Why Treasuries Are So Important | Where the Money Is - 10/9/13 | The Motley Fool | Summary and Q&A

TL;DR

Janet Yellen is expected to become the new chair of the Federal Reserve while the government shutdown and the debt ceiling debate pose risks to the US economy and housing market. The stock market crash could potentially push politicians to make decisions. Warren Buffett advises not having an opinion on everything and hedge funds have underperformed the S&P 500.

Key Insights

• 👶 Janet Yellen is expected to be confirmed as the new chair of the Federal Reserve, a decision that was already priced in by the market.
• 🏃 The government shutdown and debt ceiling debate pose risks to the US economy and housing market in the short run, particularly due to income verification issues and potential default on treasuries.
• 🙈 Stock market crashes have historically influenced politicians to make decisions, as seen in 2008 with the passing of the TARP Bank bailout program.
• 🍧 Having an opinion on everything is unnecessary and can be a mistake, according to Warren Buffett.

Transcript

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Questions & Answers

Q: Why was Janet Yellen chosen as the new chair of the Federal Reserve?

Janet Yellen was chosen as the new chair of the Federal Reserve after Larry Summers withdrew from the race. She was seen as a likely candidate due to her experience and expertise in monetary policy.

Q: How does the government shutdown affect the housing market?

The government shutdown poses a short-term risk to the housing market as income verification for mortgage applications may be delayed, and government control over the Residential Mortgage Market may slow down due to the shutdown.

Q: How can a stock market crash influence decision-making by politicians?

A stock market crash can create an urgency for politicians to make decisions as they face pressure from the market and the public. History has shown that crashes have led to swift action, such as the passing of the TARP Bank bailout program in 2008.

Q: Why does Warren Buffett advise not having an opinion on everything?

Warren Buffett advises against having an opinion on everything because it is not necessary and can lead to mistakes. It is better to focus on specific areas of expertise and not get caught up in trying to have an opinion on every matter.

Summary & Key Takeaways

• Janet Yellen is likely to be confirmed as the new chair of the Federal Reserve, which was expected after Larry Summers withdrew from the race.

• The government shutdown and debt ceiling debate pose risks to the US economy, particularly the housing market, in the short run due to income verification issues and potential default on treasuries.

• A stock market crash could potentially push politicians to make faster decisions, as seen in 2008 when the threat of a crash led to the passing of the TARP Bank bailout program.

• Warren Buffett advises not having an opinion on everything as it is not necessary and can be a mistake.

• Hedge funds have underperformed the S&P 500, with 95% failing to beat the benchmark, which can be attributed to the crowded space, high fees, and cash holdings on the sidelines.