Treasuries....the next bubble?? sure look like it

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Dylanwise
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Treasuries....the next bubble?? sure look like it

Post by Dylanwise »

It sure looks like we have a new bubble.
Just like the recent real estate and commodities bubbles,
this one seems easy to call and maybe the biggest of all.

Time will tell.

If you believe it, the question is how do you play it?
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msi
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Post by msi »

There is the TBT etf but you'd better be right about the bubble popping..
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Robert T
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Post by Robert T »

.
I know, I don't know.

But have been selling treasuries to buy stocks as part of rebalancing back to long-term policy targets.

Robert
.
ziggy29
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Post by ziggy29 »

If you really want to go out on a limb you could short Treasuries.

With somewhat less risk and making it a pure long-term inflation play you could go long a similar amount in TIPS. Then if we have the rekindling of 1980-81 inflation you'd do very well.

But it takes a lot of guts to short something in a bubble. You would probably do well eventually, but as the old saying goes, "the market can stay irrational longer than you can stay solvent."
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Dylanwise
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Post by Dylanwise »

I know an I don't now too....

but that makes sense.

I'm buying from cash.
dumbmoney
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Post by dumbmoney »

ziggy29 wrote:But it takes a lot of guts to short something in a bubble. You would probably do well eventually, but as the old saying goes, "the market can stay irrational longer than you can stay solvent."
Never mind "the market". What about the Fed? Suppose the Fed decides to drive up treasuries. Do you want to step in front of that train?
I am pleased to report that the invisible forces of destruction have been unmasked, marking a turning point chapter when the fraudulent and speculative winds are cast into the inferno of extinction.
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cato
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Post by cato »

Well, I did exactly that:

* Long Munis
* Long TIPs
* Short nominal treasuries (via TBT)

I chickened out of the TBT position a while back (luckily). Being somewhat of a Mideast expert, who reads the local papers, I think there's a black swan coming. Not good to be short treasuries for that reason. Long-term, I think that strategy would work out, but I'm just going to get by on the first two parts of it.
Citigroup delenda est.
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oneleaf
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Post by oneleaf »

cato wrote:Well, I did exactly that:

* Long Munis
* Long TIPs
* Short nominal treasuries (via TBT)

I chickened out of the TBT position a while back (luckily). Being somewhat of a Mideast expert, who reads the local papers, I think there's a black swan coming. Not good to be short treasuries for that reason. Long-term, I think that strategy would work out, but I'm just going to get by on the first two parts of it.
Don't leave us hanging! What are you predicting exactly?
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cato
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Post by cato »

oneleaf wrote: Don't leave us hanging! What are you predicting exactly?
I think the Strait of Hormuz stands a good chance of being mined within the next few months, in retaliation for actions (or just threats of actions) of other regional powers against Iran.
Citigroup delenda est.
Gekko
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Re: Treasuries....the next bubble?? sure look like it

Post by Gekko »

Dylanwise wrote:It sure looks like we have a new bubble.
Just like the recent real estate and commodities bubbles,
this one seems easy to call and maybe the biggest of all.

Time will tell.

If you believe it, the question is how do you play it?
"Stop watching CNBC. It will make you stupid and poor. If you must watch, turn off the sound. It becomes an excellent substitute for Animal Planet." - William Bernstein
djw
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Post by djw »

Until yesterday, I had a small percentage of my AA in VBLTX (Long-term Bond Index) which is 50% long-term treasuries.

Yesterday I looked at a ten-year chart of VBLTX and was amazed to see how steeply it had shot up in the past five trading days.

I calculated that I could sell it all with a 5% short-term cap gain. I decided that nothing going up that steeply could end well, so I liquidated at close of market yesterday.

Naturally, I was unhappy when it continued to go up, even more steeply, today, but I'm taking that as confirmation that a violent end can't be far away. It certainly can't keep going up like this for much longer.

I'm holding some cash that I'm ready to invest. I thought long and hard about buying VTSMX (US Total Stock Market), VGENX (Energy), VGSIX (REITs), or VIPSX (TIPS) today, but I decided to sit on my hands for the moment.

