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Friday, June 12, 2009

Everything is fine

If people come up to me, and keep re-assuring me that the "water is safe to drink", I start to wonder. If the water is safe to drink, why do people feel compelled to tell me it is OK? What do they know that makes them think I should be concerned?

I keep hearing how the US Dollar and US Treasuries are safe. And I do think they are safe, my entire 401k has been in US treasuries since January 2007. I would rather have resource stocks, but my 401k has stocks or treasuries, no resource stocks.

But I keep seeing series of news blurbs of countries around the world announcing their faith in the US Dollar.
Japanese Finance Minister Says Japan’s Trust in Treasuries ‘Unshakable’

China has to keep buying US bonds

And this with the government spending at record pace, with interest rates rising:
US Budget deficit nears $1 trillion YTD, estimate 1.8 Trillion for year. NOTE: 1 Trillion YTD, expects 800 Billion bonds sold in next 3 months.

Everyone says its great to buy US Treasuries.....and I am told this over and over. Well, if it is such a great thing, why not keep it a secret and buy it yourself? After all the less people who buy US bonds causes interest rates rise, and the buyers (like Japan, China, etc) could get better interest rates.

And I am not the only one suspicious of the USD and treasuries, seeking Alpha has an article stating "Treasuries are toast".

The real motivation of all these countries talking up US Treasuries is they want MORE people to buy. Kinda like Kramer telling his viewers to buy Countrywide, DSL, etc. It gave his buddies time to reposition their portfolio.

So everything is fine. Buy stocks. Buy Treasuries. In the mean time, I'll short stocks, and look to buy more resource stocks when they go back to lower levels.

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