Where to Put Cash to Work (Or to Rest)  | BY KEITH KAPLAN
CEO, TRADESMITH |
You’re probably looking at the markets right now with one of two minds. - “I think this volatility will all blow over soon… And I want to buy.”
- “I’m out… stocks are headed lower… And I want to know where to hide.”
The camp you’re in probably has a lot to do with your age, but also your personal risk tolerance… and whether you followed TradeSmith’s tools. We’re seeing both types in our feedback inboxes. For example, this email from Steve H. shows he’s clearly in the first camp: The market is down, please discuss the best buying opportunities in advance of recovery. Meanwhile, this email from TradeSmith Platinum member Dan C. is thinking differently: Staying the course with VQ% and TradeStops has yielded a ton of cash! Where would be the best places to park said cash, as we wait for the bottom to appear (so we can put our cash back to work)? Every market is made up of buyers and sellers. And there’s plenty of good reasons to be bullish or bearish right now. But no matter which one you are, pay close attention to today’s dispatch… Because we’ll share some prudent ideas for what to do in either case, starting with the risk-off strategy. Where the Risk-Off Camp Can Park Their Cash What you need to do is very simple. In a collapse like we’re witnessing now, it’s hard to name a particular asset you can hide out in. Typical risk-off hedges like gold and bonds have been selling off right alongside stocks. So, to truly hide out from this carnage, you need to be in cash…and in the best possible spot. For that, you have a few good options: - The easiest method is to buy a U.S. Treasury Bond ETF, especially one of the short-term ones like the iShares 0-3 Month Treasury Bond ETF (SGOV).
You can buy this just like any stock in your brokerage account, and at the start of every month it’ll distribute a yield similar to what you’d find in short-term T-Bills. As of Monday’s data, the 30-day SEC yield on SGOV is 4.18%. That’s around what you’ll earn per share over the course of a year.
Not bad at all for idle cash when inflation is just under 3%. Though, for the convenience of being able to quickly access your cash (by just selling the ETF), you do pay a few basis points of yield. - You can also buy Treasurys directly from the Fed, and you’ll earn a slightly better yield. Right now, one-month Treasurys are yielding 4.36%. So, you can buy a one-month T-bill, and then a month from now you’ll get the coupon and the principal back in the account you bought it from.
You can also reinvest your principal and just continually get the coupon in your account each month.
This does involve wrangling with the Fed’s relatively old-school website, but it’s the best yield available. You also have to worry about transferring your funds between accounts, which can take time. - Finally, there’s high-yield savings accounts. These are the best option for long-term savings. The rate is variable and depends on which bank you go with. But the range is between 3.6% on the low end and 4.4% on the high end right now.
These typically have a few days’ waiting period for funds to transfer, so they aren’t what you want if you think you’ll change your mind. (If you want to buy the dip on any given day, you’re back to ETFs like SGOV.)
Just do your homework and make sure your savings would be protected by FDIC insurance. Be aware that some fintechs offer high yields but can’t offer FDIC insurance directly – they are the “middleman” between you and an actual bank – and that this has caused problems for customers in the past. I’d personally recommend sticking with more reputable banks in general, but FDIC insurance is a bare-minimum must. Understand that all these yields will go down, and quickly, if the Fed cuts interest rates. This is also a good time to remind you: If you’re a TradeStops subscriber and aren’t following the tools, I showed you how to fix that a couple weeks back. Having those tools ready during the past few weeks may have meant the difference between suffering mildly painful losses or… really painful losses. Now, let’s talk to the bulls… The Best Stocks for the Risk-On Folks to Buy You might be look at this decline, one of the fastest we’ve ever seen, and thinking: “There’s no way this is the start of a new bear market.” You can point to the fact that bull markets don’t tend to be so short-lived. You can speculate the tariff situation will reach a compromise. And if it doesn’t, you can figure that the Fed will step in, cut rates, and ease the economy. To be clear, these are all speculations. We just don’t know if any of this will pan out. Things can absolutely get worse. And as I keep emphasizing, our TradeSmith indicators are fully in risk-off mode. That said, you can’t look at one single piece of evidence to make an investment thesis. You need multiple confirming factors to help you make decisions. And if you’ve come to the conclusion that you want to be a buyer right now more than a seller, then our software can help you. The best stocks to buy, no matter where the broad market is at, are stocks in the TradeSmith Green Zone. Stocks holding their Green Zone status at times like this are extremely strong. If you’re a subscriber with access to our Screener software, along with all the associated strategies and filters, you have a lot of options for how to look at Green Zone stocks. But for our purposes today, we’re going to set up our Screener to look for Green Zone stocks that: - Are in an uptrend…
- Are based in the United States…
- Are mid-cap or large-cap…
- Are cheaper than the average S&P 500 stock, which has a P/E ratio of 24…
- Have a VQ% of less than 40%…
- And are below 70 on the Relative Strength Index (RSI)…
This will offer us a list of Green Zone names that have relatively low volatility (but not too low) and aren’t too overbought right now, as well as being cheaper than the broad market. There are 45 stocks out of the thousands in our system that fit these criteria. Here are the top 10, sorted by how recently they entered the Green Zone: 
The recent Green Zone entries are important. It means that these stocks have been trading higher in the wake of the recent rout and are seeing positive momentum. Now, this is a clearly protective list of names. We have consumer staples, utilities, property and casualty insurance, and defense. Regardless, this is where the market momentum is moving right now. These are the stocks showing buy signals in our system. This should tell us that now is not the time to go dumpster-diving in the tech and growth sector. We aren’t seeing positive momentum there just yet. Hopefully this has helped you, whether you’re looking to get out there and buy or are looking to stuff cash under a more high-yielding mattress. What other guidance could you use right now? Tell us at feedback@TradeSmithDaily.com. Talk soon, 
Keith Kaplan
CEO, TradeSmith P.S. Another great way to follow along is to follow me on X. I’ve posted my thoughts there the last couple of days on China tariffs, the VIX, and “the margin trap.” Check them out here, and then follow my account for more. | 
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