I'll be starting a thread on this on the
dc-y2k-WRP listserv too. Here's the basis for my question. I'm pretty sure that there will be problems in the big IT systems, some symptoms are the probems at the World Bank, SUN Hydraulics, MCI Worldcom, etc. It still isn't clear to me that this will tip things over to a world like "The Postman". On the other hand, I'm fairly certain that the stock market and the indices are in for some big drops. (but who knows.) I've been thinking about moving the rest of my pitiful pension savings from the stock funds to money market funds. Anyone else planning to do this? Has anyone done this? Most of my yuppie/preppie pals are still heavily invested in growth funds and Internet/technology stock. Anyone thinking about buying PUTs and LEAPS? Has anyone done this and if so, what's your strategy? Have you picked a "market will crash" date or are you making small bets month by month?

-- cory (kiyoinc@ibm.XOUT.net), August 12, 1999

Answers

cory,

You will find advice all over the board on this question. I have put my money in a "safe" Treasury note and will sit out the rest of the year. If the government default then we know we are screwed more than we are screwed now.

-- y2k dave (xsdaa111@hotmail.com), August 12, 1999.

Cory: A good suggestion is to move your money into a money market account temporarily, realizing you will be getting under 3% interest, which you'll have to pay tax on if tax is collectible in 2000, and then turn it into real green cash sometime this fall. Put most of it into a safe deposit box in your bank. Even if the banks go down, unless there is total anarchy, you will be able to access your safe deposit box.

Just in case, however, it would be a good idea to go by the bank around December 28th or so, get all your cash, take it home and sit on it for awhile. If the banks stay open and the banking system works in 2000, by February or so you can redeposit all the cash. All you will have lost is the minimal interest for a few months.

Cody

-- cody varian (cody@y2ksurvive.com), August 12, 1999.

I plan to play a few selected speculative shorts... individual issues, though, not index shorts. The tricky part is "when," not "what."

Regards,

-- Mr. Decker (kcdecker@worldnet.att.net), August 12, 1999.

Cory, I have not yet posted here but have long appreciated your contribution so I wanted to respond since this is something with which I am familiar. I previously managed money market funds and one needs to be aware that they are NOT guaranteed by anyone and that money market funds buy paper to enhance their returns vis-a-vis their competitors (as much 'risk' as they are legally allowed). There are a few instances where a fund has 'broken the buck', their assumed constant NAV, and the institution which owns the fund has bailed it out so shareholders were unaware of the occurence. If the problem were to become very large, who knows if this would continue to happen. A US Treasury fund or, better yet, a US Treasury security is a similar risk but with the ultimate credit quality. Thanks for all your efforts.

-- kate (notreal@aol.com), August 12, 1999.

Cory, not to discourage you from looking at LEAPS or garden variety puts, but keep this in mind.

I assume you are a layman in the field of finances as are 99.99% of the rest of us, including your run of the mill broker, lawyer, CFA, accountant, etc.

For us laymen, other than home ownership, the only real investment game available to us is the long-term purchase and holding of a mix of solid stocks and bonds, diversified among industry. There are many ways to achieve this. Maybe now is a good time to just sit on the sidelines and not play the game.

The layman is probably well-advised to look at options only as a hedge or protective feature. If you are willing to pay the insurance premium for a particular reason, then OK, with the knowledge that you are forfeiting your premium at the outset.

To play options for profit is a different story. It's a zero-sum game. For every winner there is a loser. Like every other endeavor on earth, there are true professionals. So, to exaggerate, put yourself in a winner-take-all race. You have everything technically necessary to start and finish the race. You have a car, your hotshot local mechanic for a pit boss and his grease monkeys for a crew. Who is going to win the race, you or Mark Martin. Tone down the example, put yourself in an IROC race with a real car and a real crew. Still, who wins, you or Mark Martin?

If you want to take a flyer on options for fun, then put things in context. Make sure it's money you can afford to lose.

Despite the fact that the sheeple are still plowing money into the stock market, the Four Star Michelin eating, Concorde flying, Saville Row tailored money managers are very, very cognizant of y2k risk. They did not become accustomed to haute cuisine/couture/transporte by losing to the likes of some retail broker, accountant or CFA (ie., your pit crew.)

-- Puddintame (achillesg@hotmail.com), August 12, 1999.

Cory,

Assuming that you pick any kind of "traditional" investment, my advice is to be very sure to read the fine print (usually in 6-point font) of the prospectus or "agreement" or whatever you have to sign in order to get your money invested. You're likely to see the familiar Y2K disclaimer, and you may find a few surprises about the manner in which you're allowed to redeem, liquidate, or otherwise get your hands on your money.

