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When the Black Swan Swoops In for You

February 28, 2023 By E.J. Smith

By muratart @ Shutterstock.com

A word of caution, dear investor, about money market funds: they’re not all created equal. In fact, when it comes to your lazy cash, you want to treat it with kid gloves. There’s a reason it’s on your couch. The world’s a dangerous place.

Yes, you want to get it into the big wide world to do something productive with its life. But you also don’t want it coming home one day saying: “I gambled, and I owe Mr. Big $20k. Can you help?”

Back when the financial crisis unfolded, Lehman Brothers failed, panic set in, and money markets “broke the buck” (trading below a net asset value of $1). But it was the leveraged stuff offering crazy rates that took it on the chin.

A lot has changed since then, but has it? It doesn’t take much to be sold by some broker looking to get your business promising “risk free” rates well above reality. Sure, they might work out in times like these, but what happens when the black swan swoops in for an easy meal?

Your Survival Guy cares about you. Risk is a four-letter word I avoid like the plague.

Action Line: When you’re ready to talk, let me know.

P.S. Safety First: I like the Fidelity Treasury Money Market (FZFXX) as a core money market.

Originally posted on Your Survival Guy. 

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E.J. Smith
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris.

Please get in touch with E.J. at ejsmith@youngresearch.com

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