Please ensure Javascript is enabled for purposes of website accessibility

U.S. Floating Rate Notes – Wall Street’s Best Digest Top Picks Daily Alert -01/04/21

What is the one investment that is shunned and denigrated as a waste for your money? Cash. No one advises owning cash or short-term U.S. T-bills because they provide little in the way of interest income.

U.S. Floating Rate Notes
From The Elliott Wave Financial Forecast

What is the one investment that is shunned and denigrated as a waste for your money? Cash. No one advises owning cash or short-term U.S. T-bills because they provide little in the way of interest income.

In 1980-1982, U.S. T-bills were at the top of every investors buy list and that was the time when one should have sold them and bought stocks and bonds. Now, stocks and bonds are at the top of every investors buy list and now is the time to own the safest investment possible.

The government offers 2-year U.S. Floating Rate Notes (FRNs), which pay interest that is pegged to the 13-week T-bill and adjusts quarterly to the auction rate. The main reason to hold FRNs now is to escape the risk of losing principal. With long rates at their lowest levels in the history of the United States, if interest rates soar, bond investors will lose money.

With stocks more overvalued than at any time since at least the dot.com mania, if stocks enter a bear market, stock investors will lose money. FRNs are a safe alternative and are at the top of our list. Your bank or broker can buy FRNs, or you can buy them through Treasury Direct.

Nancy’s Notes: Here’s the Treasury Direct website.

Steven Hochberg and Peter Kendall, The Elliott Wave Financial Forecast, Customercare@elliottwave.com, elliottwave.com, 770-536-0309, December 29, 2020