Investing Strategies. What is your move?

[SC Maintenance]

So I opened a new Fidelity Account - taxable - for a variety of reasons. However I am having trouble figuring out their CD buy process. I can see and Buy a CD, but I don't see where it tells me the rules about early withdrawal and penalties, or if that is even possible - which would be the only benefit to buying a CD over a T-bill for me. Does it disclose that information somewhere before you hit buy?

 

[PWMDMD]

Its a reasonable question. If Japanese Yen crashed, the Japanese may be forced to liquidate their holdings of US treasuries to buy Yen and support their currency. Liquidating the US debt would drive the US dollar lower.

However I think its unlikely. For one thing, Japan is a staunch Ally and the fed would likely just buy up the bonds. Japan owns only $1.1T. The fed balance sheet is $8T. They just raised their balance sheet over SVB by $300B and the markets yawned. Buying $1T in debt from Japan would be a non event.

For another reason, the dollar is pretty strong, so a lower dollar would be good for exports. A low dollar isn;t all bad.

I asked because the last time China dumped $180B in US Treasuries they were all bought on the open market with no intervention by the Fed and no one really noticed. Most economists believe Japan or China dumping more would be a temporary problem at most and there’s real disincentive for China to do this since it would drive up the cost of Chinese exports coming into the US.

This is another one of those “boogeyman arguments” I see all the time usually based on “China owning us” that’s far off base because most people have no idea how US debt owned by foreign countries works and they equate US debt to personal debt.

 

[PimTac]

Its a reasonable question. If Japanese Yen crashed, the Japanese may be forced to liquidate their holdings of US treasuries to buy Yen and support their currency. Liquidating the US debt would drive the US dollar lower.

However I think its unlikely. For one thing, Japan is a staunch Ally and the fed would likely just buy up the bonds. Japan owns only $1.1T. The fed balance sheet is $8T. They just raised their balance sheet over SVB by $300B and the markets yawned. Buying $1T in debt from Japan would be a non event.

For another reason, the dollar is pretty strong, so a lower dollar would be good for exports. A low dollar isn;t all bad.

Japan had to increase spending after 3.11.11 and that is going to be ongoing for decades to come. On top of that they have increased their military budget, pretty much doubling it. That has put pressure on the ¥. Their labor force is shrinking as well .

They will continue to be a powerful economy but their ranking in the world is slipping.

 

[SC Maintenance]

Japan had to increase spending after 3.11.11 and that is going to be ongoing for decades to come. On top of that they have increased their military budget, pretty much doubling it. That has put pressure on the ¥. Their labor force is shrinking as well .

They will continue to be a powerful economy but their ranking in the world is slipping.

They will need to get in line for countries circling the drain. The line is long and distinguished.

 

[PandaBear]

If they already hold the US debt, so we're not talking about them selling their own currency to buy US dollars to buy NEW treasuries, why would it matter?

If it is part of their foreign currency reserve (instead of gold), then the value of debt changing due to interest rate would likely means their own currency value changes to reflect that, and attracts foreign investors trying to short it.

That sort of happened to S Korea in 97, they were Allies of US, they still suffered a lot and they hated having to go through it again. I'm not sure if Japan was forced to dump it would mean the Fed would always support it, or would just let Japan get weaker instead.

Every empire of the past failed not due to military failure but financial crisis. I am sure US is aware of the limitation of military and USD being the defacto world currency. If we abuse the QE we could collapse due to hyper inflation. After all British Pound is no longer the world currency it used to be, and it should be a reminder anyone can fail.

 

[Dave Hess]

Japan had to increase spending after 3.11.11 and that is going to be ongoing for decades to come. On top of that they have increased their military budget, pretty much doubling it. That has put pressure on the ¥. Their labor force is shrinking as well .

They will continue to be a powerful economy but their ranking in the world is slipping.

Why the need to increase their military budget if USA has a military presence in Japan ?

 

[PimTac]

Why the need to increase their military budget if USA has a military presence in Japan ?

