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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (3772)	4/7/2004 9:44:27 AM
From: Tommaso	Respond to of 116555

If one is content to get 4% a year for ten years, the ten-year treasury is fine. If inflation averages 5% a year over that same period, however, you will lose a cosiderable amount of real purchasing power. It's the longer maturities that are the real trap. At the end of ten years, they could be worth 60% of their face value. It has happened before. My very first investments were AAA bonds selling at heavy discounts, like 4% bonds selling at 80 or so a few years before maturity.