One of the lowliest and often ignored creatures in the financial jungle is set to emerge triumphant.
Behold, the T-Bill Rex!
T-bills yield practically nothing. In a severe financial crisis, they could even generate a negative yield (as happened briefly in Dec. 2008). But even that is far better than having a stock portfolio torn to shreds.
In fact, wounded stock portfolios still haven't fully recovered from what they suffered between 2007 and 2009.
Besides the market, investors must also consider the deflationary trend. Here's what EWI's Robert Prechter writes in his remarkably predictive book, Conquer the Crash, 2nd edition, pp. 164-165:
"Cash is the only asset that assuredly rises in value during deflation. One safe 'parking place' for capital during a deflationary crash is cash notes -- for example, $100 bills, £50 notes or the equivalent in your home currency -- in a safe depository to which you will always have access. That way, you will have money if the bank fails, you will have money if credit collapses, and you will have money if the government defaults on its debt. I suggest that you have at least some currency on hand if you expect a deflationary crash. Unfortunately, currency has no yield, it is destructible, and it cannot be transferred with a phone call. Carefully selected 'cash equivalents' can solve those problems.
"Cash equivalents are high-quality short-term debt. They are extremely attractive investments in a deflationary crash. Choosing them, however, can be tricky. You must own safe instruments stored in a safe facility."
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