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Author: jackcrow Big gold star, 5000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35367  
Subject: Re: TIPS, CDs, Inflation (again) Date: 4/1/2009 11:31 AM
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Loki,

Savings accounts are an investments strategy
CD ladders are an investments strategy
Treasury ladders are an investment strategy
Corporate bond buying/holding/trading is an investment strategy

To limit discussions to merely what a few define as safe and sane does for more harm then good. Safety and power are found in information.

No one has to do anything suggested by anyone. What would be truly horrible is not doing anything because you don't know anything or doing something even though you don't know anything about the move.

I would hope you know buy know that I'm no chicken little and I know you are aware of how far the US financial/monetary system is stretched. Compound that with very similar stress applied world wide. The weakest systems will fail and apply even greater stress to the world system before we muddle our way through.

It is paramount that we look at all forms of bonds and fixed income investing in light of our own personal needs/wants and the current world economic situation. High inflation can chew up and spit out savings accounts and CD ladders constructed under other conditions. FDIC doesn't insure against inflation.

Does this mean we junk the tried and true methods? No. Does this mean it is reasonable to take a good hard look at other means of meeting our needs/wants? Absolutely

If only a few of the lurkers drop by and find an idea that makes sense to them and that they can put to good use we have done something more than blather on about ways and means and risk. Maybe someone's hairbrained scheme is exactly what drives an investor too something "safer" or more understandable to them. Or maybe someone leaves the fear of investing in bonds, instilled by professionals with a vested interest, behind because they no longer fear the unknown.

The qualifier on all advice is that you can always take it or leave it.

Diversity is far more stabilizing then mono-chromatic thinking. Its lemming following that helped get us to this mess we are in. Continuing to follow the lemmings is most likely to lead us to a small step with a big drop.

The burning question for all investors, fixed income, bond holders, bond traders, equity holders and equity traders is "What works for me?" The sellers of all these vehicles cannot be depended on to have our best interests at heart.

What are our current and future financial needs?
How much do I have to invest to meet those needs?
How much risk do I have to take on to meet those needs?
What vehicles or combination of vehicles are likely to give me the returns I need?
Am I willing to take on that kind of risk?
Are there ways that I can understand that mitigate that risk?
Do I need to revise my current or future plans because I am unwilling to take on those risks?
Do I need to revise my current or future plans because I don't understand how to mitigate those risks?

All these basic questions need full freedom to run.

Hairbrained schemes need to be held up to a mirror.
Solid schemes need to be held under intense lights until as many people as possible understand the strengths and weaknesses of the scheme.

Hiding our heads in FDIC insured sand may be pure folly for far too many.

jack
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