Actually the smart money is already very sceptical in that the latest TBill auction for the shorter term was a .52% annualized yield. This by itself would make one want to think twice about a yield that is several times this amount on a liquid dollar for dollar basis. http://www.treasurydirect.gov/RI/OFBills The real acid test would be the same as for any bank. What if everyone would want their money tomorrow ? Either from a typical big name brokerage based fund, or a big name bank, one would certainly have their doubts. And as for the smaller situations trying to compete by yield, this would certainly be suspect. After all, everyone is very intelligent and well informed after the calamity occurs. Are they not ?
Thats right. Negative sentiment is a contrarian indicator. When doom and gloom reaches its zenith the markets explode upwards. They are upset because Feds cut rate and now they have no place to hide that cash. Its sitting there giving them nothing and its hurting them monthly and they are seeing less of that income streaming coming in. There is talk about investing money in ICELAND & NEW ZELAND ! LOL! Its getting desperate. Now do you know why the Feds cut rates? To flush that horde into stock and real estate markets and stimulate activity. They have been doing this for 80 years only the fools on ET are seeing this for the very first time... LOL Can you make serious money here? Yes I can.
Excellent Commentary All ..................................................................................... There are two types of money.... Money by which one would like to take on risk.... Money by which one would not like to take on risk.... ............................................................................... Money market funds have increased rates in some instances because the cost of some issuance has risen due to a rise in perceived risks....whereas before perceived risks were lower.....It is just the market place....normal.... And more likely than not, there are going to be a few hedge funds whereby in the next 36 months are going to have stellar returns by snapping up heavily discounted risks.... The issue regarding money market funds is that some of the supportive issuance are of the type that can indeed go away.....and since money market funds are perceived to be non thinking or a sleepy place to be.....perhaps not.... It only takes one to show the world that sleepy nonthinking money should know better next time..... For risk taking money.....this is a time of increased levels of fear....and thus increased levels of return for astute....and lucky players.... For sleepy nonthinking money....this is a time of negative surprises.... Increased volatility can indeed be very kind to risk taking money.... Albeit the risk of dimishing valuation of money wreaks havoc on the no risk kind as well..... If this period of time goes without one of the many money market funds not failing the one to one liquidity test.....their acid test stands firm.... Sometimes when fools rush in....valuation rushes out as well....
Perfect.... But, but, it says so in the prospectus!!!!!! ................................................................................... Yeah yeah.....you mean you did not read the prospectus that was given to you ? What do you mean ....you didn"t ? Ah.....you really should read them next time..... ........................................................................................ And do not call me again.....because you got your prospectus....and we have in house lawyers.... Trust ? What is trust ? Trust does not work in court ....my ex-friend.....
http://en.wikipedia.org/wiki/Auction_rate_security your right, they are different from money market funds...usually sold in denominations of 25K to 50K to municipalities and wealthy private investors.
Excellnt Commentary All ................................................................................................... http://en.wikipedia.org/wiki/Auction_rate_security your right, they are different from money market funds...usually sold in denominations of 25K to 50K to municipalities and wealthy private investors. ................................................................................................ The question is what percentage of money market funds holdings invest in instruments such as these and others that have similar degrees of risk.... The attractive part to buyers is to buy individually is to not pay the management fees.... Make sure one knows what the money market fund is invested in.... Or you can just be blind and stupid .... As many have been already.... Not to know what does at times has a very high price..... And can often be circumvented..... Or one can be like the other lemmings....complete idiots.... Idiots should go out and find the highest paying money market funds available....and sleep well in their idiocy....
Here is a good article about the subject from Kiplinger. http://www.kiplinger.com/columns/balance/archive/2008/balance0319.html From reading the article, it seems that even some of the best funds hold paper from companies such as Freddie Mac, Bear Stearns, Merrill Lynch, Citibank, which it seems at the moment have some possible severe future problems. This makes me wonder about lessor known funds and what they actually hold. I think that the real key here is whether or not the US Fed can be successful in their current efforts. But there is quite a bit of questionable paper floating around, and the value has to be marked to market at some point. Hopefully, the US Fed will create a feeling of trust and help secure this segment. But in the financial world, as has happened with Bear Stearns, money movements can happen very quickly. All it would take is one rogue fund to create havoc in this segment. Since visibility is not so clear, one has to be cautious it would seem. Having lived through some financial calamities, they are mostly unexpected, and very unsettling.
I got in many arguments during my stay in that 'business'. It would be, " hey, you can't do that to the people'. And then I'd here, "fuck them. They should know better." And my comment was always, "we sure spend a lot of money telling people to 'trust us, we know what we're doing'. It's so sad. The business captured all the assets, and raped people, us included, truth be known.