iShares Lehman 1-3 Year Treas.Bond (ETF) (SHY)

a little SHY of s&p returns...

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.

On top of the usual idea that the S&P500 will outperform treasuries, yields should creep up a over time.

Let's see invest in an entity that continues to go further and further into the red? I don't think so.
I think the people are finally discovering the government is not a endless supply of money and the money has to eventually come from somewhere...valid production. I don't think the President fully grasps this yet.

Bonds underperform stocks

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

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.

Flight to quality hasn't ended yet.

Stocks are at a bottom (I hope).

Continued safety flight.

5% of Portfolio

Long term pick... Won't be able to be the S&P over a series of five years. Not to say that he S&P is at rock bottom yet... it probably isn't, but two years out it will be better than it is now. And 5 years out, their will be some sector which will seem to be a "can't loose" sector. That's when I will end my pick.

I am not short this particular ETF or any of its options in my own accounts, but I occasionally carry a similar position. This is essentially a bet that the S&P will outperform short-term Treasuries over the next year or so.

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