The posting immediately above mine mentioned that money market funds are not insured. In addition, the funds invest in whatever debt obligations they find attractive, including corporate bonds, county debt obligations, etc, etc. In most cases, those obligations are not insured, nor are the institutions who issue the bonds or debt obligations Y2K-compliant. So, if your money-market fund has invested heavily in DeeCee school bonds because of an attractive interest rate, there could be some interesting problems if DeeCee defaults on its bonds.

There are some mutual funds out there who invest ONLY in short-term U.S. federal notes, bills, etc. One could argue that if the federal government defaults on a 3-month debt obligation, then the whole game is truly over.

Aside from that, there is also the obvious risk that the mutual fund institution itself could have computer problems, liquidity problems, or a variety of other problems that could drive it under...

Ed

-- Ed Yourdon (HumptyDumptyY2K@yourdon.com), August 12, 1999.

Cory,

All our money is safely tied up in debt. OUR debt. If the fridge and the well pump both decide to quit at the same time we are in trouble. So much for our worrying about where to put our money!

We've gotten as far out of debt as we are going to before rollover. If need be we have fallback plans.. Places to go and things to do.

If we lose the house to foreclosure/taxes..... Could happen. If it's legit and we are given legal notice so be it. We have fall back plans. If it's a knock at the door and "Get out you, don't bother packing" Well....... I hope my family is not too close to the house when they start ransacking it.

-- Art Welling (artw@lancnews.infi.net), August 12, 1999.

kate is on the mark. Return on money market (unsecured) during a destabilizing event (y2k-induced currency plays in search of safe havens) is playing with fire.

Look Cory, let's remember the basics. Anyone in the market should be in the market for the long term. The returns from the past ten years have been more than anyone deserved. So those who wish to stay in the market are not really that foolish. A one day drop of, say 500 points, still means that the average person who has been in for the last five years can get out then with an enormous gain still realized.

If you say your retirement amount is pitiful, cash out or preserve and protect it with bonds or any insured vehicle you choose now and quit worrying about it. Or just wait for a big drop , lick your wounds, and worry about it until then. If you can't risk losing it, then get out.

There has been large recent movement within hedge funds that are interest-rate/currency-rate differentials driven. They're setting up to gamble absolutely ridiculous amounts of (unsecured) money they have leveraged (and could never repay if their guess is wrong) this fall. The difference is that they influence the market movements and pull the trigger on the timing with their "interviews" and "advisories." You control only your money.

So...control what you can and protect your money, or try to show off and open your parachute at the very last second. Is that Clint Eastwood's voice I hear? Something about "feeling lucky?"

-- PNG (Peter Gauthier) (png@gol.com), August 12, 1999.

Keep in mind that "long term" means long term, but it depends on how old you are. If you are in your mid-40's or so, and you plan to retire at 65, then "long term" is about 20 years. Do you think we'll have a depression that lasts 20 years? If so, then get out now. If you think we'll have recovered by that time, then leave it be. You can time the market if you feel lucky, but why take risks like that if you want to be truly "prepared?"

-- (long@term.goals), August 12, 1999.

Cory,

I finished moving my investments a year ago. The market is supposed to be efficient and take future events into consideration. Sure hasn't priced in Y2K yet. I guess it will take a real big visible failure.

40% money market (if liquidity goes down interest rates could spike real high.

No US Bonds - Long bond prices will go down if interest rates go up and you lose money. Bill can take your short term bond and turn it into a long term bond with the stroke of a pen - do you think he would hesitate if the treaswury has problems servicing the debt and interest rates are going up?

15% Gold mining stock - historic lows, always goes up after a market crash

15% BEARX - Prudent bear fund shorts the market. Tice knows how to do this and understands Y2K. I might want to buy some puts and I might screw it up.

20% Oppenheimer real assets (Commodities) if oil and food is in short supply, Commodities go up fast.

10% company stock - got to keep it till I quit, don't want to quit.

Good luck

p.s. Got 7 1oz gold coins, think I'll buy more tomorrow.

ng

-- ng (cantprovideemail@none.com), August 12, 1999.

Here is some good info from the Gold-Eagle forum and posted by Oswald:

========================================== Start

Some speculation on your question of how much longer before the Wall St cookie begins to crumble as prelude for POG's launch into orbit.

