Monday, February 17th, 2020  |  4:59 PM

A Conservative Newspaper Promoting,
Life, Liberty, and the Pursuit of Happiness

Subscribe Now: Get your own copy of The US Journal

Money Market Mischief: Look under the hood and find out what you really own

Written By: Tom Hankes  |  Posted: Thursday, July 21st, 2011

Money Market Mischief Chart          The warning goes like this:  Any investment can lose money (except money market funds because all they are is cash, right?).  Well, maybe.  My son, Brian, took a job with a company in Phoenix.  Like most companies, his employer offered a 401K plan and there were approximately 20 options from which to choose, a pretty typical range offered by an employer sponsored 401K.   He asked me to take a look and find the safest option for him.  I had a pretty good idea what to expect so I wasn't surprised by what I found.

          The company offered a number of mutual fund options. I focused on an investment called "The Prudential Stable Value Fund" and thought: "hmmm, this sounds acceptable". The investment objective is described as: "… designed to provide plan participants with safety of principal and competitive, stable, and guaranteed returns".  The next piece is a chart which broke down the components of the fund.  None of the components of this fund impressed me as being particularly safe.  35% of the fund is "Commercial Mortgage Backed Securities" - isn't that one of the packaged deals that got us in trouble in 2008?  Corporate bonds - in healthy economic times these are probably fine, but in the Great Depression, many of these issues went to zero as the companies defaulted.  They simply ran out of cash as deflation and therefore shriveling product demand and sales took a horrible toll on corporate America's profits.  The last major category is described as US Government Agency paper.   Let's see; wouldn't that be something like a Fannie Mae security, which is nothing more than a ward of the State (read:  wards of American taxpayer; the stock is 34 cents, which should tell you something).  I couldn't put my hands on more detail, but what I saw wasn't very comforting.

Sign into your account to read the rest of this article. »

Share this on Twitter  |  Share this on Facebook  |  Email to a friend.  |  Contact the editor.

What are your thoughts?

Want to read more of this article?

You must be a subscriber to read entire articles.

Gain 24/7 access to all the content on this website by becoming a subscriber.
Choose your subscription plan and get full access in minutes. Subscribe now. »

If you are already a subscriber, sign in now to read more full articles.

More Business News

Subsidies Galore: Corporate Welfare

Gold Backed Currency?

Go For The GOLD!

Poor CEO Demands Raise Because He Can Only Afford $20M Vacation Home

What the Millennials Believe About the Future of Capitalism is Terrifying

Inflation is Coming

Why is Profit So Important?

End of Malls will not make Shopping any Better

Elderly - Get Out of Stocks and Mutual Funds

Thinking Outside the College Box