Many times just using logic an investor can steer away from problems. It seemed forever municipal bonds were considered one of the safest investments. One did not get rich by investing in municipal bonds however they were consistent and the default possibility was almost not a possibility. Fast forward to 2009 municipal bonds have to be one of the scariest investment choices. All one has to do is to look at State by State finances to be aware. California faces a $60 billion deficit, New York faces a $3.2 billion deficit and another example New Jersey faces an $8 billion structural deficit next year. If States run deficits like this why would one want to lend them money? <strong>I surely would not.</strong> One could argue if a State defaulted…then the FED would bail them out. Really who needs that aggravation and worry. We are in some extremely uncertain times. What I hear day in and day out.. <strong>What do I do with my money? Where is a safe place to put my money?</strong> The answer is to diversify. Do not have more than 5% of your assets in any idea. Even leaving money in the bank is risky due to potential inflation. Now more than ever one should consider at at least a 5% allocation to trend following a basket of commodities. Trend following strategies are liquid and transparent.When one trades commodities they are dealing in real assets. At the end of the day if the crisis worsens ( unemployment now at 10.2% in the US) trend following shines during crisis times. People still need to eat. People still need heat in their homes. People still need to put gas in their cars. The world will not end but it stands the chance of changing very much from what we have taken for granted.
Andrew Abraham
A.Abraham@AngusJackson.com
www.AJpartnersinc.com
www.myinvestorsplace.com
Futures trading involves risk. People can and do lose money