Crashes are usually caused by increases in interest rates, but only once the pain threshold has been breached. Consider the following:

_______________US 30 year____Dow Jones

Jan 1987_________7.37%_________2156
Sept 1987________9.76%_________2663
Increase__________32%___________23%

Oct 1998_________4.84%_________7785
Aug 1999_________6.21%________10700
Increase__________28%___________37%

We see that in 1987 a 32% increase in the yield over 9 months was needed to make people very nervous about interest rates and to establish the climate for a panic.

So far now we have have a rise of 28% in the yield over 10 months. Secondly, in 1987 the Dow was already about 10-12% below its peak value of 2 months earlier before the Panic began in the week of 16 October, with 19 October the Long Drop - a decline that was also needed to set the proper climate for a panic. At the moment the Dow is less than 5% below its high and the "buy the dips" mentality is still very much alive.

What we need in terms of history is an increase in the yield to about 6.4% (to get to about 32%) and a further decline of about 5% in die Dow to below 10200 to supply the other half of the Panic trigger. When that happens, POG will react with a vengeance!! (Pun intended!)

Perhaps soon after Friday's PPI figure?? Note that the increase in the Dow over the period of rising yields is much higher than in 1987 - that may mean the eventual collapse will be much greater than the 35% of 1987. GG!! GG!!

============================================ End I would keep a keen eye on the 30 year bond yield.

Ray

-- Ray (ray@totacc.com), August 12, 1999.

I just sent for the info on Prudent Bear Fund (bearx) www.prudentbear.com. The fund managers' views make sense to me, and the fund seems to be in a great position should the bubble burst on the Internet stocks mania. In a rising market the fund has done poorly, but should we get a "correction" it will do very well.

For safety buy short term T-bills or just get the cash. A little more lead(.223)and silver(1 oz. coins) might not be a bad idea ethier.

-- Bill (y2khippo@yahoo.com), August 12, 1999.

Decker commented:

"I plan to play a few selected speculative shorts... individual issues, though, not index shorts. The tricky part is "when," not "what."

Decker, tell us what stocks your shorting, some folks may want to go long with them!!

Ray

-- Ray (ray@totacc.com), August 12, 1999.

A few random thoughts on what can bite you and what possibly to do about it.

When there is a significant downturn virtually none of the people who thought they were 'in it for the long term' will remain in the market. This has been proven repeatedly. When people start losing capital investment (ie - what they put in vs paper profits) then they will pull out. Happened here a number of times. Happened in Japan in 1990, etc. When the going gets tough most people opt out.

Current standard measures of valuation for the markets indicate 40 to 80% overvaluation. Forget the 'new era' talk, the 'old rules don't apply anymore' chatter. We are at a massive market top with a long way to go down. You must always base investment decisions on risk to reward ratios. What is the up to downside potential. Right now this market is built on thin air. Is all downside risk.

Bonds are usually considered the alternative to stocks. It must be recognized that you can get killed in bonds as well. If you buy a 5% bond and interest rates go to 10% you are looking at a loss of 50% of your investment if you are forced to sell that bond prematurely. Conversely if you buy a bond at 10% and sell it when current rates are 5% then you will reap a 100% return on your capital investment. We are currently in a rising interst rate environment. There are several reasons for this: to much debt coming onto the market, people pulling money out of the US$ going back home (japan, china, asia, south america), liquidity needs of large firms which have been caught on the wrong side of derivative bets, nations and corporations which must liquidate bonds in order to pay off debts, etc. Add to this a growing concern of who will be able to pay off bonds when the economy turns down or slams down hard (did any one say IRS just now?).

As mentioned MM funds are not garranteed. You can lose there if the international system of currency exchange cracks open. There are alot of stresses out there you are not hearing about on the local/national news channel. What happens if the system locks tight due to systemic issues to include debt defaults, comm problems, account snafus, credit withdrawls, asteroid impacts..? "Your" money is locked tight as well. And you may never see it again.

Banks. Well, we know about banks. What we don't know is why we should trust them any more than a brokerage or other institution. They are go betweens, not productive entities. If the economy tanks they are toast because of exposure to comercial as well as consumer debt. I don't trust that combination in the future.

It looks like 'you can run but you can not hide' doesn't it?

Cash in small bills, some gold and silver, invest in productive capacity to meet basic human needs (Can you raise rabbits or chickens for sale, eggs?), barter luxury items. The most depressing thing here is really finally coping with think about another 'great depression' or worse and how you deal with that before hand.

