Look at This Cash Equivalent Rocket Ship (SHV)

Wow, what a stock!

Okay, wait a minute; it’s a cash equivalent in the form of very short-term Treasury Bills, and has only risen from 109.80 to 110.37.  But it’s regarded as the safest cash and it will track the Fed’s rate hikes in 2017 and beyond, if applicable.

shv

Here are the Fed Funds futures expectations per (CME Group).  The futures wise guys largely expect the Fed to hold at .5 to .75 in March, but by January a majority expect either either .75 to 1.00 or 1.00 to 1.25.  No great shakes I grant you, but at least cash will be paying something.  And if that great Trumpian inflationary effects party comes about the Fed would be raising much more aggressively one day.

march fomcjanuary fomc

We talk a lot about the fun stuff (stocks) or the geeky stuff (indicators), but sometimes it’s worth noting the boring stuff as well.

For cash I prefer T Bills for their relative safety and now finally, their Fed Funds tracking. AAA and maturity measured in months, not years…

quality

shv maturity

I also own SHY as a cash equivalent, but it gets beat up to a degree when Treasury bonds get beat up due to rising yields.  But the damage is limited due to its short duration of 1-3 years.

I also own TLT, the longest-term Treasury fund, which would get utterly hammered if those hysterical about interest rates currently prove right.  I think the contrarian play is to be long bonds now that everyone hates them, at least as a portfolio balancer that also pays income.

But T Bills are a good storage vessel for cash in my opinion.

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