That was just people who panicked and covered their shorts. Now they have re-established their short positions on the long bond and are safe <g>.
I think the truth is that, given what seems to me the inevitability of inflation, anyone who gets committed to the straight 30-year treasuries at such a low interest rate is likely to fare as well as those who held 3% treasuries from about 1955 to 1980. In other words, they will lose at least half their real capital. Now that's better than losing 75%, which a lot of people have achieved in just a year or two recently.
I was in a quandary today about my wife's very large position in the TIPS, but since they are --ha ha, we hope-- indexed to inflation and guaranteed by the U.S., it seemed best not to start speculating by moving into money market funds, even if that means watching that two-day 10% gain melt partly away. Also, it wasn't possible to sell at the opening. I think it's best to leave that money alone--and besides, if we ever get back below a P/E of 10 on the S&P, it can be moved into stocks. |
