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Strategies & Market Trends : Grant's Interest Rate Observer

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To: zebra4o1 who wrote (20)	6/25/2007 9:26:14 AM
From: Wyätt Gwyön	of 62

zebra, yes, umlauts for fun :) Grant has been on the ABX, and broader derivatives theme, for a long time. i have some investments along those themes. the article i found really disquieting was the one a few weeks ago about how the Texas Teachers Retirement System is getting ready to invest in all kinds of "alternative" garbage right now, at possibly the worst time in the past fifty years. i can only imagine there are many public and private pension funds around the country which are pulling similar moves. on the one hand, this has probably helped prop up some of these bubbles, like private equity and low yield (high yield is the new politically correct term for junk bonds, but i call them low yield because the yield is actually low), and also the low-rated and equity tranches of the ABX. on the other hand, once these markets blow, there will be a much bigger mess to clean up. it's no secret that many pension funds are underfunded, so they have been stretching into more and more risky investments to "theoretically" match their long-term liabilities. it's not a good thing when the whole market is reaching for yield.

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