Whiskey and Gunpowder:
Market participants have so successfully been conditioned to believe in state bonds as safe assets that when some sovereigns go into fiscal meltdown it only serves as reason to buy even more bonds of the sovereigns that are still standing, even though their fiscal outlook isn’t much better. While the fate of Greek and Italian bonds should have cast serious doubt over the long-term prospect for Bunds, Gilts and Treasuries, it only propelled them to new all-time highs. Strange world.
Well after the 2008 crash began, but well before it ended, I transferred a large percentage of my Roth IRA savings into TIPS. At the time it seemed to me that actions taken by our government would eventually, though not immediately, prove inflationary while my immediate concern was capital preservation. TIPS seemed to cover both concerns.
It is clear now that they did. However the the future now is as unclear as it was when I shifted into TIPS. I will likely stay put for some time, as these things generally play out slow until they do not.
I always hated playing musical chairs.
out
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