Treasury Bills ARE Investments!
"...Read your reply on the Qualcomm thread, by the way. I'm with you as far as the trading accounts are concerned. Been of a mind to swap out to T-Bills overnight since 1996 or thereabouts. I just do not think they quite understand what you are doing, as one fellow mentioned that you must "be doing very well trading Treasuries" (as I recall his remark)..."
I think the problem is that you and I have been "around", and are perhaps students of market history more so than many others. This means that we have lived through some good and some rough markets. We also know that this has all happened before in the past. While we cannot call these cycles per se, there is definitely an up and down phase, one of expansion and contraction that is normal in nature, not unlike the cycle of the population of rabbits and foxes. There is a time and place for everything, and I think that most people have simply not experienced this yet. Humans have an annoying habit of extrapolating any trend exponentially and then come to rely on plans based on those numbers. A whole generation has now come to believe that they will spend their Golden Years on cruise ships ad finitum. That can never happen. The market will not left everyone cash out and fulfill their dreams. In the end, there is but one way to grow rich - and that is to earn more than one spends, and put some away for the long run.
People generally think their investments are diversified simply because they own stocks in different sectors, and own some "diversified" mutual funds, when it fact, all these are equity investments. They don't really know that this is a single asset class. Forgotten are cash, precious metals, real estate, bonds, currencies, etc., and this is why my comments about owning Treasury Bills indeed sounded so bizarre to most. Oh well, they will find out one day, I am sure...or maybe not.
Even more bizarre, as a futures trader, is my position of being so conservative and defensive. People always imagine the world of index futures to be wild and woolly when in fact it is quite civilized. That is because we trade, knowing that we are playing with fire. There is no complacency possible, no saying "Oh, that didn't work, so I'll hold onto it a while longer..." There is no room for delusion, and therefore, applying risk and money management rules to uphold the principle of "do no harm" to one's account is paramount. Every move is measured, every exposure to risk is intentional. There is no smoke or mirrors that we can use to hide losses.
Teresa |
