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Did you Heed The Fed Chiefs Warning?

|Includes: ProShares UltraShort 20+ Year Treasury ETF (TBT)
 In the questions and answers section on Thursday 22 July 2010 Ben Bernanke was asked a question by one of the senators...Why aren't the banks lending to small businesses and why are they putting short term loans into long term Treasury notes.

The Fed Chief replied; I do not think that is true. The Federal Reserve has warned the banks NOT to put their short term loans into Treasury notes and bills as they may make some money in the short term, however, when rates go up they will suffer a capital loss.
 
At some time in the future interest rates will go up. Zero rates are emergency rates that are helping the banks refuel from their disastrous investments of the past few years.

It is the savers who are partly funding the banks recovery as they are getting next to zero rates on short term CD's.

So if the Fed chief has warned the banks not to put their money in Long Term treasuries. where do you think you should put your hard earned money for safety?
 
Over time the stock market has proven to be the best investments for people who are prepared to sift through the maze of advice to find stocks that will outperform bonds in the long term.

The best time to buy stocks is when the markets are in turmoil and the indexes are making fresh lows.

Cost average buying is always the best way to buy stocks. Drip feed investments at regular intervals and if you have researched your stuff you will outperform the folks who react to greed and fear.

Many times, what seems to be a safe haven holds the biggest risks for capital losses.


Disclosure: Long TBT