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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Madharry who wrote (32137)	9/24/2008 12:21:36 PM
From: E_K_S	Read Replies (1) \| Respond to of 78749

I guess all treasury funds are not the same. They must have had a large portion in repurchase agreements (for treasuries) which became ill-liquid. Vanguard has a 100% treasury fund has no repurchase agreements. It's possible that some of the paper they had was with Lehman and was frozen when they filed bankruptcy. The best approach is to have a few money accounts including an FDIC insured one that are linked with ACH transfer option. I have been raising cash and distributing the proceeds among these accounts. Long term I am eying more oil and natural resource companies and foreign country themes that have hard assets and would benefit from a falling dollar. Liquidity must still be very tight especially where an "All Treasury" fund gets frozen. I like to hold very large funds (Vanguard or Fidelity) as they have a much larger pool of investors to draw from. Many investors got hurt from the Schwab Yield Select Fund which lost 30% of its value from it's investment in CMO's last year. There was a panic run on the fund and the fund manager was forced to sell these CMO's at a sizable loss. The fund was just too small with too many very large account holders. When the large account holders exited, there was not enough liquidity available w/o selling the underwater paper. The Schwab Yield Select Fund had only 5-6 Billion in total worth. The Vanguard Treasury fund has over $600 Billion. It's almost 100x larger. We are in interesting times now. Capital preservation is key. EKS