One analyst summed it up today by saying he feels the market is about to make a sharp move upwards or downwards, but he doesn't know which it will be. That's how I'm feeling too. I'm already heavily invested in a very broad portfolio, so I'll benefit from a sharp rise. If something tanks, I'll be able to deploy my available cash to buy whatever gets slammed at a lower price.
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cato
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Post by cato »

djw wrote:One analyst summed it up today by saying he feels the market is about to make a sharp move upwards or downwards....


I can practially guarantee you, it will do both. I'm just not sure about the order.
Citigroup delenda est.
Hemispheres
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Post by Hemispheres »

cato wrote:
djw wrote:One analyst summed it up today by saying he feels the market is about to make a sharp move upwards or downwards....


I can practially guarantee you, it will do both. I'm just not sure about the order.
LOL, do people actually get paid for saying things like that? Where can I get in on that racket?
Hemispheres
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Post by Hemispheres »

djw wrote:Yesterday I looked at a ten-year chart of VBLTX and was amazed to see how steeply it had shot up in the past five trading days.

I calculated that I could sell it all with a 5% short-term cap gain. I decided that nothing going up that steeply could end well, so I liquidated at close of market yesterday.

Naturally, I was unhappy when it continued to go up, even more steeply, today, but I'm taking that as confirmation that a violent end can't be far away. It certainly can't keep going up like this for much longer.
I don't think you should be unhappy dumping it. You made money. Things are so wacky right now that any gain is a good thing. I have a bunch of cash on the sidelines too but I'm concerned about the lack of positive action in VFSTX. It appears to be rounding out to a bottom around 9.50 or so. I'm a little scared to move into stocks more until I see VFSTX improve. In my experience, the short term bond market seemed to behave more rationally than stocks and if it hasn't recovered (or, at a minimum, stopped going down), I wonder how stocks will perform.

That 200DMA stuff is looking pretty good right now...
ziggy29
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Post by ziggy29 »

djw wrote:One analyst summed it up today by saying he feels the market is about to make a sharp move upwards or downwards, but he doesn't know which it will be.

Given the volatility in the last 2-3 months, that's almost like an analyst predicting the sun will rise in the east tomorrow.
sandyboy
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Post by sandyboy »

djw wrote:Until yesterday, I had a small percentage of my AA in VBLTX (Long-term Bond Index) which is 50% long-term treasuries.

Yesterday I looked at a ten-year chart of VBLTX and was amazed to see how steeply it had shot up in the past five trading days.I liquidated at close of market yesterday.

Naturally, I was unhappy when it continued to go up, even more steeply, today, but I'm taking that as confirmation that a violent end can't be far away. It certainly can't keep going up like this for much longer.

I'm holding some cash that I'm ready to invest. I thought long and hard about buying VTSMX (US Total Stock Market), VGENX (Energy), VGSIX (REITs), or VIPSX (TIPS) today, but I decided to sit on my hands for the moment.
I would suggest that you at least consider an alternative scenario.It cant hurt to look at the Japanese Nikkei which has fallen from 39,000 to under 10,000 yen and tracked the fall of the Japanese economy into a more than ten year recession with serious price deflation.It seems to me that our economy is contracting at an alarming rate.

Yield seems to be king just now and that vbltx sure looks good!Atleast for the intermediate term.
Hemispheres
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Post by Hemispheres »

Ok, I thought the "stocks will make a big move up or down" was bad ... but this guy takes the cake:

http://www.marketwatch.com/news/story/T ... 6BB8FFC%7D

Howard Gold has now turned "bearish" on stocks. Way to go! At least he acknowledges how stupid he looks:
So, that's the grim economic backdrop I see for the markets in the years ahead. But isn't it a little late in the game to be turning bearish, after stocks are down more than 40%? Could my "surrender" be part of the capitulation that signals a market bottom? And how should investors position their portfolios for the months or years ahead?
I'll try to answer those questions next time.
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