We have several CD’s maturing in the next 30 days, and as I look across the landscape I’m not seeing obvious things to do with the money. I’d appreciate some discussion (and including specific suggestions) from members of the board.
Observations: I see inflation picking up. It’s been about 6 months since the tariffs kicked in, and the increased prices are beginning to show up in the supply chains as pre-tariff inventory is sold down. At the same time, I have less confidence that the true inflation numbers will be broadcast, either because they are inconvenient to the PtB, or because those who used to do it have been laid off/government closed. (And there’s the school that says the “true” inflation numbers aren’t true anyway…)
But I suspect interest rates are heading down thanks to endless jawboning by the administration, coupled with new voices at the Fed, coupled with some mildly discouraging job numbers lately and anecdotal stories in the press. (See comment above about “true” figures.)
Lastly, at least for this conversation, the market is - by most historical measures - wildly overpriced, and “bubble talk” is in a bubble of its own. You can scarcely open a website without the word “bubble” appearing somewhere on it.
Even if it’s not true, it appears that share prices are well outside the norm; even Berkshire sits on cash for want of anywhere to put it. (Presumably they’re better at managing cash than I am.)
So if you were in the enviable position (to much of the world, but rather common hearabouts, I think) of having a sudden influx of several hundred thousands of dollars, what would you be doing with it?
My projection is that we will have a housing construction boom to meet demand.
If you are looking for low risk low reward opportunities, there are plenty.
I suggest looking at KO. It gives a $3% yield and will be around for hundreds of years. Your investment is safe even in case of a deep market crash. AI will also benefit these companies immensely as they optimize their operations.
At the same time even a stable company such as KO has a large price risk in a crash. Between November 2007 and the end of February 2009 (16 months) KO declined by 35%. You eventually recovered your month by late 2010, three years after its peak.
Long term investors should not care about price changes. If you need the money and cannot handle a market crash, you should not be in the stock market.
There are money markets that are only available with initial purchases of $10,000,000 or more - so it isn’t so much about better at managing as it is about having better access.
Recall, he was able to go to BOA, GE and others during the financial crisis and have them create exclusive warrants. They can do things with capital and investments that even accredited investors cannot do.
As far as what to do with those CDs, my first question would be what has changed, if anything, with the rationale you used to buy them in the first place? I assume when you purchased them, you were aware that rates would eventually go down - but you still bought them. Now that rates are actually going down, what has changed for you that has you considering other options? Are you simply chasing return or has your financial profile changed?
I work with a lot of people in a similar situation and “purpose of funds” is one of the first questions I ask. So far, I don’t see that you have indicated their purpose (or their timeline) so there is no appropriate recommendation one could make.
My guess had been that interest rates on CDs are dropping, but that is only a guess. Rate drops are also the case with T-bills and I’m in a similar place as goofy with those (dropping from 4 1/8-ish several months ago to 3 7/8-ish now). I will continue to put the $ in CDs, T-bills, and Money Markets, though, since I do not see a better place for cash right now.
Rates dropping is not a change in a person’s financial condition - any more than the market going down a little bit means one needs to get out of stock.
True. But Uncle Warren has been building his cash position. Likely, in my opinion, he finds the market richly valued. Buffett does not know when the bubble will burst. But he is positioned to take full advantage when it does pop. https://nai500.com/blog/2025/09/under-the-stock-market-frenzy-why-has-warren-buffett-been-net-selling-stocks-for-11-consecutive-quarters/
*Berkshire Hathaway— has now been a net seller of stocks for 11 consecutive quarters, with cumulative net sales reaching $177 billion. More notably, as of the second quarter, Berkshire held $344 billion in cash and U.S. Treasury bonds on its books. This indicates the company is flush with cash, yet Buffett is choosing to hold onto it. The most reasonable explanation is that current market valuations are too high, making it difficult to find attractive investment opportunities.
This is factually inaccurate. Most of Buffett’s decisions have been wrong in the last decade or so. From buying KHC to OXY to selling AAPL, ORCL, IBM, WFC. Wrong, wrong, wrong. Even PCC, Marmon, Geico, BNSF are underperforming.
