+ Watch TBT
on My Watchlist
ProShares UltraShort 20+ Year Treasury (ETF)
interest rates going up
This is a daily tracking double leverage short bias instrument - about as toxic as you can get. I still can't believe the SEC doesn't put the people who bundle and sell these sorts of instruments in jail.
Interest rates have no where to go but up... I am going to hedge a little with this ETF.
FED fired its first shot today... good chance this outperforms as the threat of rising interest rates will drag on the S&P in the short-term.
Treasuries as a safety haven is an illusion. Rates can only go up from here.
bond bust still waiting
Best way to play bursting of the bond bubble
Rates have nowhere to go but up...
TBT anticipates on the biggest bubble the financial system is still facing (end of the 30Y bond market).
I'm actually pretty bearish on treasuries, especially from these interest levels and with the rising spectre of inflation. But this is a 2X leveraged ETF, so as long as we some sort of volatility and Treasuries don't drop like rocks, this thing should stink in the long term.
As economy turns around, the premium for 'safe' bond returns will go down. Fed seems quiet, so natural pricing shift should occur. I'm not necessarily bearish on bonds, but I think they are overpriced and due for a correction.
Equities are cheap compared to bonds. This will correct at some point.
Interest rates may be stuck in a trading range for a few years. But the risk-reward is for higher interest rates. The TBT will benefit from higher interest rates. An increase in interest rates could be a sign of an improving economy, or like 1987 foreign investors lossing faith. Hopefully Congress doesn't create another October 1987 in the treasury market. Once in a lifetime should be enough.
interest rates will eventually go up
Despite the huge problems with leveraged ETF, with rates about to absolutely soar, this is all but a sure thing to significantly outperform.
Rolling the dice on rising interest rates.
I'm expecting a bond crash resulting from a Euro collapse spreading to North America
in August, "treasuries have no where to run but up....25.60 8/29/2011", i closed this one recently as a reset. I still beleive they have no where to go but up, however, it may take a little time.
it costs approximately 7% annually for this ETF to maintain a short position in treasuries. Although there are many reasons to be pessimistic about treasuries, at the cost of 7% annually, treasuries would have to decline quickly to score any points with a long position in this ETF. That is to say, that if it takes a long time for treasuries to realize the expected decline, any gains in TBT from shorting treasuries will be wiped out by the cost of holding a short position. Further, it is even less likely that TBT will out preform the S&P 500 index because the performance of treasuries and stocks have a strong negative correlation. So even if TBT gains, due to a decline in treasuries, the S&P index is likely to gain even more, because it does not have the 7% annual cost that TBT has. In sum, a position in TBT is only worthwhile if you believe treasuries will fall quickly. Any long term gains from shorting TBT will be offset by the cost of holding a short position in treasuries. I do not short TBT in real life, because my cost to short TBT will offset TBT's cost to short treasuries. However, in the Fool world, where there is no cost to short an investment, shorting TBT is a no brainer.
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