Invest Like Pirate

Posted: Jun 02, 2011 12:01 AM

One of the most popular movie series of all-time has been Disney’s Pirates of the Caribbean starring Johnny Depp. 

Fraught with action, adventure, and danger, these same words can also be used to describe the U.S. Treasury market. 

In fact, the similarities are almost chilling.  If you’re sailing on the high seas and a storm was imminent, more than likely you would head for the nearest port. 

Trying to ride out the storm would probably bring death and destruction, and anything would be better than that. 

However, if the port within reach was occupied by Johnny Depp and his collection of thugs and cutthroats, you might think twice, but at least you would stand a chance.   

Investment giants like Bill Gross, Warren Buffett, Peter Schiff, and many others have been warning against treasuries for quite some time. 

The devaluation of currencies, impending hyper-inflation, the lack of confidence, and escalating debt make treasuries a loser.  Or so they say.  So who was I to contradict these legends? 

However, I’ve done a bit of sailing in my time, and I’ve certainly seen a lot of movies. 

So it just made sense to me to choose the lesser of two evils.  Since 3.6% on the 10-year Treasury, I’ve pounded the table on buying them. 

As we grab a 2-handle, and I believe a 1-handle to come, buyers are responding as I thought they would. 

Manufacturing continues to plummet, housing prices are collapsing, and unemployment is steadily rising, not to mention escalating oil and food costs coupled with global turmoil. 

As a result, concern will turn to worry, which will turn to fear, and then to panic.  Somewhere along that path, the evils of the treasury market will not seem so bad when compared to the other alternatives. 

So remember, just as Johnny Depp and his henchmen don’t look so treacherous when a killer storm is rapidly approaching, neither do U.S. Treasuries when a killer economy is rapidly rolling our way.

Whether a movie or real life, “any port in a storm” seems to be as true today as it ever was.    


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