Halls of Shrewd'm / US Policy
No. of Recommendations: 16
Mungofitch recently announced he is exiting the US as a safe place to invest as a foreign holder of capital. After listening to the Ezra Klein interview of Gillian Tett I share his concerns. When asked why, mungo said he’s exiting because of
risk assessment and geopolitical things. The latter is one inescapable factor in the former, in much the same way that growth is an inescapable factor in assessing value. Sometimes the key thing in assessing prospective return on capital is assessing return OF capital.
I understand why he’s done this, and if I were a foreign investor in the US I’d probably do the same, but as a US citizen and resident sharing the same worries as mungofitch I’m wondering what investment strategies to pursue? Treasuries are not safe, the stock market is overvalued, crypto is a fraud, and precious metals are a crapshoot. I’m thinking that real estate might be the best hedge right now if you are stuck living and investing in the USA.
What strategies are you all considering?
No. of Recommendations: 3
I’m also a US based investor and trying to figure out if treasuries are no longer safe. I’ve taken quite a bit of money out of the market the last few months, and it’s all sitting in what I thought were safe treasuries.
Are they really not safe? Doesn’t Berkshire have the bulk of their cash in treasuries?
No. of Recommendations: 16
I'm guessing that US Treasuries are about as safe as anything, for US citizens living in the US. I would guess that Warren probably agrees.
I have had almost all of my investments in the US, 50% BRKB, 40% stock index (mostly US), 10% cash. Over the past 2 weeks I have been gradually selling US stock index and buying international index, so the non-US index is now greater the US index.
I decided to increase my exposure to non-US markets and currency.
Regarding BRKB, I am just going to hold the damn stock. I figure the Berkshire management is smarter than me.
Stopped clock
No. of Recommendations: 1
I’m also holding the damn stock, because they are definitely smarter than me. Even though I’ve sold quite a bit lately, I’m still 80% in Berkshire/20% ST treasuries.
What non-US index are you buying, if I may ask?
No. of Recommendations: 2
I use the Fidelity funds with zero expense ratio.
For US stock index I use FZROX.
For international index I use FZILX.
I'm gradually shifting from FZROX to FZILX.
No. of Recommendations: 0
oddly enough I think real estate I too am trying to leave but as a US citoyen I will always have to pay us taxes. I have real estate here, and in my future country. barring ground war in either, thgat will at least retain some value. meantime I skip between the two countries on vacation
No. of Recommendations: 8
I'm guessing that US Treasuries are about as safe as anything, for US citizens living in the US. I would guess that Warren probably agrees.
I would tend to agree, especially for US persons. Other than physical banknotes, I can't think of anything safer than T-bills in your shoes. The only small incremental safety improvement would perhaps be a small admixture of banknotes of another currency, just to round things out?
My own hesitation on them is probably 90% about whether I want my money in the US period, and only a little about potential investment risk. Plus, if I'm not holding US cash to be ready for doing US investments on short notice, what do I need US dollars for?
A friend of mine raised the thought of picking up some gold as disaster protection. Not the sort of thing to get a great reception at this board (for sound reasons), and given the recent price run-up he's also a bit late to the party. But I notice silver is still below its highs from the last cycle while gold is twice as high. Using options on SLV, one could possibly even create a tiny income. A repeated covered call kind of thing. That gives up any big upside, but it's an asset from which you don't expect any lasting big upside, just noisily treading water forever. The problem being that something dependent on elaborate financial strategies might not be the thing you want to rely on in a disaster scenario, depending on what sort of disaster you're trying to prevent. Financial crashes, wars, or asteroid strikes?
Jim
No. of Recommendations: 0
The Annual Report had good things to say about the investment in Japanese companies. There are US brokerages that allow you to invest on the Tokyo exchange. Berkshire is currency neutral - borrowing in Yen as high as their investment in Yen, that part isn't easy for a individual investor to copy. But if you share the concerns on the US economy, and are worried about your position as a US citizen, you'd stand to gain if the US dollar moves down vs the Yen. I wish my IRA, where I hold most of my investments, had access to the Tokyo exchange.
No. of Recommendations: 5
I think treasuries are safe for US citizens for at least another few years. The risk Mungo worries about makes sense: the rules get changed arbitrarily on foreigners. But if Trump really does want foreigners out of the T-bill market, he should want US Citizens IN the t-bill market. Or at least that's what makes sense to me and I will have to admit that Trump does a lot of things that don't make sense to me. But still, I think T-bills for US Citizens are only slightly riskier than banknotes, and their yield is much better, and they are easier to store.
I don't think the additional return from longer dated treasuries is worth enough to risk it so I'll take the 5.2% from SGOV for now.
I think staying pretty invested is a good idea as an inflation hedge. Despite BRKB's lofty current price I still have a bit, although I do have a covered call on it.
Personally, I have a fair amount of PLTR and NVDA. I think the AI future loves both of these, and that that trend probably transcends whether we lose our democracy or not.
That was fun to say, but I doubt we lose our democracy. I mean probably we won't. Finger's crossed.
R:/
PS: and to Mungofitch: Thank you canary. Message received. We need to figure out how to get some air back in here.
-r
No. of Recommendations: 2
I don't think the additional return from longer dated treasuries is worth enough to risk it so I'll take the 5.2% from SGOV for now.
The current SEC yield for SGOV is 4.20% (and that makes sense because it would typically be the average 0-3 month T-bill yield minus the 0.09% expense ratio which is spot on at 4.2% right now).
