If your short-term assets are at risk in the stock market, you have made a fundamental mistake.
One of my bank clients has several billion dollars of cash and short-term assets on which it is earning just 27 hundredths of one percent interest.
By the end of 2007, money funds held a record 31% of corporate America's short-term assets, a share that is thought to have continued rising this year.
Others will make bigger adjustments, putting some assets needed for short-term expenses in safe investments like money-market accounts while leaving assets for long-term expenses in riskier investments like stocks.
Holding a lot of long-term, illiquid assets and using very short-term markets for funding seemed fine when times were good.
Short-term capital needs--as in, assets likely to be expensed or converted to cash within one year.
Long-term nominal interest rates are influenced by many things, including investors' expectations of inflation and future short-term rates, and a risk premium for holding long-term assets.
The commercial paper market is growing increasingly antsy and GE, not unlike a hedge fund, is stuck with some percentage of long-term assets that it is trying to fund with short-term money.
That allows banks to use short-term funds raised from the sale of products to buy the longer-term assets that have the higher yield banks need to give investors the promised return.
Secondly, the Fed holds long-term assets and short-term liabilities and yield curves generally slope upwards.
The less charitable interpretation is that the central bank has softened the penalty for banks that have funded purchases of very illiquid assets with short-term paper.
SIVs allow a money manager to borrow money in the short term in order to invest in higher-yielding or more risky assets longer term.
FORBES: This is a transcript of the After Hours video report.
Note: Short-term policies are not eligible for the Long-term care Partnership program, which allows people to preserve additional assets and still receive Medicaid benefits.
FORBES: Not Interested in Long-Term Care Insurance? How About Short-Term Care Insurance?
Short-term capital gains (meaning gains on assets held for less than a year) are taxed at ordinary income tax rates of up to 35%.
The more short-term reason why investors are buying US assets is that the minutes of the latest meeting by the US Federal reserve suggest that some Fed policymakers want the central bank to stop pumping money into the economy much sooner than previously thought.
Until recently the Federal Reserve owned rather safe assets like gold, short-term Treasury bills and the short-term IOUs of commercial banks.
Providing greater short-term liquidity might ease the taking back of assets on to banks' balance sheets and hence bring down interbank rates.
However since a bank only keeps a small percentage of its assets in cash or short-term investments if there is a run on a bank or handful of them the overall faith in the banking system could be rattled.
Vanguard would place the Muchmores firmly in its index funds, from the Short-Term Bond Index (charging 0.2% of assets per year) to the Total Stock Market Index (0.2%), a Wilshire 5000 tracker.
America's biggest banks now boast liquid assets of three to 11 times their short-term borrowings, according to Moody's.
With most of the funds tied up in long-term assets, that could leave the banks short of cash if investors stop buying new products.
As the commission's report makes clear, an EMP attack could devastate both civilian and military assets without harming humans--in the short term.
Even after exchanging various assets for debt, by 1974 LTV had no short-term debt and a quarter of a billion in cash.
This means that marketing is no longer viewed as merely a tool for building market share or short-term revenues, but is instead considered a strategic investment in building critical intangible assets, such as customer relationship and brand equity, which produce important long-term profits.
Assets in savings accounts may actually be losing value thanks to short-term interest rates that are actually lower than the inflation rate.
The accounting rules do allow you to designate assets as being held to maturity, or being held in the short-term.
Tobias Adrian and Hyun Song Shin have shown that the balance sheets of financial firms that mark their assets to market grow and shrink based on changes to the level of short-term interest rates.
Most of these business assets cost time and money to build, and bring in little value in the short-term.
FORBES: Can Two Simple Questions Determine The Value of Your Company?
It is this short-term financing share that creates the potential for systemic spillovers in the form of deleveraging and marketwide fire sales of illiquid assets.
应用推荐