This Week in Finance - 7/18/08

Welcome to WallStreetOasis.com's latest This Week in Finance newsletter, where we profile the hottest investment ideas, substantive market data, incisive financial blogging, and the best under-the-radar research Wall Street has to offer.

Investments: Cash is King

Some may not think of "cash" as an investment - it's not volatile, sexy, or even particularly interesting. You won't see great returns having your money sit in cash - but (at least the great majority of the time) you won't lose any money either, which in today's market can be seen as the biggest victory of all.

When I refer to cash, I mean vehicles where you can keep your money "risk-free." Money market savings accounts, certificates of deposit (CDs), government bonds, various money market and "stable-value" mutual fund products are all cash equivalents. These securities, however, do vary, and especially in today's wild markets, choices between them can be very important. The yield on these various instruments can be vastly different, and usually vary with the credit risk and stability of the underlying issuer (banks, governments). Bankrate.com and Bankaholic.com have good lists comparing the offerings (and rates) available at various banks.

There are two main concerns when holding cash. One, as mentioned above, is the stability of the underlying institution. With the recent failure of IndyMac and growing concerns over numerous banks (Washington Mutual in particular), the safety of deposits, though FDIC insured up to $100,000, is at the forefront of many investors' minds. Until the credit crisis comes to pass, always be aware of the condition of any bank that you keep any significant amount of money with.

The second concern is holding cash in a currency that is losing value. With inflation fears persisting and prices rising, a weak US dollar is certainly something any cash investor should monitor. Now, however, certain banks are offering foreign currency savings, money market, and CD accounts Everbank.com, offers a multitude of CDs that offer exposure to currencies and interest rates from other countries, and combinations of countries based on geography and other characteristics including commodity, energy, and oil exposure. Though the interest rates are not as high for these foreign cash accounts as you would receive investing directly in a respective foreign bank, certain currencies offer significantly higher interest rates than US banks, and all offer the chance to participate in the appreciation of the currency vs. the US dollar. And the best part? Everbank is holding up tremendously well, having just released record earnings.

Research of the Week: Rumors

For those of us who work in finance, and in the hedge fund and private equity community in particular, we understand the importance of gossip. Keeping track of who's doing what, when they're doing it, at what price and with whom are not only interesting to keep track of, but very relevant in understanding how money is being made (and lost).

Albourne Village is a great site to keep up with all the goings on the hedge fund and private equity space. They have daily and weekly alert emails, news updates, resident boards, and a "library" where current research pieces can be downloaded. All you need to do is complete a quick and free registration process. Other good sites to keep you up on the gossip of the day include FinAlternatives, HedgeWeek, and Private Equity Wire.

Blog-Wrap: Fannie and Freddie (everyone's got an opinion!)

Blogs have been teeming recently with Fannie and Freddie. EconBrowswer takes a look at their role in the subprime crisis. Accrued Interest wants them broken up. And the New York Times reports on hedge fund manager extraordinaire Bill Ackman's plan to rescue the troubled GSEs (which "amazingly" involves wiping out the current equity, which he is short!)

TWIF Notes: Some good news for a change

The Wall Street Journal has five things to be bullish about right now.



TheStreet.com has 5 reasons to buy Lehman Brothers.

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Questions? Comments? Send an e-mail to Hedgehog@WallStreetOasis.com or send a private message to him at WallStreetOasis.com. To read previous issues of This Week in Finance please click here: http://www.wallstreetoasis.com/xtracker/type/simplenews

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