Thursday, April 17, 2008

Cash Rates are Terrible and So Are U.S. Treasury Yields: Time to Buy Stocks?

Well money market rates are officially pathetic right now. According to Bank Deals 4.0% APY is about as good as you can get and most places yields are much lower. Pretty soon I bet 3.0% is the high. Going out to long term US treasuries isn't too appealing either with the 10-year yielding a pathetic 3.7%. This basically tells me that there has been a flight to quality (i.e. panic). My plan is to take a long-term view and move towards being more fully invested in some much riskier assets now that we have had a nice correction across both the credit and equity markets. I will look at lots of international equity mutual funds. I may even look at some retail and financial specific sector funds since those secotrs have both been hammered. I am also considering looking at an inverse long-term US treasury bond fund or ETF to take advantage of what I view as unsustainably low yields on US treasuries. When I finally make some moves I will be sure to let you know what I did. They will probably be gradual over the next 3-9 months. Anyone else have any thoughts on where to put capital now? Leave them in the comments.

1 comment:

Matty at Experts on Credit said...

I'm actually trying to figure that out now. I look forward to seeing how things pan out for you over the next few months.