How do you invest? Do you fear the markets?

[waauw]

So how risky do you go?

TCW Group Inc. is taking the possibility of a bond-market selloff seriously.

So seriously that the Los Angeles-based money manager, which oversees almost $140 billion of U.S. debt, has been accumulating more and more cash in its credit funds, with the proportion rising to the highest since the 2008 crisis.

“We never realize what the tipping point is until after it happens,” said Jerry Cudzil, TCW Group’s head of U.S. credit trading. “We’re as defensive as we’ve been since pre-crisis.”

TCW isn’t alone: Bond funds are holding about 8 percent of their assets as cash-like securities, the highest proportion since at least 1999, according to FTN Financial, citing Investment Company Institute data.

Cudzil’s reasoning is that the Federal Reserve is moving toward its first interest-rate increase since 2006, and the end of record monetary stimulus will rattle the herds of investors who poured cash into risky debt to try and get some yield.

The shift in policy comes amid a global backdrop that’s not exactly rosy. The Chinese economy is slowing, the outlook for developing nations has grown cloudy, and the tone of Greece’s bailout talks changes daily.
Distorted Markets

Of course, U.S. central bankers are aiming to gently wean markets and companies off zero interest-rate policies. In their ideal scenario, borrowing costs would rise slowly and steadily, debt investors would calmly absorb losses and corporate America would easily adjust to debt that’s a little less cheap amid an improving economy.

That outcome seems less and less likely to Cudzil, as volatility in the bond market climbs.

“If you distort markets for long periods of time and then you remove those distortions, you’re subject to unanticipated volatility,” said Cudzil, who traded high-yield bonds at Morgan Stanley and Deutsche Bank AG before joining TCW in 2012. He declined to specify the exact amount of cash he’s holding in the funds he runs.

Price swings will also likely be magnified by investors’ inability to quickly trade bonds, he said. New regulations have made it less profitable for banks to grease the wheels of markets that are traded over the counter and, as a result, they’re devoting fewer traders and money to the operations.

To boot, record-low yields have prompted investors to pile into the same types of risky investors -- so it may be even more painful to get out with few potential buyers able to absorb mass selling.

“We think the market’s telling you to upgrade your portfolio,” Cudzil said. “Whether it happens tomorrow or in six months, do you want look silly before the market sells off or after?”

source

[warmonger1981]

https://www.google.com/url?sa=t&source= ... JKYa62_dVA


https://www.google.com/url?sa=t&source= ... 6a7mwdGL1w

Not looking good.

[mrswdk]

You might as well go to your nearest casino and spend the day playing blackjack. At least it's actually vaguely entertaining.

[khazalid]

burn it to the ground

[got tonkaed]

I am not really that risk averse.

[KoolBak]

Real estate....it doesn't go away....and beer.

[notyou2]

I invest in prisons. Even though the crime rate is falling, my paranoid government is building more and more prisons and jails and miraculously finding the people to fill them, so I invest there along with all the party faithful and the senators and members of parliament.

It's kind of like an old boys club, but more satisfying.

[xroads]

I have been an investor most of my life.

I usually buy stocks, and sell options against it. Buy good companies and dont panic when the market crashes every couple of years.

Think of a market crash as a 50% off sale.

[Army of GOD]

I invest in alcohol and nuclear weapons

[tzor]

So how risky do you go?

I'm a big follower of The Motley Fool and I've invested in a number of their recommendations to great effect. That part of my portfolio tends to be more risky, but I have 401K accounts and some gold and silver (my pretties, they are ... I love the ones from China) to be on the more safe side of investments.

Currently all of my stocks are outperforming the S&P.

[mrswdk]

My housemate paid a couple of thousand USD to be taught how to trade stocks by some online hack, and after 6-7 months of (part-time) trading still hasn't even broken even yet.

[waauw]

My housemate paid a couple of thousand USD to be taught how to trade stocks by some online hack, and after 6-7 months of (part-time) trading still hasn't even broken even yet.

Shouldn't she be buying gold and silver? I mean, isn't that the Chinese thing to do?

So how risky do you go?

I'm a big follower of The Motley Fool and I've invested in a number of their recommendations to great effect. That part of my portfolio tends to be more risky, but I have 401K accounts and some gold and silver (my pretties, they are ... I love the ones from China) to be on the more safe side of investments.

Currently all of my stocks are outperforming the S&P.

Yeah I know, those chinese panda's are absolutely stunning. Haven't gotten my hands on them myself. They are so popular they always seem to sell for a higher price, so I just ended up buying Australian Kookabura's

[casper]

A diversified portfolio of low cost index funds, e.g. Vanguard.

[mrswdk]

My housemate paid a couple of thousand USD to be taught how to trade stocks by some online hack, and after 6-7 months of (part-time) trading still hasn't even broken even yet.

Shouldn't she be buying gold and silver? I mean, isn't that the Chinese thing to do?

Nah, property is the most common form of investment.

And in any case, my housemate isn't Chinese :3

[tzor]

Shouldn't she be buying gold and silver? I mean, isn't that the Chinese thing to do?

I don't know how common the practice is in China, but it is very common in India, especially gold which can be used by women as a kind of savings.

Yeah I know, those chinese panda's are absolutely stunning. Haven't gotten my hands on them myself. They are so popular they always seem to sell for a higher price, so I just ended up buying Australian Kookabura's

I have a couple, one was for the 2013 World Money Fair in Berlin. The front of the silver coin has two pandas. The back has two images, the Brandenburg Gate and the Great Wall.

[mrswdk]

Shouldn't she be buying gold and silver? I mean, isn't that the Chinese thing to do?

I don't know how common the practice is in China, but it is very common in India, especially gold which can be used by women as a kind of savings.

Don't Indians buy gold mainly as a status symbol? I heard the men there would make suits out of gold if they could.

[waauw]

Don't Indians buy gold mainly as a status symbol? I heard the men there would make suits out of gold if they could.

They do, but the common Indian also buys gold and silver as an instinct to avoid volatility in the Indian Rubee and because they don't trust banks. I once read an article that claimed most Indian farmers keep their savings in precious metals and burry them in their garden. In fact precious metals are so popular in India that their government implemented restrictions on the prodduct. This ofcourse utterly failed. Illegal trade in precious metals is flourishing in India.

I don't know how common the practice is in China, but it is very common in India, especially gold which can be used by women as a kind of savings.

Yeah only about 2 years ago did China surpass India as largest consumer in precious metals. Combined India and China represent more than half the worlds demand for physical precious metals. Unfortunately the major sellers are europeans and americans, which in case of a financial collapse could prove a very painful decision.

[tzor]

Shouldn't she be buying gold and silver? I mean, isn't that the Chinese thing to do?

I don't know how common the practice is in China, but it is very common in India, especially gold which can be used by women as a kind of savings.

Don't Indians buy gold mainly as a status symbol? I heard the men there would make suits out of gold if they could.

I've heard that it was mostly the women. Jewelry has a powerful cash like ability, especially if it is in chains where portions of the chain can be shortened to provide a payment.

From personal experience I've never seen Indians dressed like "Mr T" although I've only been to Bangalore and Mysore and that was ten years ago.