Posted on 06/08/2011 8:11:30 PM PDT by Signalman
CHICAGO (CNNMoney) -- Pimco founder Bill Gross reiterated his warning to cash out of Treasuries Wednesday afternoon.
Investors who have been betting on Treasuries are destined "to get cooked like frogs in an increasingly hot pot of water," the well-known bond bear told attendees at a Morningstar Investment conference in Chicago.
Gross, who manages the $235 billion Pimco Total Return Fund (PTTAX), said real interest rates, which remove the effect of inflation to measure the actual yield an investor receives, have fallen into negative territory.
He pointed out that Treasury inflation-protected securities with a maturity of 5 years are trading at a yield of -0.5%. In October 2008, the 5-year TIPS' real interest rate stood at 4%.
(Excerpt) Read more at money.cnn.com ...
Pigs are officially flying.
Gross gets it. He got it months ago when he ordered PIMCO to dump their US holdings. Glad he driving the point home, just in time for QE3.
Then it's too late for me, since I didn't read this until Wednesday night. Although I have a degree in math, not journalism, I did go to public school so long ago that they actually taught basic grammar there. Let's try:
On Wednesday afternoon, Pimco founder Bill Gross reiterated his warning to cash out of Treasuries.
but before the crash I had put most in the only "safe" investment that they offered....US Reserves....there is no other option...
any advice?....if I could park it in a savings account, I would if they offered one...
but before the crash I had put most in the only "safe" investment that they offered....US Reserves....there is no other option...
any advice?....if I could park it in a savings account, I would if they offered one...
bump
Bill’s right, and it will be a circular collapse. Yields will go higher, as risk goes higher. Prices will fall. Remaining investors will be skinned. The rising yields will signal the spread of interest rate hikes to the rest of the economy. Markets will fall, decreasing revenues further. Layoffs of employees will further shrink revenues. Repeat. Repeat again.
Good word.
YUP...my husband TODAY finally said...he’d read something in a publication he gets that some financial people are warning people to get out....I’ve been warning him for 2 years....now he’s saying can’t buy gold, it’s too high...I’m thinking about buying lead.
>>>Gross gets it. He got it months ago when he ordered PIMCO to dump their US holdings. Glad he driving the point home, just in time for QE3.
And since he dropped US Treasuries, the yield on the 10-year has dropped about 75 bps. He may have just been early, but to date that move hasn’t paid off.
The implications of US Treasury holders getting “cooked” is that Mr. Gross expects a sovereign default by the USA...or hyper inflation followed by total dollar destruction...negating the value of all dollar denominated financial assets.
“any advice.....?”
Canned Goods and Ammo.
Self direct your investments as they try to swap 401k providers hoping you don’t bother to change their default recommendations as each new fund plays games with your money.
Great if they have a precious metals fund but I doubt it. Look for commodity funds first, dealing in foods then cotton then miners or minerals. Then look for emerging markets funds invested in South America, India, Australia, Canada. Then look for foreign country bond investments fund like Canada, Australia, Swiss, India, China. Last look for US companies in a fund that are primary overseas ventures (cheap labor) or companies that engage in supplying the war machine (planes, guns, bombs, etc.)
Or stop investing money in the 401k all together and take a loan out and buy precious metals starting with silver. Of course you will be paying yourself back in the long run while parking that payback money hopefully in a 401k fund listed above. After paying the loan off, get another loan and reinvest outside the 401k. An investment in silver coins (rounds) or gold will all by itself hold value while the US dollars falls. And it will, too much debt pending.
Lately, I find myself often wishing that economics didn’t sound very much to me like a combination of Chinese and Greek.
For some reason the CNN article errors when I try to expand it in my IE browser so I cannot read the whole thing.
It seems to be saying that one should only get out of fixed treasuries.
Inflation Protected ones are fine because the return fluctuates with inflation.
Am I understanding this correctly?
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