Suppose you leave 33% in stocks, 33% in bonds and 34% in cash in a bank account. Let's say that stocks decline 50%, interest rates double (for a 50% loss in capital investment if you sell) and the bank staggers for 6 to 12 months. You can hang onto the bonds and get that 6% per annum, hang tight, fight the nausia that tells you you want to sell. The stocks won't come back for 10 years or more but you were smart enough to buy stocks which had an unbroken record of paying dividends (3% per annum on your investment). You have some income. You also have 34% of you money to plug back in after the smoke clears to ride the stocks up again and the bonds down. You split the 34% into 17% stock picks of defensive bluechips (proctor and gamble, etc) which pay dividend (now quite high compared to stock price) and 17% purchase of bonds are high rates.

You have income from the initial bond purchases, the initial stock purchases and new income from bonds and stocks bought on discount dollar store prices.

As the stocks recover you appreciate significantly/cutting loses slowly. As the bonds drop you appreciate massively on the 17% you bought high plus you have the income coming in. Not bad for a totally mindless allocation.

But my own thinking is this: 'show me'. I have pulled every last cent out of this market, out of banks, etc. Show me you deserve to have it back. It represents alot of hard labor and sacrifice on my part. I can always come back in after the smoke has cleared and buy the best of what remains at deeply discounted prices. A most I lose a few opportunities. I can deal with that compared to losing almost everything and cursing the day I was born.

-- ..- (dit@dot.dash), August 12, 1999.

That last line of my post should say, "...US Treasury security is a similar RETURN but with the ultimate credit quality".

-- kate (notreal@aol.com), August 12, 1999.

Cory, the securities markets move up and down in such a way as to deceive most investors. When the the Dow and Nasdaq begin unwinding later this year ( I will not predict "when", but it will be on a day that catches everyone off guard, it will be a mystery to the talking heads"but all the indicators were good...") investors will begin buying so called bargains. Tell your yuppie buddies not to try to catch a falling knife, until it has stopped bouncing on the floor. Suggestions? Your reporting as been immensly helpful and led many to much more conservative safe havens then you are considering. Everyone in our family cashed out of the markets. I did so years ago, my parents 18 months ago, my brother last month. Cory, your own reports have made us question all electronic promises to pay until we see what happens next year. Gold is at a 20 year low. Why not buy some Eurepeon fractional gold coins now? British Sovereigns, Kroners, etc.? Bags of $1000.00 90% silver pre-64 coins are available at good prices. The premiums are low, for now anyway. The high was 28,000.00 during that silver run up years ago, they about $4400.00 now. Hey, real money,think abouit it. Gem quality MS 65 and MS 66 coins are moving up in value about 30% in the last 18 months, with 600-800% upward movement to go based on 1989 record highs. This is what you can hold in your possession. No promises to pay. Cash,get some. And a safe. I know people will argue some of these ideas, but we all share the goal of getting our family, loved ones, and finances across this stormy channel called Y2K. Load your boat thoughtfully,prayerfully. Above all, fear God, not Y2K. Fear God, not man.

-- potent (potent308@hotmail.com), August 12, 1999.

Gawd, I can't believe that people still advocate putting your cash in a SAFE DEPOSIT BOX at a frigging BANK!!!!???!!!!!!!???!! For the 10,000th time:

W-H-A-T G-O-V-E-R-N-M-E-N-T-S C-A-N-N-O-T F-I-N-D T-H-E-Y C-AN-N-O-T S-T-E-A-L

kate: Do you like to mudwrestle?

-- King of Spain (madrid@aol.com), August 12, 1999.

King: A safety deposit box is safe enough for the time being. If the gov't puts in emergency controls on cash withdrawals, safety deposit boxes will not be included because the money is not deposited in the bank's account, it's just being stored there. Furthermore, it would be better for the economy if that money were retrieved by the owner and spent on various things, rather than having it sit locked up in a bank vault, so the gov't would want it to be used.

I think the best policy is to get out of electronic investments very soon, going from stocks and bonds to money market accounts and then from them to cash in the next couple of months, carefully watching Wall Street and the federal gov't. At the first sign of a crisis, cash in the money market funds, take the cash and stash it in a safe deposit box unless you're fully confident you can hide it at home.

Then if no bank runs occur between now and December 31st, but things get increasingly shaky (which is what I expect to happen), go get the cash sometime during the week after Christmas and take it home. After that, you're on your own.

-- cody (cody@y2ksurvive.com), August 12, 1999.

Ray,

Stop by and we'll review my brokerage records for the past few years. I'll buy the drinks. I suggest a good Spanish red with crow.

Regards,

-- Mr. Decker (kcdecker@worldnet.att.net), August 12, 1999.

