Monday, December 31, 2007


One of the advantages of being a mere blogger is that one doesn't have to write to a deadline. When one has nothing to say, one says nothing. Jon Markman of MSN Money Investing and other places, isn't so lucky. His need to meet a deadline is the probable explanation for a lot of problems in his column for today.

First of all, pretty much everything he says was already said by Markman's colleague Jim Jubak in the latter's column of September 14, and nothing has changed since then to justify a new article, which is why there is nothing new in Markman's column. And it's hard to believe that Markman just didn't know about Jubak's article, since they refer to each other's opinions with reasonable frequency.

In addition, some of the things which Markman says are strange, to say the least. He says that "brokerages [do not] make it easy for investors to discover what their money market funds are invested in...." Well, I regularly - twice a year, I think - receive a prospectus from each of the money market funds where I have money. The prospectus includes a list of the fund's holdings, and is mailed out by the brokerage's clearing company. Even if it weren't, I can find prospectuses for both online, on the fund companies' Websites.

The distinction which Markman makes between 'breaking the buck' and refusing to let investors withdraw their money is also misleading. He seems to be saying that forcing you to take your money back at less than 100 cents on the dollar is both rare and terrible, but refusing to let you get your money out at all unless you agree to accept less than 100 cents on the dollar, which has happened to investors in several funds owned by respected companies lately, is something very different. If it were my money, I would feel differently.

Markman's most shocking statement in today's article, however, is an incorrect statement of fact central to the subject of the article. Markman refers to Schwab's "next safest... Government Money Fund (SWGXX), which contains government-guaranteed Freddie Mac (FRE), Fannie Mae (FNM) and Ginnie Mae bonds." Although Ginnie Mae bonds are government-guaranteed, Freddie Mac and Fannie Mae securities most definitely are not, as those two companies admit. There are people who want to talk about an 'implied guarantee', suggesting that the government will not let these large "government-sponsored" - i.e, government-founded - companies fail, but when their charters say that there is no guarantee, it's hard to believe that this is worth more than the idea that the government won't let Citibank fail. Would Mr. Markman also call Citigroup's securities "government-guaranteed"?

I don't know what a professional journalist should do when he just doesn't have the time or interest to get the facts right, but this does not seem to be it.


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