03-16-09 - No place for money

My TIPS are down about 10% in the last year. All bonds fell a lot during the crash. I'm not sure exactly what the reason is, I guess corporate bonds lost value because there was a fear of defaults as people realized the ratings weren't what they were supposed to be. Also the yields have plummetted which has made them less desirable. I don't really get it though. I mean I guess even though the bonds are fixed income, the price for them is set by the market, so is prone to fluctuations of supply & demand.

Saving accounts are no good either. Here's the delightful ING reports :

Dec 30, 2008    Interest Rate Change to 2.472% (2.50% APY)
Jan 20, 2009    Interest Rate Change to 2.374% (2.40% APY)  
Feb  3, 2009    Interest Rate Change to 2.178% (2.20% APY)
Feb 18, 2009    Interest Rate Change to 1.835% (1.85% APY)  
Mar  3, 2009    Interest Rate Change to 1.638% (1.65% APY)  

Steadily plummeting to zero. Though really that's just an indicator of falling inflation. The real inflation rate is maybe something like the ING APY plus 2 or times 2 or something like that.

I think almost anything you do with your money is a loss. The reason the bank is giving you X% is because they think they can do better and make money off you. There's no free money in the world, the bank is basically investing for you and taking a big commision. Bank interest rates are almost always below inflation (the only exception is during brief periods when things haven't adjusted yet).

Anyway, since there's nowhere to save I figure I'll just invest in Hookers and Blow.


AK said...


Nathan said...
This comment has been removed by the author.
MH said...


Anyway. The clear answer is goooooooooooold bullllioooon.

cbloom said...

I already invested two years of my life in GoldBullion ;)

I could write a whole rant about Gold. I do not understand the gold valuation at all, it makes no sense to me. It seems like a bubble just like Housing was. The price is going up because people want it because the price is going up. Of course my unwillingness to play bubbles has cost me very dearly over the years so maybe I should just ignore the fact that it fundamentally makes no sense to me and jump in.

old rants