If you do Ray, keep your back to the wall...

-- Andy (2000EOD@prodigy.net), August 12, 1999.

Cory,

Unless you plan on shorting the market as it crashes you should be out.

For the last few years I was in fidelity magellan making 30% a year compounded, early this year I got cold feet and transferred the 401k (all of it) to an overnight fidelitymoney market fund (you will usually have 4 or 5 funds to pick from Cory - pick a money market fund - this is the safest) earning maybe 1% - no big deal, I was happy, slept much better. Now all that money is in the prudent bear BEARX (just went up from 3.97 to 4.30 - not bad), I will also be getting into USPIX and buying more physical gold - if I can afford it I will buy individual gold mining shares too (may never see the money again but what the hey!)...

At any rate, unless Clinton imposes currency withdrawl limits (I've heard a rumour of September but that seems way too premature) I will cash out completely before rollover. Various ways to do this.

Finally on no account get a bank safety deposit box - these will be frozen by the gubbmint if there are bank holidays.

Cody - when banks shut their doors - THEY SHUT THEIR DOORS - PERIOD... there's no popping down the road and politely knocking on the dor saying please let me in, I want my money... for a start there may be hundreds of people in line (ha! it will be a seething mob) before you, and even if they let you in would you want to walk out with your stash through all these angry people who've lost their life savings???

no way san jose

-- Andy (2000EOD@prodigy.net), August 12, 1999.

Mr. Decker, your kind of greed and stupidity is what has gotten us in to this mess in the first place. You seem to think that by sitting on your ass and watching your portfolio magically rise to the heavens you've performed some sort of academic miracle. You are living in a fantasy. It has already been shown that a group of monkeys randomly throwing darts at the wall can come up with better stock picks than a lot of brokers. The real reason you and your "bubble buddies" have prospered is explained in my thread "Y2K Economics for Decker", which after half a dozen requests, you have still refused to address.

We will see how kindly your type of "intellectual capital" is regarded after the fall.

-- a (a@a.a), August 12, 1999.

KOS, You are exactly correct! What our guvment' don't know, they can't take....

Cody, Not sure how old you are or what you know about the bank crashes in 29' but, EVERYTHING that was in a safe-deposit box was taken by our guvment' and not returned or even looked into being returned until the early 80's. According to a news artilce that appeared in my local rag about this, items as large as "small oriental rugs to items as small as coins" were taken during the crash. The guvment', as it is, has every incentive to "take" as much as they feel necessary in the event of a national emergency, to keep things afloat. Dont' think it can't happen again. I worked for 10 years at the largest bank in my state and can assure you we had the means of getting into your safey deposit box if need be. My advice is to NOT place any item that you will eventually want back in a safe- deposit box unless you can precisely time when that bank may fold and take with it your valuables.

Don

-- don (mrmtgman@aol.com), August 12, 1999.

Cory,

This is not an investment recommendation, but this is what I am doing with some of the money that I can "afford to lose".

I have chosen to use put options on the Dow Jones Industrial Average.

DJIA options are collectively termed DJX options and have "strike prices" of one percent of the DJIA. So, for example, a DJX option with a strike price of 110 would equate to a DJIA of 11,000. The ticker symbols of these options have five letters, but in some quote systems, one needs to precede the ticker symbol with a dot, as in .DJVML , in order to indicate that it is an option and not an equity.

Key questions: by when will the market drop, and by how much?

The answers: real soon now, and a whole bunch, are not good enough.

So, I plan to take a couple of guesses regarding the when, and I am guessing "more than 20%" for the how much.

As long as the anticipated market move occcurs before the expiration date of the option contract, the contract appreciates. These options expire the Saturday after the third Friday of the expiration month; in effect, they expire at the market close the third Friday. Often, one would sell before expiration; but if not, and if it expires "in the money", then you get the money.

In recent days, DJVML contracts could be had for $225 to $275 per contract plus brokerage fees. DJVML options expire in January 2000 and have a strike price of 90. If the market does not drop a bunch, this contract will become absolutely worthless in five months!

In another few months, if the market is still up, I expect to buy March 2000 contracts, perhaps, for example, DJVOL.

By waiting a few months, and if the market continues rising, I may be able to get March contracts with a higher strike price at a lower cost.

Meanwhile, if the market tanks, the contracts that I have bought will appreciate. If the market tanks so much that options trading breaks down before I get out, my investment will become moot. (You will forgive me for continually bringing up the fact that there are risky aspects to this stuff.)

Again, this is not a recommendation for anyone to follow; it is just one person's approach to a tricky situation.

