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Market Watch Commentary Bad Advice?

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March 03, 2008 – Comments (3)

I was reading "The Ultimate Sell Signal: Part II" and a single line got my attention for the disasterous advice it implies.

The FDIC's challenge means you should confine your bank accounts to insured deposits exclusively. Other safe harbors are Treasury-only money-market funds, money funds owned by large institutions (even banks) and maybe short-term Treasury bills.

The very last part, "maybe short-term Treasury bills," when you've been advised "treasury-only money-markets" implies that if you are in treasuries, they should be long term.

Ekkkkkk!!!

I was messing around with 30 year treasury bill calculations to calculate what the value would be if the market rate went from the 4.375% to say 5%.  It would change the trading value of the treasury bill to $90.34 per $100 face value.  And for a second comparison, if the rate went to 6% the price would go to $83.27.  Long term treasury bills are bubbled due to the interest rate being artificially low. 

I don't see any reason why treasury bills couldn't do the same cliff diving we've seen all over the place.

3 Comments – Post Your Own

#1) On March 03, 2008 at 2:40 AM, Tastylunch (29.26) wrote:

I think what caught my attention the most was the fact he said "maybe". It's hard to value wishy-washy advice like that when he doesn't even state the possible advantages and risks. It comes across like he is haphazardly guessing.

I agree dwot, treasuries don't seem like a particularly safe place to be considering the circumstances.

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#2) On March 03, 2008 at 3:16 AM, cluelessmorgan (93.34) wrote:

I don't trust any of these people. 

 I find many "fools" here to be educated, whether they have official degrees or not, more than most of these "smart" cats at large.  If you have been investing, researching, and studying for years, in my book that gives you an honorary degree.  Maybe even a doctorate for some folks on here in particular.

Here's an example of what I mean:

I asked a person I used to work with if he thought of certain types of investments having any value in his clients portfolios (he was a financial planner).  He said no, he laughed at the idea, etc.  Not even the smallest percentage.   He gave me some lenghty reasons that sounded like regurgitation from a professor he must have had.  I walked away from the conversation knowing he was in error about some things.  But little ole me does not have a finance DEGREE, so why should he listen to me?  His credentials are way beyond. Meanwhile, since my previous conversations with him, the investments that I questioned him about have soared.  And he, my friend, was twice out of work last time I talked to him.   I never mentioned it to him, but kept it to myself that he was dead wrong.

And I find a lot of these guys, even the ones with experience and tenure, just way too robotic in their approach and unable to be open minded about investing and investment ideas. Maybe they are stuck in a rut, or maybe they don't understand the changing times, economies of the world, etc.  You can read about modeling, and dow theory till your full to the rim with knowledge, but in the real world, things are ever changing and sometimes the poop hits the fan.

The wise take much counsel and listen to many viewpoints.

The fact that we have people like dwot (and many others who should have honorary degrees) who can see through what these "pros" are saying is evidence enough to me, that the fool intelligence community is superior to the "offical market pros".

Thats my opinion and I stand by it.

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#3) On March 03, 2008 at 7:02 AM, abitare (38.38) wrote:

I got the Ultimate Sell Signal Part I at the Bottom of my blog. 

The first Ultimate Sell  signal was the resignation of GAO  David Walker.

I posted on this on 01 Mar and put a video of 60 Minutes interview with David Walker. 

 

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