China is the driving reason. The other is that the USA is not as strong as we would like to think. The Navy is a good example.

 

[PWMDMD]

China is the driving reason. The other is that the USA is not as strong as we would like to think. The Navy is a good example.

What objective measure is this statement based on? With our ginormous military budget, how much more "strength" do we need?

 

[SC Maintenance]

China is the driving reason. The other is that the USA is not as strong as we would like to think. The Navy is a good example.

This is 100% accurate by Japan's own statements. It was started by Abe. For the last 30 years the USA has been shrinking its footprint overseas. At the same time China has become more hostile and shown interest to become a world power.

Weaponizing the US dollar was the dumbest thing I think the bankers ever did. If you don't allow all countries to participate in the US dollar system, then obviously it can't remain the world's currency, so competing systems emerge. Neutral countries look at it and say, well perhaps we could be on the wrong side of the US policy at some point, so were best to hedge our bets on both sides. Besides sanctions only hurt the average citizen. The evil dictators are never harmed by them. Its a stupid policy.

China and India - both countries with huge trade amounts with the USA have defied completely the sanctions on Russian oil. Cheap oil for their own people. The repercussions were exactly zero.

The world is deglobalizing rapidly for anyone paying attention.

 

[Cujet]

What objective measure is this statement based on? With our ginormous military budget, how much more "strength" do we need?

Impossible to know at this time. But one thing is clear, being top dog has major advantages, including financial advantages. Although China has a much larger population than the USA, it does not have significantly more land mass. 9.7 v 9.4 (China vs USA) Million sq meters.

Of the investments I have, defense related ones with good returns include General Dynamics and Honeywell.

 

[alarmguy]

Call me crazy but just bought for me, a pretty significant amount of GM. Not sure if it will be a day trade, week trade or couple month trade... but hope we are at a bottom *LOL* I dont have a stop loss in. Paid 33.015

I wish I waited but dont have time today... something tells me it wont be a day trade... hopefully doesnt get trashed, to me, this is a wild card. Temporary loss of reason.

 

[PimTac]

This is 100% accurate by Japan's own statements. It was started by Abe. For the last 30 years the USA has been shrinking its footprint overseas. At the same time China has become more hostile and shown interest to become a world power.

Weaponizing the US dollar was the dumbest thing I think the bankers ever did. If you don't allow all countries to participate in the US dollar system, then obviously it can't remain the world's currency, so competing systems emerge. Neutral countries look at it and say, well perhaps we could be on the wrong side of the US policy at some point, so were best to hedge our bets on both sides. Besides sanctions only hurt the average citizen. The evil dictators are never harmed by them. Its a stupid policy.

China and India - both countries with huge trade amounts with the USA have defied completely the sanctions on Russian oil. Cheap oil for their own people. The repercussions were exactly zero.

The world is deglobalizing rapidly for anyone paying attention.

Before someone points out that we are off topic I will add that these types of discussions are what investors get involved in. Increased defense spending would indicate better times ahead for defense related stocks. That goes for Japan as well.

On the flip side of that it’s how those defense moneys are spent. The US Navy has spent billions on an entire class of ship that is a failure. Just a couple of weeks ago they launched the USS Cleveland. The launching itself was almost a failure. That ship will not even be commissioned. Instead it will sit somewhere and rust. So this discussion has to take into account every angle.

Sometimes investing is not as easy as just dumping money into an index fund and watching it grow. Todays investors have to be on their toes.

 

[Pablo]

So I opened a new Fidelity Account - taxable - for a variety of reasons. However I am having trouble figuring out their CD buy process. I can see and Buy a CD, but I don't see where it tells me the rules about early withdrawal and penalties, or if that is even possible - which would be the only benefit to buying a CD over a T-bill for me. Does it disclose that information somewhere before you hit buy?

It's pretty basic. There are no assessed penalties. You simply sell your CD on the open market if you want to dump it early.

 

[SC Maintenance]

It's pretty basic. There are no assessed penalties. You simply sell your CD on the open market if you want to dump it early.