You can follow DJX options at:

http://quote.cboe.com/QuoteTableDownload.htm

Enter DJX in the entry field and press the download button, etc.

If you download the DJX info, you will see, among other things, three sets of December options. The first is for December 1999, the second is for December 2000, and the third is for December 2001. A new set of the info is available each trading day, and includes prices on about 160-170 DJX options. Sometimes that site is very busy right after market close, so I wait an hour or so before trying to do the download.

4. Here is what an entry looks like (this is from July 8 when the DJIA closed at about 11,127):

Mar 90 (DJV CL-E),24 3/4,pc,25 3/8,26 1/8,0,200,Mar 90 (DJV OL-E),2 1/8,pc,2 3/16,2 9/16,0,12164,

The Mar 90 (DJV CL-E),24 3/4,pc,25 3/8,26 1/8,0,200 part on the left is a call, and the Mar 90 (DJV OL-E),2 1/8,pc,2 3/16,2 9/16,0,12164 part on the right is a put. The parts in ( ) contain the symbols. Throw away the blank and the -E, and for the put you get DJVOL.

Parsing the put info: the Mar is the month that contract expires. The 90 is the "strike price", in this case meaning that that contract will be "in the money" if the DJIA gets below 9,000. The 2 1/8 is the last price at which it traded. The pc means it did not trade yesterday (if it had traded yesterday, that space would have shown the difference since the previous closing price). The 2 3/16 was the closing bid, and 2 9/16 was the closing ask. When you buy, you pay the ask times 100, when you sell, you get the bid times 100 (in both cases you get to pay broker fees). The 0 is the volume, the number of that contract that traded yesterday. The 12164 is the "open interest", i.e. the number of DJVOL contracts that existed as of the previous close.

Here is the corresponding info from June 8 when the DJIA closed at about 10,765:

Mar 90 (DJV CL-E),24 3/4,pc,23 3/8,24 1/8,0,200,Mar 90 (DJV OL-E),4,pc,3 5/8,4 1/8,0,12092,

Here is the corresponding info from August 11 when the DJIA closed at about 10,788:

Mar 90 (DJV CL-E),24 3/4,pc,22 3/8,23 3/8,0,200,Mar 90 (DJV OL-E),3 3/4,pc,3,3 3/8,0,17141,

Things change, sometimes slowly, sometimes quickly.

Questions?

Jerry

P.S. Options gains and losses are treated as long term by the IRS when last I looked.

-- Jerry B (skeptic76@erols.com), August 12, 1999.

Correction: In the paragraph on parsing the info, the word "yesterday" should have been something like "that trading day".

Jerry

-- Jerry B (skeptic76@erols.com), August 12, 1999.

Andy: I live in a very small rural town. The bank is locally owned and operated and all the employees are folks who live within a few miles of here. I have spoken with the bank manager, whom I know well, who has told me that no matter what happens, short of troops stationed at the front door, he will open up to let me get to my safety deposit box.

However, at the first sign of trouble I plan to go immediately to the bank and clean out the safety deposit box, just in case. Your comments?

-- cody (cody@inna.net), August 12, 1999.

Don: I'm old enough to remember a time when the public schools were safe, when parents and adults in general were respected, when people actually looked up to political figures, and when you could buy a Coke for a nickel. I'm not old enough to have lived during the Great Depression but I have read a fair amount about it.

I am not aware that the gov't confiscated the private property in people's safe deposit boxes, since it was not part of a bank's assets. Are you quite sure about this? I would think I would have run across this information long ago. The gov't respected individual rights far more in the thirties than it does now so I'm surprised such confiscation could take place then.

I'm sure the bank has the means to get into my safety deposit box if it wants to, but until a crisis approaches, there is no reason to do this so I think the box is fairly secure for the time being. I'm constantly watching for things to change in a way that would alarm the gov't and will clean out the box at the first sign of trouble. The alternative is to hide whatever I have at home and as long as things are calm in the economy, I think it's safer in the bank vault.

Your comments are welcome.

-- cody (cody@y2ksurvive.com), August 12, 1999.

Cody,

You sound like you might be in your 40's as I am. I too, remember those "good times" and have tried to bring up my own children in the same manner. Except the nickel cokes, of course! Am very sure of my facts about the confiscation, however. My grandfather told me this happened and until I came across a front-page article in my paper shortly thereafter, I don't think I would have beleived it. He lost several items from his box and was very distrustful of banks thereafter.

If you do decide to leave things where they are, I would watch things carefully. If the economy begins to tank, and it will, get it out fast.

