in a down turn as they hold a load of BBB .

NY LIFE which is rated A++ has 40% of their bonds in BBB AND JUNK .

so annuities may not be all that secure

there is 10x more in that BBB segment then 2008
 
mathjak107 said:
we are sitting on a powder keg right now ….

insurance companies , pension plans , institutions, many funds , etc , own corporate bonds .

70% of the entire corporate bond market is in the BBB rating ….that is the sweet spot .

it is the last rung of investment grade .

any down grade in a down turn can see trillions dumped as the bond are no longer investment grade with few takers .

the companies that rate insurers say this is the elephant in the room .

if these bonds get down graded the highest rated financial institutions will be down graded .

just a one notch down in rating requires 4x the reserves …with few takers many financial institutions will not be able to come up with that with poor liquidity.

there is 10x more in that BBB secment then 2008
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Yes, and that powder keg is scary!
 

mathjak107 said:
i don’t keep a lot in banks , never did .
i had a money market fail in 2008 in a brokerage account ..we lost about 3% but the accounts were locked for a few months .
so i only use treasuries via treasury money markets or etfs …i use shy and sgov .
a mass failure in banks draining fdic would take an act of congress to refund and pay everyone.
treasuries need no act of congress
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Do you keep all of your savings in treasuries, or what percentage?
You must have some cash accessible, in order to pay off credit cards and other expenses.
SHY has averaged 1.63% over the last twenty one years. Why not put the bulk of savings in the market?
 
John cycling said:
Do you keep all of your savings in treasuries, or what percentage?
You must have some cash accessible, in order to pay off credit cards and other expenses.
SHY has averaged 1.63% over the last twenty one years. Why not put the bulk of savings in the market?
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of course i don’t keep all my savings in treasuries …i have the money we live on , an emergency fund and whatever my portfolio calls for .

80% of my core portfolio is in equites , gold ,long term treasuries and short term treasuries now ..it varies over the years as to what i do so no i wouldn’t have been in shy for twenty years

the other 20% is in a 100% equity portfolio
 
with rates on bonds coming down shy is a good choice now .

a 4% cd bought in january is up about 1.25% .shy is up 2-1/2% .

in fact going back to 2000 shy has averaged 1.63% while cash instruments averaged 1.50% or less

so shy tends to pay more then money markets or cds do .

in my portfolio shy and sgov form a barbel with long term treasuries to bring interest rate sensitivity in to the range of an intermediate term bond .

shy and sgov also get rebalanced into more of the other asset. classes acting like an option to buy. assets at lower prices but with no expiration date .

so cash and shy have its work cut out as they are active components of a portfolio design that is one of the most popular for more then 40 years
 
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Muskrat said:
Holy cow mathjak…you know so much more on this than i knew existed
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there is usually so much more to everything then most people know about .

the problem is what i call believing your own bull …..

that is where you support , high five and listen to only those who support your view , without ever sleeping with the enemy and learning what they know …

i have switched opinions so many times based on what i learned from the other side after getting in their heads ….

so it’s important to learn but also importantly to learn objectively so you can argue both sides just as well
 
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mathjak107 said:
there is usually so much more to everything then most people know about .

the problem is what i call believing your own bull …..

that is where you support , high five and listen to only those who support your view , without ever sleeping with the enemy and learning what they know …

i have switched opinions so many times based on what i learned from the other side after getting in their heads ….

so it’s important to learn but also importantly to learn objectively so you can argue both sides just as well
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I wished more people lived by your philosophy. Sometimes even when I support someone's views I'll debate from the opposing side simply to shake up their narrow minded thinking.
 
the biggest reason forbes said most never reach their full financial potential is they never sleep with the enemy .

they only agree with and read things that support their view .

they never get in to the enemies head to really learn the other side and that hurts them as they just go on believing their own bull sh#t as it’s called .

over the years smart savvy financial people like michael kitces , dr wade pfau , blanchette , milevsky , etc have shown me what i believed was either wrong , a myth or out dated thinking .

so i switched hats and learned , instead of arguing a myth.

in fact what hurts the most isn’t usually what we don’t know, it’s what we think we know that ain’t so.

you see it here over and over in many discussions
 
Reading “The big short” was fun…and very very educational. I get some of my albeit limited knowledge by reading people who can explain the events and logic in entertaining and simple ways. Now…much later in life I wish I had done it much earlier.
 

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