Thanks. That's very helpful. I am still trying to figure out what benefit there would be to a CD vs a T-bill. The CD's pay slightly higher interest sometimes. Treasury's have no state income tax (for most people, me at least). Both can be sold. What am I missing?

 

[Pablo]

Thanks. That's very helpful. I am still trying to figure out what benefit there would be to a CD vs a T-bill. The CD's pay slightly higher interest sometimes. Treasury's have no state income tax (for most people, me at least). Both can be sold. What am I missing?

Not much, I don't think.

We don't have state income tax (yet). So I go rates.

Both are pretty safe, obviously T-bill is safest. Both are locked in.

Some CD's pay monthly (very few)

I wonder about start and end timeliness (?) I'll find out on CD's. What about T-bills?

 

[PWMDMD]

Before someone points out that we are off topic I will add that these types of discussions are what investors get involved in. Increased defense spending would indicate better times ahead for defense related stocks. That goes for Japan as well.

On the flip side of that it’s how those defense moneys are spent. The US Navy has spent billions on an entire class of ship that is a failure. Just a couple of weeks ago they launched the USS Cleveland. The launching itself was almost a failure. That ship will not even be commissioned. Instead it will sit somewhere and rust. So this discussion has to take into account every angle.

Sometimes investing is not as easy as just dumping money into an index fund and watching it grow. Todays investors have to be on their toes.

Except it has been shown time and time again over decades now that it is as easy as just buying a low-cost total market index fund. Millions and millions of investors do it all the time and make lots of money with little to no additional thought. I have no issue with people wanting to invest in individual securities so long as they understand the HUGE differential in risk but also let's not suggest those investing in individual stocks are in any way superior or even necessary to make money over time compared to total market index funds when factoring in risk vs reward. You can easily be a "successful investor" and not have any idea what any one particular sector is doing.

 

[PimTac]

FRC visiting the woodshed today. Trading was halted for a while but looks to be back up. Apparently that cash infusion from the big boys is not enough.

https://www.cnbc.com/quotes/FRC

 

[Pablo]

FRC visiting the woodshed today. Trading was halted for a while but looks to be back up. Apparently that cash infusion from the big boys is not enough.

https://www.cnbc.com/quotes/FRC

Here, hold my bag.

 

[SC Maintenance]

I wonder about start and end timeliness (?)

I apologize, I am not 100% sure what you mean.

Treasury direct publishes their auction schedule about 6 weeks ahead. You can actually place buy orders out that far on Treasurydirect. Fidelity only allows a week ahead which I have read is normal for a brokerage. As an individual you get the high yield of the spread at auction.

You need to have your order in at least the day before the auction. You get your T-bill in your account in about 6 days after auction.

When it matures - you can either roll it - in which case it would revert to the next auction of the duration you wanted, or you can let it mature and treasury direct transfers the money into your bank account in a few days, or you can leave it in your T-direct account?

Is this what you mean?

I can see having lots more new issue with CD's. Fidelity shows hundreds of CD's. There are only a handful of T-bill auctions. Of course that is new issue - you can also buy already issued of both.

 

[Pablo]

I apologize, I am not 100% sure what you mean.

Treasury direct publishes their auction schedule about 6 weeks ahead. You can actually place buy orders out that far on Treasurydirect. Fidelity only allows a week ahead which I have read is normal for a brokerage. As an individual you get the high yield of the spread at auction.

You need to have your order in at least the day before the auction. You get your T-bill in your account in about 6 days after auction.

When it matures - you can either roll it - in which case it would revert to the next auction of the duration you wanted, or you can let it mature and treasury direct transfers the money into your bank account in a few days, or you can leave it in your T-direct account?

Is this what you mean?

I can see having lots more new issue with CD's. Fidelity shows hundreds of CD's. There are only a handful of T-bill auctions. Of course that is new issue - you can also buy already issued of both.

Yes partially.

Really I was wondering about lag time, from say close date 4/28 or whatever day until principle and interest are 100% available for trade.