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Gentlemen:
Just to add my two cents to the T-Bill discussion, I don't believe there's
any doubt that Mr. Hoffman's T-Bill could have--and should have been--rolled
into a new, $15,000 T-Bill. Rolling simply means that the old T-Bill
matures, and a new T-Bill is purchased on the weekly government auction to
replace it. And yes, T-Bills most certainly can be purchased in $5,000
increments.
Perhaps most interesting to me, however, is the fee issue that lurks a bit
beneath the surface here. I think it's remarkable how many brokers seem, on
the one hand, to tout such low commission rates, but on the other hand, they
certainly do find ways to supplement the low commissions by charging fees on
almost every other service they might be asked to render. Most of the
Futures Commission Merchants bank at Harris Bank here in Chicago, and I
happen to know that Harris Bank does not typically charge for T-Bill
purchases of $100,000 or more. Any relatively large and halfway clever FCM
will bundle its clients' weekly T-Bill purchases together and typically
surpass the bank's $100,000 threshold, which means that client T-Bills can
be purchased free-of-charge. Thus, why should any trader be willing to pay
$20 or $45 or $60 to buy a lousy T-Bill? It seems to me that the
higher-quality clearing firms usually provide this service free-of-charge to
their clients. But alas, the higher quality firms are also generally a bit
more expensive on commissions, and many traders seem to focus on commissions
with little regard for the behind-the-scenes fee structure of the firm. I
wish more traders would more carefully scrutinize fees instead of
automatically jumping to the often-incorrect assumption that a lower
commission rate always means lower overall trading costs.
Just an observation....
Regards,
Dan
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