Galt Stock

Independent Investment Research for IRA’s and 401K’s

Nov. 26, 2008

News from the capital is good, but gives us a warning.  Treasury prices plunged on Monday.  The 10-year note plunged 24 basis points to 3.10%.  The 2-year, 10-year and 30-year government bonds recorded their lowest yields since the Fed started keeping records in 1962!  If you have a contrarian bone in your body, what does this tell you?  Bubbles always burst, if you own treasuries you might want to sell them and avoid the rush.  When the market you are in is so extreme to break records going back over 45 years, you should expect it to revert to the mean. The market will not only revert to the mean but it will probably overshoot to the other extreme.  With all the ‘flation going on, I predict a rapid increase in interest rates that will leave treasury owners holding the bag with certificates worth less than face value.  Of course, you can hold them to maturity, but after the affects of inflation, your returned capital’s purchasing power will be seriously damaged.  Buyers beware.  You can get better returns with many stocks that pay dividends that are comparatively safe, provide inflation protection as they raise their prices, and possible capital gains. 

We are off to Grandmothers for Thanksgiving, shopping and the KU vs. MU game.  See you Monday. 

WARNING:    The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it’s your money.  If you lose it, it’s your responsibility, not ours or your grandmothers!  The editor may or u amay not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.