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Pastimes : Ask Mohan about the Market

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To: Don S.Boller who wrote (13470)	1/26/1998 8:17:00 PM
From: Tommaso	Read Replies (1) of 18056

That's always possible, but I prefer to take the annualized profit of about 55% already realized and go into short maturities. As I understand Warren Buffet to have done--though no one seems able to provide much confirmation of this rumor. Incidentally I understated the capital gains if bonds do go to 4%--for a 30-year treasury it would be closer to 40%. An excellent return should it work out that way. Over 50% with interest payments. The problem is that all this stuff really is nothing but paper. No gold--not even a corps of engineers such as stands behind Intel stock. Just the full faith and credit of the United States. Which has the power at any moment to print however much money it pleases. Over a 30-year period--or even a shorter one--a lot of things can happen. And just a twitch upward instead of downward in interest rates and there go all your profits. Now in a super-exporter, such as Japan, interest rates can go practically to zero. But the United States is a super consumer and importer. At some point our paper may start to seem less attractive as a store of value.

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