Minnesotans getting hit by Wall Street woe

  • Article by: KARA McGUIRE , Star Tribune
  • Updated: September 23, 2008 - 11:18 PM

Assets frozen after the Reserve Primary Fund 'broke the buck' are still in legal limbo.

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the_vfoxSep. 24, 08 4:48 AM

have to ask, why did you put all the money in one place?

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doctor2687Sep. 24, 08 9:24 AM

The fund is now worth 97 cents on the dollar, and has been a very risky fund that has produced very high returns. I agree, putting such important monies all in one fund is very foolish.

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phlionSep. 24, 0810:09 AM

It's easy to say shoulda put the $ in more than one place, but up until this day in the history of man nobody diversified their money market holdings.

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mlomkerSep. 24, 0810:48 AM

Peculiar that a money market account would have meaningful exposure to corporate paper. I guess that Dr must be right--it was more of a short-term bond fund.

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Minneapple18Sep. 24, 08 3:25 PM

It is apparent that even Money Market funds have chased yield to gain customers. You have to understand that the money managers' pay depends on how much money is in their fund. Promise higher yield (i.e. build more risk into the portfolio) and your salary rises. Greed will have its day.

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twinman55Sep. 24, 08 3:32 PM

Forgot who the first one was exactly, but I am pretty sure we did't guarantee its account holders, not sure why we feel the need to this time around. When your yields are higher, there's usually a reason and it's usually spellled..R..I..S..K.

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delferingSep. 24, 08 4:11 PM

theres money there are crooks close behond,

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buthead2Sep. 24, 08 7:53 PM

First of all Money Market funds are safe investments and are governed by the 1940's Investment Company Act that has governed their operations for over 60 years without (but one very small) loss of principal to investors. There is no such thing as a riskless investment. (even Treasury securities have interest rate risk) Second, this investor's account may be temporarily unavailable, but it is not lost. At the end of the day, I would be very surprised if this investor lost more than 3% of his principal when they will be able to receive the cash in the account. If one factors in the interest earned ytd, they may in fact break even. There are very few investments that could survive a "run". When all investors head for the exits as the same time (fear) creates liquidity problems that prevent an orderly sale of the underlying assets at reasonable prices. This is not a situation where there were bad underlying investments, rather it is the fear in the markets that spread like wildfire. People need to start asking questions and thinking for themselves rather than acting out of fear.

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