Best Wishes,

Don

-- don (mrmtgman@aol.com), August 12, 1999.

Top News

Thu, 12 Aug 1999, 5:42pm EDT

Treasury Bonds Fall as 30-Yr Sale Disappoints Some; Dollar Little Changed

New York, August 12 (Bloomberg) -- U.S. bonds fell for the fourth time in five days as a $10 billion, 30-year Treasury sale drew less demand than some traders expected, and economic reports fueled concerns the Federal Reserve will raise interest rates.

``It's probably premature to get in'' and buy Treasuries, said Harvey Hirschhorn, who helps oversee $30 billion at Stein Roe & Farnham Inc. in Chicago. ``This is still an uneasy period.'' Stein Roe favors corporate and other debt that offers higher yields than Treasuries.

The outstanding bond, sold in February, fell 5/8, or $6.25 per $1,000 face amount, to a price of 86 13/32. Its yield climbed 6 basis points to 6.27 percent, matching a 21-month high reached yesterday.

The dollar traded at 115.49 yen from 115.39 in late New York trading yesterday. It earlier rose as high as 116.06 yen, for its fifth gain in six days against the yen. The dollar was at $1.0669 per euro, from $1.0658 yesterday, only the second time in 10 days it slipped against the euro.

The Dow Jones Industrial Average rose 1.59 to 10.789.39. The Standard & Poor's 500 Index fell 3.77 to 1298.16, and the Nasdaq Composite Index slipped 15.48 to 2549.50.

Bonds

Today's auction wrapped up the Treasury's $37 billion quarterly debt sale, filling investor portfolios and dealer inventories. The new 30-year bond sold with a yield of 6.144 percent and rose to 6.19 percent by late afternoon.

Bonds may have a tough time recouping losses in coming days as the government releases its producer price index tomorrow and consumer price index on Tuesday -- two closely watched inflation gauges.

Analysts say recent economic reports showing strong growth in jobs, income, home and vehicle sales has already heightened concern about inflation and the probability that the Fed will raise interest rates at its Aug. 24 meeting. That would spell higher yields for Treasuries, too.

``I don't think we're out of the woods yet,'' said Bruce Alston, who invests $1.5 billion of fixed-income securities at Value Line Asset Management. He says the bond yield could rise to 6.375 percent by the Fed meeting, and he's opting for the higher yields available on agency securities.

Benchmark Treasury bonds are down 12.2 percent so far this year, reflecting price declines and reinvested interest payments.

Meantime, the Chicago Board of Trade closed trading early following a power outage in Chicago, and that may have brought selling to the cash market from trading firms that would have otherwise sold futures, analysts said.

Reports today showed retail sales climbed 0.7 percent in July, above expectations for a 0.4 percent gain, while the Federal Reserve Bank of Atlanta said activity at Southeastern U.S. factories picked up.

``The economy is still rolling along,'' said Ken Anderson, the manager of $35 billion in fixed income securities at Evergreen Asset Management Corp. in Purchase, New York. ``It's hard to be positive'' on bonds. He's investing in money market debt, the safest fixed-income securities.

The Fed already increased its target for overnight bank lending -- the federal funds rate -- by 25 basis points in June to cool the economy and head off inflation.

Fed funds futures suggest a large camp of investors expect a rate rise later this month. The implied yield on the futures contract for September delivery is 5.25 percent, 25 basis points higher than the current fed funds target.

The implied yield on the October contract, at 5.34 percent, signals a rate increase is all but certain -- if not in August then at the Fed's following meeting Oct. 5.

At today's yield of 6.08 percent, the new U.S. 10-year notes sold yesterday yield 426 basis points more than the 1.82 percent yield on the most current 10-year Japanese bond. The new notes yield 118 basis points more than the 4.90 percent yield on 10- year German bonds.

About $39.4 billion of bills, notes and bonds traded through most of the major bond brokers by 3 p.m. New York time, 45.4 percent less than the average Thursday in the third quarter of 1998 and 17.6 percent less than the average Thursday in the past month, according to GovPx Inc., which supplies information on Treasury prices and trading.

The basis, which reflects the difference between the current 30-year bond and the September futures contract adjusted for a conversion factor, was 9/32 lower at 254/32, or 7 30/32 points.

Yields on three-month bills fell 10 basis points to 4.77 percent. Yields on six-month bills fell 2 basis points to 5.08 percent, while one-year yields rose 2 basis points to 5.21 percent.

