Posted on 08/17/2010 8:09:20 AM PDT by TigerLikesRooster
Don't Touch 10, 30 Year US Bonds: Marc Faber
Published: Tuesday, 17 Aug 2010 | 2:52 AM ET
By: Ansuya Harjani News Assistant, CNBC Asia Pacific
Investors should stay clear of 10 and 30-year U.S. government bonds, warns Marc Faber, editor & publisher of The Gloom, Boom & Doom Report, following the Treasury Department's report that China's ownership of American debt has fallen to its lowest level in a year.
"I think eventually inflation will accelerate," he said. "Whenever food prices go up, and grains have been very strong recently, with the sum delay, you get inflationary pressures."
10-year treasury yeilds fell to 2.570%, the weakest level since March 2009. While, the 30-year bond's yield reached 2.719%, the lowest level in 16 months.
Faber cited a weakening U.S. dollar as a second reason to decrease holdings in the country's debt.
(Excerpt) Read more at cnbc.com ...
P!
Unless you are a foreigner. In that case load up. :-)
OK, fine.
So if government bonds aren’t even safe any more, where DOES the rational investor put what little cash we have left??
"...U.S. Treasury debt for a second consecutive month in June, while Japan and the U.K increased their holdings... ...total foreign holding of Treasury securities was up $45.6 billion to $4 trillion. This represents an increase of 1.2%. "
“So if government bonds aren’t even safe any more, where DOES the rational investor put what little cash we have left??”
Who knows? Try a basket of foreign currencies, staples (grains), precious metals, and real estate.
At least one of those might help preserve some sort of wealth.
You can probably answer your own question, but you let the funds stay in shorter term instruments. If you’re depending on income and willing to see the principal decline because you’re satisfied with a buy and hold strategy, the yield on many securities is relatively high. Pitney Bowes is flirting with 7%. It really depends on what your situation is.
This may have been a recommendation for Jedidah --but his post got me interested too.
My take is there's no perfect investment just like there's no perfect shirt because everyone's different. While shirts depend on body size and style preference, investing depends on time frame, risk tolerance, and willingness to personally manage. Some people want no risk or effort (T-bills) some want no-effort highest return in 10 years (s&p fund) or maybe they're willing to monitor the funds several times a week (growth mutual fund) or every hour (small cap stocks) etc. etc.
Interest rates are going down, not up...making 10 Year and 30 Year Treasuries even more attractive.
Deflation.
OK, I’m really impressed that you could turn my screen name into a link. Cool. And that should tell you how tech un-savvy I am.
You mention T-bills, and my question to you smart investor types:
Are government bonds safe? I have a lot of money in Ginnie Maes right now, a significant amount in high quality corporate bonds, a minimal foothold in good stock mutual funds (keeping a small position in those closed to new investors).
I’m perfectly capable of effort, and I’m fairly smart, but I’m risk averse, or maybe just worn out and scared.
Not holding anybody to anything. I’d just like to hear educated opinions.
I’m appx 10% cash. Have pre-’64 coins in case TSHTF.
Rest is diversified in mainly US blue chip stocks WHICH ARE COMMODITY based or Consumer Staples. All pay a dividend and all were purchased in the ‘golden zone’ of 3%+. This way, I’m getting paid comparable to treasuries but have a good chance of the stock price and dividend yield on cost increasing. Some might say the value of the shares could go below what I paid. Well, they have...and then they went up...a couple I could have sold for 25% profit in a couple of months or weeks. Some I did [low dividend payers bought near the bottom before another momentum swing]. Others I held on to for the long term.
In the taxable fund I’ve a lot of pipeline MLP’s, a couple of E & P MLP’s and one REIT along with a closed end muni for low/no tax cash flow.
In both accounts I’m invested in several utilities and telecoms to function in lieu of treasuries along with two hand-picked corporates. Higher yield that appears fairly safe. After all, if everything goes down the crapper, treasuries might not be worth so much, either. No real asset ‘just the good faith and credit of the USG’
Have some shipping/transport and industrials, too. Little to no financials, health care, tech. [Do have Pfizer and Merck pharmaa] Consumer discretionary in KO and MCD. Over 50% is energy related. Not following any of the normal ‘balanced portfolio’ hoo, ha. Don’t believe in it.
They won't even sell those to federal employees through payroll deduction any more.
Next question is ‘how long can deflation last?’
The fact that there are so many investments to choose from is not any more of a problem than having too many refrigerators to pick from, it's just that most are all pretty good and pretty much the same.
For me I got most of my money in cash waiting for something good to come up, with some in an s&p500 fund that I ignore and my only stock I got is CTSH and I'd like to dump it if it would just quit making money for me (up 1.05% while the DOW's down 0.31% so far today.
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