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Pastimes : Ask Mohan about the Market

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To: Investor2 who wrote (13413)	1/25/1998 5:51:00 PM
From: Tommaso	Read Replies (2) of 18056

Thanks for laying out the true risk/reward pattern for the long-term treasuries. With fiat money, actually to plan on holding a bond paying 5% for thirty years seems the inverse of the safety of planning to be in the stock market for 30 years. I think it's a guaranteed way to lose capital--though perhaps at a dignified rate. I say this as someone who put most of my wife's IRA into treasury strips back in August (November 2013 series) and just sold them ten days ago. Of course it's possible that we might see the long bond lower than 5% if there's a sudden dumping of goods, deflation, unemployment, and loss of confidence in the economy. But to take that view is to speculate. I did think that the 6.75% rate one could get last August looked pretty good as a parking spot, with no inflation in sight, but since then if you look at the money supply figures, there's lots of money being created. Whatever the Fed may say there's been a big shift in actual policy. And it is an inflationary shift. By the way, I still think US equities are an absurd bubble. But I have got into Korea and am thinking about Malaysia. Also, gently, moving into gold.

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