Dollar

The dollar pared gains against the yen and euro, falling along with stocks and bonds. ``The dollar has definitely been following the asset markets,'' said John Beerling, chief trader at Norwest Bank in Minneapolis. With stocks off their highs for the day and bonds declining, that's ``dragging the dollar down.''

Speculation the economy is expanding quickly enough to warrant at least one interest rate increase has hurt bonds and stocks in recent weeks, dimming demand for the dollars needed to buy those securities. That's outweighing the potential benefits to dollar deposits from higher rates.

The dollar rose earlier on optimism U.S. stocks would extend yesterday's rally. The gains continued after the report on retail sales eased concern the Federal Reserve will have to raise interest rates more than once in coming months to quell inflation.

While the increase in July sales surpassed expectations, a tamer-than-predicted jump when excluding auto sales provided some relief, traders and analysts said. The dollar had gotten a boost since yesterday on continued strength in stocks.

Retail sales rose 0.7 percent in July, a larger increase than the 0.4 percent jump forecast in a Bloomberg News survey of economists. Excluding autos, sales rose 0.3 percent, less than the 0.4 percent increase expected.

Traders have turned their focus on tomorrow's release of the July producer price index for further clues on whether inflation is picking up. The index likely rose 0.3 percent last month, after a 0.1 percent decline in June, according to a Bloomberg News survey.

-- (just@helping.out), August 12, 1999.

OK Cody, that'll work for me, you know the manager and he'll do you a favour ... I still see problems with this scenraio (i.e. other townsfolk get wind of this, you and he won't be too popular will you ITSHTF... and others)...

my point is newbies might read your advice and take it as gospel - that's all...

all the best whatever you do (me - no bank, no way)

-- Andy (2000EOD@prodigy.net), August 12, 1999.

Speaking of Safe Deposit Boxes.....

My bank was just purchased by Southtrust Bank. (Doesn't give me a warm fuzzy feeling!) In my "welcome" statement was a pamphlet called "Safe Deposit Box Agreement."

Some interesting tidbits:

5. Use of Box: The Lessee agrees not to use the Box or permit the Box to be used for any purpose other than the storage of securities, other papers, coins, precious metals and jewelry. (Does other papers include paper dollars??) The Lessee will not use or permit the Box to be used for storage of any property of any illegal, explosive, corrosive, dangerous, or offensive nature, or which may become a nuisance to the vault or any of its tenants. Any breach of the provisions of the foregoing sentence will give the Bank the absolute right to terminate the Agreement immediately, and to enter the Box forcibly at once.

But THIS is the one that "gets" me!

6. Liability of Bank: The Bank will not be liable or responsible for any damage whatsoever to the contents of the box caused by humidity, aridity, heat, cold, fire, flood, water seepage, sprinkler damage, or corrosive, noxious, or explosive items or materials; the Lessee assumes all such risks. (Then WHY am I paying you to "protect" my stuff?) The liability and duty of the Bank in respect to property deposited in the Box is limited to ordinary care in the performance by employees and officers of the Bank of their duties, and will consist of (a) keeping the Box in the vault where located when this Agreement is entered into, or in one of similar specifications (which may be located at a different address from the original Box), the door of which vault will be locked at all times except when an officer or employee is in attendance in the office where the Box is located, and (b) allowing no persons access to the Box except the Lessee or an authorized deputy or attorney-in- fact of the Lessee (identification by signature alone being sufficient), and his, her or their legal representatives in case of death, insolvency, incompetency or other disability of the Lessee. Proof of partial or total loss of contents of the Box will create no presumption of an unauthorized opening. (I'm not putting MY cash in there! In fact, maybe I'll just terminate my agreement for the box!)

-- Gayla (privacy@please.com), August 12, 1999.

Cory,

I sold my house and am currently putting the equity into a pleasant place amongst trusted neighbors and friends in a rural area (small but debt free). It really is amazing how much you can spend on rice, beans, cisterns, seeds and tools.

I recently closed out my 'pitiful pension' (IRA mutual funds) and took the early disbursement. I will owe a 10% penalty on this if I don't roll it over in 60 days.

I have also bought some gold and hold it physically (about 10% of my portfolio).

In short, I am *OUT* of the stock, bond and money market racket. I expect to loose some interest and endure the laughter of friends when the market goes to 15,000 in early Feb. of 2000. Meanshile I am sleeping very well.

Berry

-- Berry Picker (BerryPicking@yahoo.com), August 12, 1999.

a,

Sounds like the wine *you* drink is pressed from sour grapes.

-- Connoisseur (sniff@sip.org), August 13, 1999.