Seems everyone has fallen asleep in this thread... Not much interaction - so maybe it's turned into a blog? If that's the case I'll quit posting to it?
I generate more cash than I can spend... laughing at this thought... but it's what I've been trying to get everyone here to try to do.
I used to use GE or MSFT (years ago) to park cash. No point in letting it sit in a Money Market sweep account that pays .01% (joking - but it's not far off). Now I use ETF's -- High Yield (HYG) or JUNK (JNK)... both of which pay real decent dividends.
The reason for todays BLOG post
-- is that I want you to look at the DETAILS of the dividend before you just park cash. To use HYG as an example.... it just paid the dividend so won't be paying a dividend for another 3 months. Not much point in parking money you're going to invest next week or next month in this name today... All it takes is a simple look at the details to see when the next "EX" date is. Remember that you only have to own it until after the "EX" date to collect the dividend! Since this is a larger holding in my Schwab account - I choose to put the cash here today... but it's money that I'm not planning to spend - or invest - and if I do want to pull it out - I will check to see if I'm close to the "EX" date before making that decision. If I only have to wait a couple weeks or maybe even a month - to pick up that dividend I'll leave it alone and wait to get paid. Why not? It's CASH.... (.50 per share - on the 5000 shares I just bought is real money).
Now -- if I need to or wanted to use some cash beforehand - I'd just dip into the margin side of my account. I can write a check or buy stocks using MARGIN (about 50%) of my account total. There is a very very small % rate for doing this and it's far less than the 7% yield on HYG... so if I suddenly needed to buy a stock (really? Nothing I do is that "quick"... so I'm just using this as an example) or Charley was selling another car I just had to have.. I have this available to me. I do not -- and please please please -- do not use the MARGIN as an ATM! The minute you do - the market will dump and they'll sell your account out to cover the MARGIN CALL!
I actually had a friend that had a 33 MILLION dollar margin call. Understand that this meant he had to have had AT LEAST 66 Million in his account - in order to get 33 Million in margin! I asked him point blank -- DUDE! How f'n greedy do you need to be that you have to go to margin to try to generate a little more "return". He was using the margin to GAMBLE with - by buying more stocks etc trying to make a gain on his borrowed money. Guess what happened to his return when they called him and asked him to cover his margin (which means you have to bring them more money to cover) - and when he couldn't - they did it for him (they just sell stuff in your account to lower your margin back to the 50% level)... at a LARGE LOSS by the way! You literally only have about an hour or maybe half the trading day to "cover". IDIOT.
Brian Hobaugh SCCA National Tour June 2014
First Hemi 'Cuda Convertible Ever Built
Short clips: Goodguys Pleasanton autocross and pit videos
Hybrid Mode