During the Covid crash, he panicked and sold (rather than buying). During GFC, he did not deploy capital till late when he acquired BNSF.
He wrote an article about why Gold is not a good investment. which obviously is wrong. He has been vocal for a while about BitCoin, which obviously he has been wrong.
I am a long term BRK shareholder and happy that PBV is >1.5 . I have been selling my shares steadily. I may look at it again if PBV dips to ~1.32.
As I said, what has changed is that interest rates are going down, and inflation is going up. When I bought them I was getting very good interest (over 5%) and inflation (for me, anyway) was flat to non-existent.
This is the result of an oops on my part. What do you call it when all the rungs of the ladder are at the same place? Story: I had a couple of fat CDs on a ladder, and they got called (first time that’s happened to me). I turned them over for a couple of new, shorter ones without checking when everything else expired. Short version: several of them pay out within a couple months, two of the ~recently bought and two from the previous ladder, all within the next 4 months.
So anyway I am looking for what to do with a wad of cash.
Not in the slightest, I just don’t want to have that much idle cash sitting around, especially if inflation does pump up. I have a fair amount of market exposure (mostly stalwarts but not all) and MM for several months living expenses, if necessary, and now … this …
Correct, which then begs the question as why change from cds. Other than a lower rate, what has changed? Is this just a case of chasing the highest safe rate and if so, then that is not a sound investment strategy.
The delta. I was making 5% worry free. Between the lower rates and the increasing inflation, that will probably now be 1% or thereabouts. That’s different.
It is a market of stocks, there are plenty of undervalued stocks to be bought. Much depends on your investment plan and your time horizon and needs.
If you need the money within 5 years, just reinvest in CDs and just accept the fact that yields will be lower.
Otherwise, there are plenty of stocks to look at. Most of the bubble talk I hear deals with AI expansion. Too much too fast, etc., etc. Given that, I look at it like the Gold Rush Era. You heard about the few that struck it rich but the ones that really got wealthy were the ones selling picks and shovels. E
nergy companies. Utilities to look at that are potential places where Ai infrastructure (and populations) are set to build and grow. Duke DUK, Dominion D, American Electric AEP, Southern Company SO, and Black Hills BKH. Pipelines because most of the new infrastructure will run on natural gas. Kinder Morgan KMI and Oneok OKE. Also, Cheveron CHV and Exxon XON are relatively cheap and the world still runs on oil.
REITS with falling interest rates usually do well. But still comes down to management. WP Carey WPC and Realty O are a couple popular “all purpose” real estate options. Both have decreased their office space exposure and are growing their international footprint. Alexandria Real Estate ARE is a specialized REIT involved in biomedical research. Prologis PLD is the largest industrial REIT. Equinix EQIX and Digital Realty DLR are cloud server/storage farms.
And if you’re looking for transportation, Union Pacific UNP which is in the process of buying Norfolk Southern to make the only US transcontinental railway.
My investment style is Benjamin Graham’s dividend growers at a discount.
Sooo, we still don’t know the goals for this money. i.e. why is it invested differently than the rest of your funds. When do you plan to spend this money? How do you plan to spend it (lump sum or some withdrawal strategy)?
I get the 5% worry free but by comparison, the S&P has produced 6x as much YTD with of course a fair bit of worry - and over 10x as much in the last 3 years. Why are these funds being invested differently than your stalwarts - any why not just buy more of those stalwarts? Note, the decision to continue to hold those starwarts is not significantly different than the decision to buy them brand new (taxes excluded).
You haven’t told us enough information. For example, risk tolerance and time horizons. One can assume that money that was once in a CD was money you could not afford to lose, or was earmarked for spending in the near future. As an example someone mentioned getting into KO. Someone else said it dropped 35% and took three years to recover. First someone said something about long term investors and price changes. And therein lies my point.
We don’t know your time horizon for this money. What is needed for, and when. How important preservation of capital is. Etc.
I could not find anything safe that did not have some risk of some sort. I did put a similar sum into an international dollar hedged bond fund (bndx) paying about 4.34 percent recently, but it was a bet on dropping rates and a declining dollar with the intention of selling if rising rates enter the picture. It has been a good bet so far.
