Cash Not Trash

This is something investors need to at least take notice of.  For the first time in over a decade cash is finally paying you something again.  The chart above might be a bit confusing in terms of all the different lines so I'll make it simple.  The dividend yield on the S&P 500 is in red.  The rest are various cash like investments, 90 day T-bills etc.  Notice for years they paid you almost nothing.  That is not the case now and they are currently competitive with S&P dividend yields.    This again makes cash a more compelling hedge in times of uncertainty or heightened volatility.

But there's another story that this chart isn't telling.  If short-term yields have risen then so have rates longer out on the curve.  A 10-year treasury currently yields about 3%.  Corporate rates are about a full percent ahead of that and the Federal Reserve has told you there's a very high probability of at least two more rate increases next year.

I don't know how much of this has to do with stocks having hit a wall so far this year but it's becoming hard not to notice that there's starting to be competition for stocks in terms of yield right now.  For the first time in years cash isn't trash and actually pays you something to have it in your portfolio.

As a reminder we are only committing to this one post this week as we move our office.

Link:  Market Watch:  This Could be the Most Important Chart of the Century for Investors.

*Long ETFs related to the S&P 500 in client and personal accounts.  Short S&P 500 in a personal account as part of a separate individual strategy.  Investments can change at any time without notice.