Flat-Line or Decline?

16 Oct Flat-Line or Decline?

The economy is starting to settle down, the bull market is over however that is not completely a bad thing. Even though there isn’t a very aggressive growth in the U.S. economy that doesn’t mean that there is a total flat line in the market, does it? In fact this doesn’t even exclude the possibility of further decline in the market.

The current price for Three-Month Treasury Bills is currently priced at 0.00%.But what does this even mean, and how does this affect you? Well basically these bonds sell at a discount, $99.80 per $100 value, and then reach maturity at $100, and the holder receives the difference between the purchase price of the security and what you get at maturity. This makes Treasury bills very popular due to their short-term maturity and simplicity. However these are currently priced at zero, which basically means investors earned exactly zero dollars on their investment. The highest yield in the last few months was about 0.10% in August, this shows that there is not much hope for improvement in the near future for these government bonds.

Not making matters any better, recently information was released revealing why the Fed and the U.S. government didn’t bail out Lehman Brothers, they just didn’t have the money. Former Fed chair Ben Bernanke stated that he and then-Treasury Secretary Henry Paulson, decided not to reveal this information to the public due to the fact that if it was common knowledge that the government didn’t have the funds to bail out the investment bank, there could have been mass panic capable of bringing down the financial system.

One can easily gather that with the recent patterns in the U.S. financial system, coupled with the secrecy and blatant lack of resources, that there is not much hope to be placed with the U.S. market if you’re expecting any sort of profit or security. So why wait for the market to make the first move? Contact your registered investment advisor and be prepared for whatever the future may hold, and whatever the government ins’t telling you.