"My blue chips were suffering. Even my muni bonds. And I worried about my bank accounts."
I remember in 2008-09 when ARS (auction rate securities) were frozen, and auctions would fail - unprecedented in what is supposedly a highly liquid, short-term money market-like security. You simply couldn't find buyers for that very short-term commercial paper and bank paper. Companies, institutions, and firms simply could nott access their short term 'liquid' funds - and no banks (with some exceptions) were willing to float bridge loans until the ARS market thawed. It was chaos for everybody.
And while the muni bonds were sinking, I recall Czeching on my Vanguard California Tax-free Money Market fund and the yield - and seeing that what was usually yielding maybe 0.5-1 percent, was yielding a whopping 8.4 percent!! This went on for weeks and weeks above 6 percent yield on a tax-free muni paper money fund! While the intermediate and long term CA tax-free bond funds were yielding maybe half of that rate (and that's after their principal value was slashed!). Crazy!
Like you, I opened several additional bank accounts with different banks (and a credit union) to spread the risk of FDIC insurance limits in case of widespread bank failures.
I also diversified my cash into different currencies via FXA, FXC, FXE, and FXF ETFs.
I always academically knew that currencies (money) is no more 'solid' than a stock or any other asset. In fact, it can be even (and is) much less reliable as a store of value than a productive asset or a physical asset. I was much more enamored of stocks in companies which held substantial natural, non-renewable resources - like potash, oils, mining, metals, agriculture enterprises, etc. I bought the original POT stock (Potash Corp) for example.
Butt 2008-2010 taught me viscerally to look at money (currency) just as a medium of exchange which was nott stable and could be extremely unstable. I've never viewed cash (or bonds) the same way since then. I did see the great value in preferred stock and quality convertible stock - and Buffett did wonderful with his deal to gett a large chunk of Golem, Sax preferred stock that was convertible.
I now view preferred (and convertible preferred) stock in quality companies as a foundational holding. You gett the advantage of preference in bankruptcy for capital preservation in very bad times and still have upside in the common via conversion. And much less volatility, which is important when you gett old. Plus the dividends.
The basic rule I always knew butt didn't feel until 2008-10 was that if the US stock market failed in a major way, then there is no way the US Dollar can have any meaningful value. The US Dollar is basically a stock share in the corporation of the United States of America. If the US stocks are nott worth much, the Dollar will be worth even less on an intermediate/longterm basis. In that vein, the Dollar (or any country currency) is actually a riskier value placeholder than a basket of good quality stocks with solid assets (physical assets especially) and leaders in key economic sectors that the world cannot do without (agriculture, petroleum, metals, mining, pharmaceuticals, lumber, uranium, electricity generation).
In an analogy, a surgeon and a dentist will always be able to find work and generate value for themselves regardless of the economic condition. A manicurist, hairdresser, realtor, restaurateur, and golf course pro notsomuch.
I have a very diminished view of the value of cash and especially of bonds. I would much rather have a diversified (with the sector proviso mentioned above) portfolio of solid, dividend growth stocks - common and preferred/preferred convertible. Stocks in this basket manner are IMO much safer than cash and have the benefit of growth as well as yield.
It's money that is now very risky (and bonds therefore are even riskier). The Fed and 2008-2010 have left me with that view, intellectually and now viscerally.
AI
