Tuesday, March 11, 2008

Things that go Bump in the Night Reprinted

Reprinted from 9/5/2006 and edited

These are things that can keep you awake at night.

Ever heard of a big mutual fund going bankrupt? Even if you haven't, do you know the name of the one you own?

What happens when the baby boomers retire and ask for their money, is it there? It doesn't have to be there. They haven't asked for it (yet)! Your fund manager could be on his second tour around the world on his (yours technically) private yacht.

Ever heard of a retirement fund insured by the FDIC? Does it matter? They don't insure investment losses anyway.

After 34 pretty good years, isn't the stock market due for a 5 to 10 year downward slide?

Why would the big boys be buying 30 year bonds--how much lower can interest rates go before you say, spend it, inflation will eat it up?

How can a hurricane triple insurance rates in Florida, but yet the threat of a housing collapse has done little to long term interest rates?

How can Fannie Mae package a ton of junk and have no problem selling it? Nobody mentioned that "Risk had left the market." Can you say "retirement fund investment?"

Something is ready to DROP, not sure what it will be, but it WILL go BUMP in the Night.

Copyright 2008 All rights reserved


Anonymous said...

Maybe I got this wrong, but did Bernanke make a commitment today to purchase $200billion worth of garbage collateral from the investment banks? Why is he being so derelict in his management of what is, essentially, taxpayer money?

Could he please show some concern for the millions of us who were responsible enough to save some money? Does he truly only care about bailing out his billionaire buddies?


I guess they might just see it as saving the system - how many people consciously see themselves as wicked?

Lone Ranger said...

I converted most of my savings to gold and silver 18 months ago. I've slept much better ever since.

Boom2Bust.com said...

Thanks for re-posting this.

"After 34 pretty good years, isn't the stock market due for a 5 to 10 year downward slide?"

I hardly ever hear this question being asked. I guess we've forgotten, or would like to forget, that markets can and will go down.

Jim in San Marcos said...

Hi Anon 9:24

I think once the general public figures out what is going on, it will be too late.

Bernanke has put 200 billion on the table. You still have time to pick up your share and mosey out the door before someone yells "fire."

Nobody is dumb enough to invest in mortgage loans. What's next to turn illiquid?

The $200 billion tells me that the big money is leaving. After all if its over 100K it's not FDIC insured.

The real odd thing is that most of this would have been very unbelievable 6 months ago.

Can you imagine a European who bought a million dollar real estate MBS last year. Not only has it lost 1/3 of its value from the currency exchange, the rest of it may be worthless; Peruvian bonds come to mind ;>)

oldgoldbug said...

Nice job Jim. That journalism degree and several decades of living has made you a very clear, concise and informative writer. Well done.
My gig is charting and while the oil price goes to new highs the oil stocks are rolling over. I think you are right on the money - the crash in consumption is going to make everyone's head swim.
I too have had a hard time reconciling long bonds at less than 4% and gold at $960 but the thought occurred to me that, like Will Rogers said (and of course I paraphrase) "I am not as concerned about the return on my money as I
am about the return of my money". Maybe investors are parking in places where their losses in nominal terms (dollars) will be limited as well as where their losses in real terms (gold) will be limited. Of course, having created exactly such a portfolio in the 80's I am not amused. As someone said "when you are right too soon you are wrong". Amen.
Anyway, I thought we would see $100 on oil before $150 but it looks like that may be a bit off. I guess the shorts haven't been squeezed enough. I'll be back to see what else you might be posting.

Jim in San Marcos said...

Hi Goldbug

Thank you for the complement

I like that quote "when you are right too soon you are wrong".

I have one that I believe "We can all be right at a certain point in time, we all can't be right at the same point in time."

We are coming up on that certain point in time. The question is, Will we make it out with some real money in hand?" Retirement might not be an option.

You would almost have to be 100 years old to have experience the last big collapse.

I think that oil will drop just like housing did.

Hold on, the ride is about to begin. Thank you for your comments.