iShares Barclays 1-3 Year Treasury Bond Fund (ET (AMEX:SHY)

My time frame on this call is 6 months, after which I expect the S&P 500 to be lower than it is today. This is an exercise in market timing, something I have no track record of doing well.

I think further Fed easing will be announced this month, and for a short term bullish response from the market.

But, within 6 months we have possibilities for at least three bearish catalysts, in rough order of likelihood:

US GDP readings will contract, suggesting recession.
The European sovereign debt crisis will metastasize.
The market will lose confidence in the Fed's support.

While I think each of these bearish catalysts have only a 25% chance of materializing within 6 months, with three chances the odds we get one of them look greater than 50%, and getting any one will make it likely another one hits soon after. I think the result would be mass market pessimism.

I do not have remotely the confidence in my own opinion here to close out my longs - this is an exercise in market timing, considered futile by many accounts - but I plan to shift a little from longs to cash, or shorts where I can find them.

Treasuries are at near record low yields, and thus at record high prices... Thus this ETF can't go much higher, and won't keep up with the S&P500 over the long term.

Yields have very little room to fall from current levels.

it will definitely fall or underperform from this point

I am predicting bond will outperfrom equities for the next few years. My reasons are as follows:

The S&P is way overpriced, the P/E ratio is above the historic median.

David Rosenberg points out the S&P has priced in 4% GDP growth for 2010 while the bond market has priced in 2%.

More than 100% of the economic growth we have seen in 2009 has been the result of government spending. This cannot continue forever. If you take away government spending in 2009 real GDP would be down around 6%

While firms have been "beating" earnings estimates those estimated have been DRASTICALLY cut down over the past year.

Lastly if you look at the S&P 500 earnings have been made by cutting costs, as revenue is down. You can only cut costs (lay off people) for so long, eventually you have to sell more.

My hedge against inflation and leveraged with a short on IEF this will be a winner.

Treasury bubble. Treasuries are correcting.

Everybody is selling T bonds and buying stocks because they now "feel better", so I'll take the other side of the trade.

Should be a long-term winner, let's just hope long-term gets here sooner rather than later.

copycat'n

Think Deflation for the next two years, maybe five

Flight to quality hasn't ended yet.

Continued safety flight.

5% of Portfolio

Lehman failure risk watch close

These bonds should underperform the S&P in the long haul... especially because the S&P is more reasonably priced at 1257 than it has been in a while.

This is a one-star company within 5% of it's 52-week high. I say it's gotta go down.

This is a long term pick.
This ETF has nearly all its assets in Treasury Bonds. Those will always underperform stocks over an extended period. Therefore, this is an easy pick.

Like shooting fish in a barrel. Stocks outperform bonds.