G&G Associates Tax & Financial Consulting
The Writing is On the Wall
Imhotep (Wisdom To You) G&G Readers,
I have been out of town for the past couple of days and I’m still trying to play catch up. Wanted to pass the warning sign along to you which goes along with what I have been writing to you for months. In short…get your damn money out of fixed assets or you pay or in this case lose big.
The writing is on the wall…but do you know how to read it?
What’s happening…rising interest rates are destroying bond funds, including the world's largest mutual fund – Bill Gross' PIMCO Total Return Fund. The $250 billion fund fell 3% in the 30 days through December 8. The only bond fund that underperformed PIMCO over the same period..?
The Vanguard Inflation-Protected Securities Fund, which fell 3.9%. Did someone say ultra safe Vanguard…?
So rising interest rates are killing bond funds... We're seeing inflation. But the funds designed to profit during inflation, Treasury Inflation-Protected Securities (TIPS), are performing worse than normal bonds. TIPS' principal are supposed to increase with inflation and decrease with deflation. But that's not happening...Why? Because TIPS are a joke for two reasons...
1) TIPS are fundamentally flawed. Investors buy them for protection against a money-printing government. But with each dollar the U.S. government prints, the likelihood it will repay those debts decreases. It's like the government is saying, "Hey, we'll pay you back if you buy Treasurys, but we'll really pay you back if you buy TIPS." In both cases, the issuer is the same.
2) TIPS follow the Consumer Price Index (CPI), which tracks the prices of a basket of goods and services… But the very government that promises to pay out in the case of inflation is the one controlling the CPI numbers. And we don't know where they're getting the info... The CRB Ag index (CRBA) is up 18% the past 12 months. The U.S. Oil Index (USO) is up 6% the last 12 months. Yet the CPI is only up 1.2% in the past 12 months.
Could the Government be lying to us…NOOOO…they wouldn’t do that now!
At the exact time TIPS should be soaring (prices are rising, and interest rates are soaring), they're getting crushed.
With the falling dollar and the explosion in gold, silver, oil and other natural resource prices, you need to stay on top of your game and manage your “OWN Finances.”
Become a GGIS subscriber now and you’ll be sure that we make sure you stay on top of your Tax and Financial Future to make sure your BUSINESS … AT HOME is protected. Remember…most people look after their bosses business, but fail to look after their own business at home.
Take advantage of our 2010 discount lifetime subscription offer if you are not yet a member of the GGIS paid newsletter service and you’ll be on your way to knowing how to protect your portfolio...at least what’s left of it. I’ll keep you informed on the “REAL DEAL” in our economy so you can protect your wealth. So....Sign up today before the price increases in 2011.
To become a member of the G&G Investment Society newsletter subscription, send an e-mail to GGIS@gngassoc.com and/or visit our website at www.gngassociates.net and click on the “Products & Services” link and we’ll get you signed up right away.
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Until the next time,
Ankh Uja Snb (Life, Health, Strength),
Asar Gary Gray
Tax & Financial Consultant, RFC
866-361-3872 toll free fax
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P.S. If you're not a GGIS Paid Subscriber reader yet, it's not a bad way to start the year. The recent dollar rally has actually given everyone some new opportunities to invest on the cheap. And currently, our GGIS portfolio is packed with great plays to kick-start your "anti-dollar" portfolio for 2010.
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LEGAL NOTICE: This work is based on SEC filings, current events, interviews, corporate press releases and what I've learned as a financial consultant. Nothing herein should be considered personalized investment advice. It may contain errors and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.