Comments on: Negative Cash

By: James

James — Mon, 06 Sep 2021 09:48:35 +0000

Ha, was just about to post Anchor Protocol but someone has beaten me to it… only concern is getting enough insurance cover for your deposit

By: J

Tue, 31 Aug 2021 13:34:24 +0000

Will you share your stablecoin strategies?
Any thoughts on Anchor protocol’s ~20% APY on UST?

By: Kunal Sampat

Kunal Sampat — Mon, 16 Aug 2021 04:52:17 +0000

Hi Tynan,
Interesting post/ thoughts.
I’ve done something similar where we bought a parcel of land and leveraged $ from the brokerage account (Wealthfront). I am also using BlockFi which pays 8.6% interest on GUSD.

Wealthfront charges 3.7% on margin loans, which is higher than the 1.6% you mentioned in your post. Do you know if I can transfer my margin loan?

By: Adam

Adam — Wed, 11 Aug 2021 14:42:24 +0000

Here are some parts of the equation that are missing to me: How do you determine the appropriate “safe” Loan-to-Value ratio? What is the plan if or when there is a substantial enough crash that you get margin called? How do you know when to put outside income towards purchasing new investments vs paying down that margin balance?

By: Tynan

Tynan — Sun, 01 Aug 2021 04:58:45 +0000

In reply to Daan. I haven't. I know I should because there are good ideas in there but I just can't stand his writing style. I can't even articulate why.

By: Tynan

Tynan — Sun, 01 Aug 2021 04:57:27 +0000

In reply to Steve. He does it because he can then make a cash offer and beat out financed offers. Once he gets the property earning a return he can easily refinance it and use the cash to pay us back.

By: Steve

Steve — Tue, 27 Jul 2021 20:20:04 +0000

Honest question — why would the real estate developer pay you 8% for your cash instead of borrowing from a traditional lender at a much cheaper rate?

By: Daan

Daan — Tue, 27 Jul 2021 15:23:05 +0000

In reply to Tynan.

I see. I understand what you’re saying but I think we might be talking about different categories of risk here. Have you read any of NN Taleb’s books? He explains these things better than I could.

I think you might enjoy Fooled by Randomness or The Black Swan (the latter is most relevant here). I’d recommend only reading the first 2/3 as he tends to waffle on at the end!

By: Jacob

Jacob — Tue, 27 Jul 2021 03:17:13 +0000

I don’t think I got this emailed to me.

By: Tynan

Tynan — Mon, 26 Jul 2021 22:04:28 +0000

In reply to Daan.

1. Sure, I agree that nothing is actually no risk, but this is close enough that I can call it that comfortably. I have zero doubt that he would make things right no matter what, based on past experience and knowing him well.

2. I have negative money there, so I’m not worried about it. Even if I had positive money, there is SIPC coverage of both securities and cash.

3. I would never get into a situation with a single point of failure. IBKR could die and I’d be fine. I don’t mind the extra step of having to liquidate something in the extremely unlikely event that IBKR disappears.