UCO TREASURERS LATEST SCHEME - T-BILLS

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Of course, we all remember Mr. Grossman, our current UCO Treasurer, before he became UCO Treasurer.  He, along with his friends Mr. Solomon and Mr. Karpf (may they rest in peace);  used to get great joy in attempting to incite the Delegates to near riot conditions. They endlessly criticized  UCO at every opportunity. Now Mr. Grossman is Treasurer and he comes to us with a proposal to RISK $5,000,000.00 of our money in the purchase of T-bills. Following are some of the risks involved in such a scheme:

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Risks and Disadvantages of T-bills

Even though most investors consider those assets risk-free, this is not entirely true. There are always risks when we talk about investing. What are the main risks and disadvantages of T-bill?

In 1979, The U.S. Treasury was forced to delay payments (default) to individual investors redeeming about $122 million of Treasury bills maturing on April 26, May 3 and May 10, 1979. The Treasury blamed the delay on an unprecedented volume of participation by small investors and the unanticipated failure of word-processing equipment used to prepare schedules needed to cut them individual paper checks.

• Interest rate risk

Bonds are closely correlated with the movement in interest rates. The relation is not as strong as between corporate bonds and interest rates, but it can have an impact. Usually, when rates go up, bonds decline.

• Low yields

Even though these investment tools are quite safe and risk-free, their returns are relatively lower compared to other assets.

• Inflation risk

The returns on T-bills cannot reach the level of inflation. As of 2022, the inflation rate pace is much higher compared to the T-bills yield.

• Opportunity risk

Because of their maturity, you might miss out on other, more lucrative, opportunities in the market. The term of treasury bills is relatively short (up to a year), yet for a year it might cost you tens if not hundreds of missed chances.

 

Bottom Line

Overall, investing in T-bills may be a nice way to diversify and strengthen your portfolio. The fact that the US government backs them up and issues them makes those assets almost free of risk and very attractive. On the downside, they offer a relatively low yield.

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UCO is not chartered to enter into risky market investments of any sort. What you or I do with our money is one thing, what UCO does with the peoples money is quite another. UCO's handling of our money must entail ZERO RISK, there is no alternative.

I entreat all our Delegates to reject this plan when it is presented for vote at the upcoming Delegate Assembly meeting.

Dave Israel