hatarakiman

Ten Year Treasury Note: A Terrible Investment

Foreigners(non residents) don't have to pay tax on Government bonds.
People do buy bonds and use it as collaterals. The Margin Maintenance Req of 5~10 year bonds is only 4% market value. You can earn 3.38% plus other derivative's gain.
Assuming you always buy 10 year notes at auction and hold it to maturity, spreading it out, it's like 10% each year for the 10 year notes. It's ok to put 10% in 2008 and another 10% in 2009...
But anyway, I prefer TIPS, it's inflation safe. But if you buy it from the secondary market, it's better to choose the market price that is less than the 100 principal value.

ETFs: Yes, They Have Their Drawbacks Too

I only bought SPY and TIP, sometimes MDY, IWM for avoiding wash sale rules for my friends(clients).
I sold a couple of calls (deep otm) on it.
No individual stocks, that's too risky for retirees.
Actually most people put money in CD after they "learned" some experience from the market crash. 2 to 3% higher return than CD will satisfy most people's investment goal. There are products like LIBOR plus 3% or LIBOR plus 5%. It's a good benchmark actually.

Has Gold Finally Broken Out?

I just heard from the news in Taiwan. The manager of the jewelry store said the price of the gold is so high, but the sales is aweful. Few people are willing to buy it as a present.
So people just buy it and put it into the closet, but not really use it for any purpose... It's really a good sign.

China Is Now in Firm Control of U.S. Debt Markets

The debt issue is really not a big problem if the US real growth can be maintained in a stable way. At least, the debt is denominated in US dollars

The treasury department issues debt to force spending(consumption). Fed sells debt to pull money out of the market. Those are two big machines controlling the flow of money.

If there is no capacity limitation on those machines, they can do what they want actually.

Unfortunately, California's machine is capped by its state law...

China Is Now in Firm Control of U.S. Debt Markets

How does China get US dollars? They can "earn" it from exports or foreign investment.

When China gets the US dollars, what are they going to do with the "money"? If China keeps it in cash, there would be no interests, so it's better to use the cash to buy treasuries that earn extra.

An outflow of US dollars is good actually, because US doesn't have to pay the interest on those money.

btw, money is like stocks. Issuing more money will definitely dilute its value, but it might not necessarily depreciate its exchange rate in the long run. Every country is printing more money, anyway.

How Do You Buy Spot Oil?

I think most of people should go back to take John Hull's "Options, Futures, and Other Derivatives" course again.
UOY is pegged to "February 2014 oil contract" as mentioned in your article. UOY is NOT pegged to "the front-month futures contract" as it mentioned by Macroshares.
It's like an option pegged to Feb 2014 future should be priced based on Feb 2014 future, not the front-month.... there is a low risk arbitrage opportunity if you want to try it.

7 Deadly Sins of Income Investing

dybydx, you must be a lazy person.

Technicals are like fortune-telling, predicting, forecasting. Most people are enjoying it, why not give it a try!


On Apr 29 11:35 PM dybydx wrote:

> why not just buy Vanguard Total Market Index (or ETF equivalent)
> and Total Bond Market Index. no need for hours of technicals and
> fundamentals.

7 Deadly Sins of Income Investing

11.6% Wow!

Got to check what's the holdings and how Nuveen pays it!

About 63.8% is ROC -> Return of Capital!

so the actual yield is about 11.6%*36.2% = 4.2%

On Apr 29 11:18 PM glennf1 wrote:

> JGT - Nuveen Multi-Currency Short-Term Government Income is a good
> hedge for the dollar and is currently yielding ~ 11.6%. It's like
> having insurance that pays you instead of paying them!

Why Jim Rogers and Robert Shiller Aren't Buying U.S. Stocks Yet

Instead of listening to what they teach you to invest, it's better to see what they really invest in. Some strategy sounds really great, but it doesn't really make (big) money in the long term.

I doubt we can get stock investment advice from Mr. Rogers and Mr. Shiller. Regarding stocks, I prefer Peter Lynch, Warren Buffett, Burton Malkiel, and John Bogle.

Swine Flu: Why You Can Ignore the Hype

I have been through SARS in Taipei, Taiwan. Even a little cough in the train or bus, you got an eye. Everybody was wearing the mask outdoors in the city, even in the office. No talking in the elevator, the bus... and definitely no air conditioning. It's like a war against unknown evils.

According to the records, 47 died in the SARS event in Taiwan. I don't really know how serious this is. But it shows the SARS can be contained.

I don't know how long this swine flu can last, but it should be able to be contained with the current technology.

Btw, our government just shows the tamiflu acquired in 2003 in its warehouse, and a special vehicle that's used to transport highly infectious people, that's also acquired in 2003.

How Does $9000 Gold Sound?

If gold is such a good thing, Bill Gates and Warren Buffett would put all their money in gold. I haven't heard any wealthy people put all or most of their assets in gold. Apparently, there are other better investment than gold.

GM Bondholders: No Good Answer

The unsecured bond holders don't need to accept this offer if they think 46% is a good recovery rate. They can just short GM stocks at the current price or go naked call if they are still available.
The weird thing is that GM goes up today even with this news.

Swine Flu: Why You Can Ignore the Hype

This swine flu is a lot different to SARS. When the SARS broke out, the symptom is like flu, so it's not handled correctly. The death rate of SARS is about 12%. The epidemic rate is highly related to population density and how people handle it. We need to monitor it and handle it carefully, but not panic.

Will Hedge Fund ETFs Outperform Hedge Funds?

Two things come to my mind.

1st. I am not sure if they use correlations to find the underlying components of the FoF. Predicting the future is not like predicting the history, so it takes time to see if it really works.

2nd. The major components are Bonds, Stocks, and Currencies. According to the Modern Portfolio Theory, the result of the portfolio would be inside the efficient frontier determined by those components. But the (risk,return) of the FoF is outside the efficient frontier determined by bonds and stocks from the past experience (am I right?). Let's see how it goes.

California Housing Affordability Reaches Record High

Most of the people cannot afford buying a house. That's pretty much the trueth, because the affordability is less than 50% in most of the area.