Cash as an asset
Comment of the Day

December 02 2022

Commentary by Eoin Treacy

Cash as an asset

I posted this piece on Friday discussing the merits of shorter-term bonds versus long-term bonds. The calculations I posted are incorrect because the stated yield is annualised. Therefore the compounding chart I posted is completely erroneous. I really should remember that anything which seems too good to be true usually is. I don’t know what I was thinking and can only apologise. Nevertheless, my conclusions about gold, the dollar and the outlook for stocks remains unchanged. I’ve amended the copy below to make more sense.

Eoin Treacy's view

During the decade of zero interest rates, savers were sacrificed in the interests of reviving animal spirits among speculators. Rates were held at both low absolute and negative real levels for years.

That forced conservative investors, like pensions, endowments and regular consumers into much riskier assets. Performance in the fixed income markets was driven by price momentum rather than yield which left the sector exposed to the current round of interest rate hikes.

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