Two Ways To Play: Investors Head For Higher Ground
Strengthen your portfolio in good times and bad.
Bloomberg reports the rate on 3-month T-bills dropped to the lowest levels since World War II after investors dumped higher-yielding assets for the safety of short-term government securities.
The rate dropped to 0.0203% this morning on concerns that credit market losses will be more severe after the bankruptcy of Lehman Brothers (LEH) and the Fed's takeover of AIG (AIG).
In other signs of stress, the rates charged for short-term loans relative to US bill rates jumped to the highest on record. Further, LIBOR rates jumped 19 basis points to 3.06%, the most since September 29, 1999, according to the British Bankers' Association. And finally, the TED spread jumped 84 basis points to 302 (investors use this figure as an indicator of credit risk). The increase was the largest since Bloomberg began compiling the data in 1984.
See Professor Lance Lewis' column, Why Gold Is Up $85.
From the Bull Pen: Gold's run today was the largest in history, according to Professor Lance Lewis. Investors using the gold ETF (GLD) might consider using a near term sell stop around $84.
From the Bear Cave: Will the UltraShort 20+ Year Treasury ETF (TBT) explode to the upside once this mess is sorted out? Sell stops can be set below $56.
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