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Here’s Why I Buy 2-Year Treasuries for My Personal Portfolio


Cramer explains why he recently bought a 2 Year Treasure with his personal money

By CNBC Jim Cramer tell him Investment Club fifth member that he personally bought 2-year Treasury bond — because for the first time in a really long time, yields are more competitive with stock yields, especially when factoring in the risk-free nature of government-backed bonds.

  • Before we learn more, we’d like to explain that Cramer, as a financial journalist at CNBC, must follow our company’s rules regarding individual stock purchases with his own money. The difference here is that Cramer, as head of the CNBC Investment Club uses Charity fund shares holdings like a portfolio, said he only wishes he could own the names he recommends members buy. The club only owns shares and holds cash. It does not invest in bonds.

As Cramer said on Thursday, in his personal life, he contributes monthly to S&P 500 index fund. But this month, instead of putting money into it, “Mad Money” the presenter said he “actually bought a two-year batch of paper.” He recalls, “I haven’t done this since March 15, 2000. That’s what I respect Jay [Jerome] Powell, “The Chairman of the Federal Reserve.

And why not: yields on the 2-year Treasury note have spiked to nearly 3.9%, highs back in 2007, along with the Fed raising rates more aggressively. Cramer called it “unreasonably high” and “guaranteed by the full faith and credit of the United States government.” In addition to the interest, if you hold the 2-year Treasury for the entire term, you’ll get your money back.

By comparison, the current dividend yield on the S&P 500 is close to 1.7% annually. But unlike bonds, your principle in stocks or stock funds is not guaranteed.

  • So in a bull market for stocks, dividend yields and rising stock prices have blown up bond yields. But in bear markets, like the current one, bond yields are starting to look a lot more attractive, because the nearly 3.9% guaranteed yield on 2-year Treasuries is more than double the yield. dividend yield of the S&P 500. Plus, the principle of risk to you is essentially non-existent.

Become a Member of the CNBC Investment Club with Jim Cramer.



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