Saturday, January 5, 2013

Exponential Trend of the Day

Click to enlarge.

Hey! I actually found an exponential trend chart that hasn't ended in abject failure yet. Although we did get a bit ahead of ourselves in recent years, we're pretty much right on trend!

This is why professional money managers are no doubt paid the big bucks. Sure, as retail investors we could park the money directly in money funds ourselves. Or better still we could also just buy short-term treasury bills directly from the government and hold to maturity. At least there aren't any fees! That would cut out the parasitic institutional middle man though. Where's the fun in that?

Money Market Funds - Risks and Benefits

Why Would I Use Money Market Funds?

Investors who want a decent return from a relatively safe investment use money market funds.

Decent return? Relatively safe? Seriously?

The investments are typically liquid, meaning you can usually get your money out within a few business days.

And do what with it? Buy stocks AFTER they have doubled yet again? Seriously?

You can also take advantage of rising interest rates by keeping your money in an investment that will adjust to the markets.

Take advantage of rising interest rates? Seriously?

See Also:
Weighing the Consequences of a Money Fund Overhaul

Source Data:
St. Louis Fed: Custom Chart


Fritz_O said...

Um, help a slow learner to understand something...

When that chart goes up rapidly, it's a bad thing for the little people, right?

When that chart goes up slowly, or even goes down, that's a good thing for the little people, right?

And, at the present time, the little people seem to be starting to "get it"?

Thanks a ton, in advance. ;/

Stagflationary Mark said...


I would answer your questions with yes, yes, and yes.

That's only a 1 in 8 chance! Amazing coincidence!

Hold on. Were those rhetorical questions? ;)

Fatboy said...

The cardiac arrest video is kind of spooky

Fritz_O said...

Were those rhetorical questions?

No, they really weren't. I don't fully understand what the chart is saying to me.

I can understand why people rushed to MMF's from late 2007 to 2009, that's the second steep hillclimb, I believe. But the timing of the first climb puzzles me. It is well after the dotCON bear market actually when the stock market was bottoming out.

It seems to represent a reluctance to invest in the stock market but it's so late in coming after the dotCON bust. Not that the investing masses are on top of things, you know. ;)

Of course, all this is assuming that the sharp climbs represent the little guys moving money from stocks to MMF's at an accelerated rate due to fear, lack of faith in stocks, and so on.

dd said...

The chart is saying there is no where to hide if you're stuck in a traditional 401k what with the war against money market funds.

Luke Smith said...

Reminds me of something Chris Whalen said a few years back. Video begins at 7:15.

"Everything is short-term, everything is ephemeral"

Stagflationary Mark said...


Spooky works. Keep in mind that I'm a fan of Lovecraft.

Stagflationary Mark said...

Fritz_O & dd,

I think dd managed to sum up the chart far better than I did.

Some of the recent weakness in the chart could even be 401ks being converted to IRAs.

For example, my IRA holds one self-managed long-term TIPS bond. That's clearly not possible in a 401k, if for no other reason that it would be harder to hide excessive fund expense fees. ;)

Stagflationary Mark said...

Luke Smith,

Very interesting video! I shall watch it all at some point in the near future.

Stagflationary Mark said...

Speaking of spooky, Mish has a must read post today.

Startling Look at Employment Demographics by Age Group: Spotlight on Age 25-54

This plunge in employment in the prime working age group of 25-54 is irrefutable proof that the drop in employment and the falling participation rate is not based on aging boomer demographics.

Won't see me try to refute it. Sigh.

Fritz_O said...

I think dd managed to sum up the chart far better than I did.

I agree. Without dd's simplistic yet affirmed analysis I would not have found the answer(s) I was looking for.

It makes me wonder if privatization of SS is really a good idea. I mean, is abusing public institutions for private profit a good idea? Or is it an act of preying or plundering?

CONservative capitalist eCONomic society?

Stagflationary Mark said...


I mean, is abusing public institutions for private profit a good idea? Or is it an act of preying or plundering?

You and your almost rhetorical questions! ;)