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TMV, TMF, the bond markets, and me

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June 10, 2009 – Comments (3)

I have now bought Nov puts on TMV and TMF. And even though I had to stretch to meet the Ask in each case, my timing has seemed pretty good so far. Of course, I am hoping that these two super-ultra leveraged ETF's see-saw their way down to single digits, a la the FAZ/FAS pair. However, TMV has everything going for it: enormously overpriced US Treasuries, looming high inflation, high deficits, growing foreign opposition to the USD's reserve currency status, and shrinking foreign participation in UST auctions. If there's a big drop in TMV, I intend to buy some and ride it to the next high. The problem with riding TMV to 1,000 (other than tracking risk, derivative market risk, etc.) is that the US gov't has enormous incentive to try sneaky methods of propping up Treasury prices. And they just may be able to pump UST's at times inconvenient for buyers of TMV. Still, until the derivatives market collapses, TMV, TMF, and their puts are fun ways to bet on the coming tsunami of inflation and interest rate hikes.

Related tickers: TMV, TMF

3 Comments – Post Your Own

#1) On June 10, 2009 at 4:12 PM, ttboydxb (28.78) wrote:

Lovin TMV right now, think it will go up again tomorrow. After that, we'll see, maybe cash a bit in, or let it ride with a tight stop.... 

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#2) On June 10, 2009 at 11:00 PM, FleaBagger (28.92) wrote:

I actually sold my TMV (after buying the TMF puts, of course) in order to get back on the FMCN/SINA arbitrage. (Even if the deal doesn't go through, which I'm pretty sure it will, SINA is looking overbought, and FMCN undervalued.) But it went up about 20% after I did. Oops! Oh well. I still have those TMF puts. Those are treasures. I hope TMV comes back down a little bit before I have more capital to deploy, but who knows? The gov't and the Fed may or may not be able to keep UST yields low.

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#3) On June 10, 2009 at 11:00 PM, FleaBagger (28.92) wrote:

...in the short term. Of course I know that they won't be able to keep yields low for long.

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