Pimco on the Challenges of LIRR

• Joshua M Brown
• February 9th, 2010

When I read the headline in my inbox, my first thought was "Wait a minute, MORE challenges with the Long Island Rail Road?"  Then I read it and uncovered Pimco's terrific acronym for the 4 challenges that face investors for 2010:

Legislatation
Issuance
Rates
Regulation

From Pimco's Viewpoints:

As cash and short duration investors headed back to work in the New Year, the commute was looking hairy. In the past two years, money market yields dropped to all-time lows even as price volatility for short duration instruments soared. New obstacles lie just ahead.

Along with the risk of the unexpected, these investors face four distinct challenges in the first half of the year. We refer to them collectively as LIRR. No, New Yorkers, it’s not the Long Island Rail Road we’re talking about – that’s a different kind of commuting challenge altogether. LIRR stands for 1) Legislation, 2) Issuance, 3) Rates and 4) Regulation.

Just as picking the right mode of transportation can mean the difference between getting to the office on time or missing the morning meeting, investors need to select the right investment vehicle for this trip. A flexible, yet customized strategy may be the smoothest ride toward preserving capital while also maintaining liquidity and earning a competitive return.

Knowing the ins and outs of LIRR will also be critical.

Read the rest for a complete take on each of these headwinds...

Source:

Rough Commute: Riding the LIRR with Cash and Short Duration Investors in 2010 (Pimco)

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