Saturday, April 11, 2015

The Power of Obviously

March 31, 2015
Stocks' highs can lead to financial fraud — and mental stress

Obviously, there will come a time when interest rates start to rise.

Since it is obvious to all market participants that long-term rates will go up, then obviously no market participants currently own long-term treasuries. What? You say some market participants do own long-term treasuries? Impossible I say! That's insane!

And, when rates do go up, it will bring another level of risk to investors and savers.

Since it is obvious to all that savers were hurt by falling interest rates, then it must also be obvious to all that savers will be hurt by rising interest rates. Obvious! Savers must be hurt no matter what rates do! That's what makes savers so stupid, obviously.

Investors who decided to avoid the stock market and put money to work in long-term bonds will be in for a shock as rates rise and market values of the debt securities decline.

I will be in for a shock? I just assumed that since I bought long-term bonds with intent to hold to maturity that nothing much would change for me. I could sleep right through it. In fact, I'd sleep even better if rates would rise so that I could reinvest the proceeds on better terms. It would be a pleasant surprise. I also kind of assumed that those who bought stocks on margin might not be nearly as restful as me if such an event played out. Silly me.

How much they decline will be determined by the amount interest rates decline.

Bond values don't decline when interest rates decline. Obviously, he meant to say "interest rates rise" instead. Since he is an "executive editor", I must ask the obvious questions.

1. How many executive editors does it take to spot the error?
2. How much value does an executive editor add over that of a regular editor?
3. Should I trust the financial advice of an executive editor?
4. How about one prone to errors?

I walked into this "fraud" link expecting great things. Obviously, the content did not do the title justice though. Big shocker.

In my opinion, fraud thrives best when things seem obvious but aren't. You know, like house prices are obviously going up so it is obviously impossible to lose money in real estate. That had fraud written all over it.


Stagflationary Mark said...

The Logic of Moving to China

1. Obviously, there will come a time the volcano inside of Yellowstone National Park will erupt.

2. Obviously, you won't want to be in the USA when it does.

3. Obviously, you can't wait until the last possible minute to leave.

4. Obviously, China is a long way away.

5. Obviously, China will be the growth engine of the future.

6. Obviously, there are a lot of empty newly constructed cities in China you could be living in.

7. Obviously, there are plenty of factory jobs there to employ you.

8. Obviously, people love it in China. A billion people can't be wrong!

Please come to my free Chinese Time Share event coming soon to a Holiday Inn near you! Free cookies! Free drinks! Once in a lifetime opportunity! Bring a friend and you could win up to $50 at the door!

mab said...

Alright, the jokes over. Enough! Can we have our Constitution back?

Stagflationary Mark said...


Constitution Gag

The gag usually ends with Lucy pointing out to Charlie Brown that he should not have trusted her.