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Politics : Welcome to Slider's Dugout

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To: jim_p who wrote (8267)	3/6/2008 11:26:10 AM
From: surelockhomes	of 50697

>>I covered my shorts a little too early, but a profit is a profit.<< Don't fret to much. Here is where the real money will be made and how cash conserving cash rich WB makes it. The smart money is now seeking the least yield that will provide the highest returns (50%) a year from now, at much lower risk. Note the last sentnce. >>TGR: Right. So what do we do with our money? IM: For the typical American, you go directly to Treasury Bills. The dollar’s losing value; you’ve got a negative cost to carry, but the value of a Treasury Bill is that’s the final form of paper that the government cannot tinker with. Because the 91-day T-Bill auction is what keeps the wheels of the system turning. If you had a one-year note, you might suddenly discover some sort of emergency declared and be told that your one-year note’s now a five-year note. They couldn’t possibly do that with a 91-day T-Bill or the system comes to a halt. I keep thinking back to the wisdom of Jim Benham, who originally worked in the Fed and then founded the old Capital Preservation Fund. He ultimately sold it to American Century; I am not sure whether they still follow the policy. But I always remember Jim speaking to audiences in the ’70s emphasizing that you want to own a direct T-Bill. You don’t want a swap or an option or some piece of paper from somebody else between you and the Treasury. He was ahead of his time, but that was the cleanest piece of paper that existed. In my mind, this is exactly the environment where an attitude like that should be taken. When I get people saying, “Why should I own a Treasury Bill; it’s only going to pay me 2%, and that’s taxable?” the point I make is that the Treasury Bill is 100 cents on the dollar of buying power when everything has fallen 50%.<< From the excellent article: Message 24373638 Going directly all into T-Bills might be a little extreme, but the drift to safety should be highly considered.

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