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Best four years of your life

March 18, 2010

College years are sometimes referred to as the “best four years of your life.”

Whether or not this is true, they sure beat the last four years of life for a Sallie Mae shareholder. (negative 76% total return).

And the next four years don’t look good either.

From Bloomberg: “SLM Corp, the biggest US student loan company, tapped the bond market for the first time in two years, paying more in interest than it charges [college students for their loans.]”

SLM sold $1.5 Billion of 8 percent notes due in 2020 at a yield of 8.25%. Stafford federal studen loans have a fixed interest rate of 5.6%.

Bright college years … ahh.

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  1. March 25, 2010 at 7:11 pm

    I have an idea. I’d like to know what you think.
    http://pergelator.blogspot.com/2010/03/money-for-nothin.html

  2. Rocky Humbert
    March 26, 2010 at 1:23 am

    Pergie: Thanks for stopping by. Rocky read your post on this subject, and your desire for a “solid currency … [not] subject to inflation” is a desire shared by many citizens.

    Your basket of goods and services is very similar to the current Consumer Price Index (CPI). And CPI’s are calculated by most major world governments. Over very long periods of time, a country with a higher inflation rate will see their currency devalue relative to a country with a lower inflation rate. For example, the US Dollar has declined substantially versus the German, Swiss and Japanese currencies over the past 30 years.

    The purchase of Treasury Inflation-Protected Notes (“TIPS”) is the closest thing to owning currency that appreciates with inflation. Unfortunately, the Government taxes the appreciation of these notes as income, so the Government ironically first creates inflation, and then taxes you on its creation.

  3. kim
    March 26, 2010 at 12:54 pm

    Rocky maybe we could partner up to create a CPI ETF which only incurs long-term capital gains? (You would have to be the brains, and I would provide the start-up capital by creating a second ETF based on tax protest)

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