Greg Pack
Wash Weenie
Call me a pessimist, market bear, or "tinfoil hat guy"- I just want to give you magnates out there a head's up.....
In the past I have used money market funds to store money which I need liquid. The fine print on these is that they can theoretically go down in value. But no one really expects that, right? Well, right now there is a decent chance for these to go down in value in the near future, depending on their makeup.
If you hold significant assets in either money market funds or bond funds take a few minutes and look at your prospectus. See what comprises the underlying instruments they hold to generate interest. If they are US treasuries you are good to go, but if they hold mortgage back debt and to some extent even municipal bonds you could have some issues.
There are current unresolved problems with bond insurers. If they are not bailed out by our government (i.e the taxpayers) the market value of these assets could potentially collapse. These could cause significant writedowns and loss of principal value of these funds.
Until this is resolved I don't feel comfortable holding money in either vehicle. I sliced up my money and put it in several banks with limited sub-prime exposure and clear of the housing boom-bust cycle, keeping all within FDIC limits. Even safer is treasuries at http://treasurydirect.gov/ . Crappy return, but I'm more worried about preservation of capital right now than an extra point or two.
Bill: Insert your favorite "This guy is an idiot and the post should not be construed as financial advice statement" here.
In the past I have used money market funds to store money which I need liquid. The fine print on these is that they can theoretically go down in value. But no one really expects that, right? Well, right now there is a decent chance for these to go down in value in the near future, depending on their makeup.
If you hold significant assets in either money market funds or bond funds take a few minutes and look at your prospectus. See what comprises the underlying instruments they hold to generate interest. If they are US treasuries you are good to go, but if they hold mortgage back debt and to some extent even municipal bonds you could have some issues.
There are current unresolved problems with bond insurers. If they are not bailed out by our government (i.e the taxpayers) the market value of these assets could potentially collapse. These could cause significant writedowns and loss of principal value of these funds.
Until this is resolved I don't feel comfortable holding money in either vehicle. I sliced up my money and put it in several banks with limited sub-prime exposure and clear of the housing boom-bust cycle, keeping all within FDIC limits. Even safer is treasuries at http://treasurydirect.gov/ . Crappy return, but I'm more worried about preservation of capital right now than an extra point or two.
Bill: Insert your favorite "This guy is an idiot and the post should not be construed as financial advice statement" here.
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