Not exact matches
Neither argument holds right now for holding any tactical
cash,
especially with no reasonable prospects for a near - term rate increase
and the yield differential offered by
bonds over
cash right now.
I think the most you can do is hope for the best
and make sure your money — most
especially your 401k or other retirement
cash — is well diversified among US
and foreign stocks,
bonds and a big buffer of safe
cash.
This technique is
especially useful for callable
and extendible / retractable
bonds, whose
cash flows depend on future interest rates, or are said to be «path dependent.»
This can be
especially true as we approach the redemption date of the ETF, since the
bonds in their portfolio are also nearing maturity
and more of the portfolio is shifting to
cash.
The fact that
cash no longer keeps up with inflation is punitive —
especially considering that stock
and bond investors are enjoying good performance.