Sell US Treasury Bond Fund

The main purpose for this e-newsletter is to let you know that it is time to make an investment change which is to sell bond funds associated with the US Treasury. For the clients who own this fund it is time to make a change. This will be discussed in some detail in the middle section. The first section is from Vanguard. The final section is on the use of wasp spray for personal protection.

Vanguard

In a week that was light on new data, a revised estimate showed the U.S. economy grew 3.1% in the fourth quarter of 2010, a bit higher than the previous estimate of 2.8% released last month. On a more downbeat note, sales of new and existing homes declined sharply. For the week ended March 25, the S&P 500 Index rose 2.7% to 1,314 (for a year-to-date total return—including price change plus dividends—of about 4.9%). The yield of the 10-year U.S. Treasury note rose 18 basis points to 3.46% (for a year-to-date increase of 16 basis points).

Sell US Treasury Mutual Fund

The performance of this type of fund is inversely related to the longer term interest rates so that as these interest rates go up the performance of this fund goes down. These longer term interest rates have been suppressed by the Federal Reserve purchasing of US Treasury bonds called Quantitative Easing or QE 1 and 2. By making these purchases the Federal Reserve increased demand and lowered the interest rates so that businesses would be more attracted to borrow money and stimulate the economy.

The Federal Reserve has been successful in their goal and the economy is recovering. Also, the Federal Reserve has stated that this program will end on time at the end of May 2011. As the Federal Reserve stops making these purchases interest rates will rise. Eventually, the Federal Reserve will sell these bonds which will raise interest rates even more. With higher interest rates coming fairly quickly, it is time to make a change before QE 2 ends.

Three options exist: buy a money market fund, buy a corporate bond fund, or buy a stock fund. If a client wants to become more conservative and take less risk it is time to buy a money market fund. If a client wants to maintain their current risk level then it is time to buy a corporate bond fund. Lastly, if a client wants to take on a higher amount of risk then it is time to buy a stock fund.

Also, if you have a home mortgage with an interest rate over 5% now would be a great time to consider re-financing to a lower interest rate. Home mortgage interest rates will increase as longer term US Treasury bond rates increase. The re-financing opportunity will not last much longer.

WASP SPRAY

A friend who is a receptionist in a church in a high risk area was concerned about someone coming into the office on Monday to rob them when they were counting the collection. She asked the local police department about using pepper spray and they recommended to her that she get a can of wasp spray instead.

The wasp spray, they told her, can shoot up to twenty feet away and is a lot more accurate, while with the pepper spray, they have to get too close to you and could overpower you. The wasp spray temporarily blinds an attacker until they get to the hospital for an antidote. She keeps a can on her desk in the office and it doesn't attract attention from people like a can of pepper spray would. She also keeps one nearby at home for home protection... Thought this was interesting and might be of use.

Val Glinka teaches self-defense to students at Sylvania Southview High School. For decades, he's suggested putting a can of wasp and hornet spray near your door or bed. Glinka considers it inexpensive, easy to find, and more effective than mace or pepper spray. The cans typically shoot 20 to 30 feet; so if someone tries to break into your home, Glinka says, "spray the culprit in the eyes". It's a tip he's given to students for decades. It's also one he wants everyone to hear. If you're looking for protection, Glinka says look to the spray.