Sometimes you hate to be right.

When the Dow broke 10,000, as you can see below, I screamed from the mountain top to get out.  I called the 1,000 point rally, and it happened.  Yesterday, the Dow suffered a 733 point drop, the worst single day point drop in it’’s history.

Hopefully, you sold  into the rally if you did not get out at the 10,000 point mark.  What’’s next?  Sitting on 2% money markets?  Look closer…

Now that the Treasury has taken a stake in Morgan Stanley, I like the idea that with the Fed’’s backing, I can reach for the implicit Fed guarantee (almost like T-Bills), but receive a fantastic, safe return on my money.

This past monday, when the market rallied 900 plus points, I searched out for morgan stanley senior unsecured debentures.  Trading at $ 10.60 per share, the morgan stanley senior unsecured debentures (debt) was yielding an astounding 14.4% (Ticker symbol MWR).  Rather than participating in the market rally, I jumped into the morgan stanley debt, with it’’s implicit Fed guarantee.  Yielding 14.4%, when safe money can only get 2%, I figure is a great deal.

Monday, after trading, when everyone who was long made money, the debt I bought at $ 10.60 traded down to $ 10.25.  My investment was worth a small amount less than what I had paid, but I was not dismayed.  When I arrived home Monday night, I told my wife I could care a less what the market thought, I was perfectly happy to sit back and get my 14.4% for the next 25 years.

Sure enough, tuesday brought a market that must have seen the same thing, which caused the share price of MWR to rise 39% to 14.  I was up 39% on my money while the market began to tank.  Wednesday, as previously mentioned, we suffered the worst single day decline in the stock market’’s history.  While the market declined, MWR was up, trading to $ 14.28 in the after market.  The yield is still 11% while trading at 14.28, so it’’s still, in my opinion, a nice long term option of implied safety in the turbulent crosswinds of a generational shifting stock market.

Opportunity abounds when markets lose their heads.