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Trust: Wall Street's New Watchword

By

It should be - especially in these troubled times.

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The Federal Reserve minutes leave no doubt in my mind that most of its members realize how crucial low rates are to our fragile economy. Higher rates would not only ruin the Fed's credibility, but would also destroy any hope for a recovery.

Make no mistake: If they have to choose between a weaker dollar and lower rates, they have only one way to go. We can argue about the timing and degree of dollar destruction - but you fight the Fed on rates in the near term at your own peril.

In a deflationary environment, coupon clipping is a viable strategy. In other words, if asset prices are going down, staying where you are isn't such a bad thing; anything else is gravy.

Quantitative easing is attempting to punish savers, but that doesn't mean you have to play their game. Chasing risky assets that have run 30% or more is just that: chasing.

As an institutional bond trader, I've spent the past 15 years dealing with Wall Street traders and salespeople. Most of them are very smart, relatively honest, hard-working people. Some will even be lifelong friends. And yet, after all we've been through, I'm amazed at the horribly unscrupulous way some of them still do business. For some, the fact that the recent crisis didn't have a material effect on them is almost a justification.

I hope that everyone someday realizes that trust and your word are the most important things in both business and in life. Don't reward bad behavior. Do business with people that do it the right way. There are plenty of us out there especially in our community.

For any of you newer Minyans (like me), who may have any doubts about the sincerity of the people on this site, I can assure you that you are among friends. When you go through a tragedy that affects you both personally and professionally, you find out how important friendship is. Trust me, you want Todd and the gang in your foxhole. Thanks to everyone that's reached out over the last couple months. It means more than you know.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

 

 

 

 

 

 

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