Where to save your cash

The market is too fluid and fast-moving. I wish it was a down day on Friday so that I could get my UPRO positions at a lower entry price. I did not get the chance. After it was down over 2% on Thu, the marketed was just fighting back strongly and roaring high all the day on Fri. The bullishness underneath is just too strong at the moment and you don't want to get in the way to fight against it. I set an open order for UPRO and did get it, although not the perfect price as I wanted. Will see how it turns out in a few weeks.

If you have a lot of cash, where to put it? Save in the bank, I guess most people would say so. Definitely for the money you need for daily living and expenses. Currently the US government will guarantee saving's deposits up to $250K for each person (the FDIC coverage). Technically speaking, your money within $250K should be safe even if your bank goes belly up. If your cash amount goes way beyond $250K, I'm not so sure that you can simply put them in the bank. With all the turmoils going on in the US, as well as in Europe that may certainly bring financial disasters to the US if the crisis explodes, we may see more banks bankrupted in the next few years. Ironically the large the banks are, the more danger they are given their higher exposure to bad debts both domestically or internationally. In this kind of case, I won't feel comfortable to "save" my money in a bank's saving account. Rather I will buy short-term Treasury Bills (often called T-Bill). Why so? T-Bills are a short-term debt obligation backed by the U.S. government with a maturity of less than one year. While in reality the US government is already broke, it is considered ironically as the safest government bond. You may notice, people worldwide often rush into the T-bills or other long-term US government bonds as the safe haven. Given the US government is the only one in the world which can print with no limit the world reserve currency, the US$, currently there is no worry for anyone that the US government will default. So T-Bills are simply the cash for US$. As the holders of the T-bills, you are guaranteed to get them back regardless of amount. I can guarantee you that we will see more turmoils in the years ahead and people will continue to rush to the T-bills as the safe haven. To me, gold and silver are much more valuable than cash or T-bills, but for most people they simply believe paper money or cash. If so, buying T-bills is more reasonable. I must warn you though that I emphasize "short-term" bills. Don't buy long-term (10 years or 30 years) government bonds as they are the biggest bubble brewing right now, which will burst eventually. When it happens, it will be a catastrophe if you hold them.

You may buy T-bills directly from the US Treasury but the simple way to do so is to buy the ETF fund, symbol SHY. See its one year chart vs S&P500. SHY (blue line) is rather stable with a year-to-date gain of 1.4%, which I think is even better than your saving interest. The S&P (green line) has been up and down rather volatile throughout the year. That's the difference between cash and stocks!