financialsense.com
A couple of week's ago, I brought this out as, in my opinion, one of the best reward-to-risk long term plays around. I have been adding to my short position in bonds using this 1.25 leveraged "bearish" bond fund (ProFund's Rising Rates Opportunity Fund). I am now pounding the table on this one! Again, if you have been reading my column, you now that my broad outlook on the market is bearish for U.S. equities, bonds, and real estate, with my thesis being: interest rates will experience an upward shock when the artificial manipulation of the mid-to-long end of the yield curve created by the "carry trade" and overseas intervention unwinds. This will cause a sharp rise in rates (drop in bond prices) and reversal of the downward interest rate trend—reeking havoc on stocks, bonds, and real estate. Even if you don't share this view, there are many other reasons rates could rise going forward (e.g., financing the giant deficit, or if can't help but dream, an economic recovery).
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Of major importance: The bond market experienced a relatively sharp sell-off on Friday, and stocks fell! Remember my thesis as mentioned briefly in my pick of the week, and that I have been discussing for almost two years now: the asset bubble bursting, with interest rates rising and stocks, bonds, and real estate falling. There have been numerous trading days along this rally, that have been stopped short with a volatile sell offs in bonds (rising rates). These are just teasers and warnings of something bigger on the horizon, which is not to be ignored! |
