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Plain Talk About Treasuries
Old 03-06-2009, 09:13 AM   #1
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Plain Talk About Treasuries

Simply Rich Wiki - Safe Havens

Les Antman shows that "safety" while emotionally appealing has not always worked out well.

Ha
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Old 03-06-2009, 09:26 AM   #2
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Too simplistic for this group. Many people here are currently on the side losing less to inflation than to the market but I doubt that everyone expects to stay on the side forever unless they have far more than they need.
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Old 03-06-2009, 10:14 AM   #3
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I apologize.

Ha
No need. I really didn't mean it the way it seems.
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Old 03-06-2009, 10:29 AM   #4
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This is pretty amazing stuff - CDS on 5-year Treasuries, which only yield about 1.8%, are trading at 1%.

International investors are now willingly giving up 1% of the annual return on 5-year Treasury notes to buy insurance against a default by the Treasury. A year ago, they only had to pay 0.05%. This means that the risk of default on these securities has multiplied 20 times. In fact, the cost of insurance against a default on Treasuries is now more than that for the average AAA or AA security! The rating agencies wouldn't dare say so, but the insurers who have to put their money where their mouth is think US Treasuries are in the single-A category.
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Old 03-06-2009, 12:18 PM   #5
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This is pretty amazing stuff - CDS on 5-year Treasuries, which only yield about 1.8%, are trading at 1%.

International investors are now willingly giving up 1% of the annual return on 5-year Treasury notes to buy insurance against a default by the Treasury. A year ago, they only had to pay 0.05%. This means that the risk of default on these securities has multiplied 20 times. In fact, the cost of insurance against a default on Treasuries is now more than that for the average AAA or AA security! The rating agencies wouldn't dare say so, but the insurers who have to put their money where their mouth is think US Treasuries are in the single-A category.
If US Treasuries actually defaulted, I suspect that the whole system would be in shambles and the insurance would not pay off.
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Old 03-06-2009, 07:56 PM   #6
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Ah, 'ha'! You read Les Antman, too!

Les was one of the voices that led me to a 50/50 US/international ratio for equities. He asserted that a 50/50 pot would recover faster than 100% US.

My equities are still 50/50 and I only have about 30% in MMFs, bond funds and CDs. My total pot still took a huge hit. Maybe everything will go lower; maybe not. I am sticking to my original asset allocation of 50/50 and see where it takes us. I am not smart enough to time the market, so I have to play the long odds.

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Old 03-07-2009, 04:05 AM   #7
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part of my portfilio uses my own version of harry brownes permanent portfolio , not the fund but gld,tlt,vti,cash

my tlt which is the long term treasury portion closed up 28% last year...gld (gold) was up 5...the 2 together left me with a 1% gain over all...

all my other mixes were down 38

those feeble treasuries have an amazing ability to protect...even now a 3 % return if we have say a 2% deflation is still a 5% real return


interesting how not one of the crystal ball guru's had long term treasuries as a buy last jan 2008
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Old 03-07-2009, 05:43 AM   #8
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"You might as well expect the best: optimism is the only realism. Save, invest, diversify, wait. And find a hobby other than watching the news." from Simply Rich Wiki


Sounds like a plan to me.
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