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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: patron_anejo_por_favor who wrote (124623)	5/22/2008 7:43:51 AM
From: Eddy Blinker	Respond to of 306849

Carnac the Magnificent says , Oil at home needs inflationary prices to get it UP Dippity Do.................

To: patron_anejo_por_favor who wrote (124623)	5/22/2008 8:46:00 AM
From: ChanceIs	Read Replies (1) \| Respond to of 306849

RE: Long Bond - Lehman 1-3 Year Treasury Bond Fund (SHY) Patron, I couldn't agree more with you about the perils of the long bond. I read one sharp, old, Wall Street sage recommending buying the short bonds. One can easily do that through the iShares (SHY) short bond ETF. ishares.com Of course that is for the wimps who don't want to get short. The short bonds are less volatile or sensitive to rate changes. In the current climate, short rates aren't getting any lower, so the potential for capital appreciation isn't there. Short rates could easily go up from here so that there is real possibility of cap losses. Of course with the short maturity, those losses get wiped out upon redemption. Same sage also suggests that the government can't monkey with the very short bonds (less than six months?). Apparently the government has been known to extend maturity at will...eg turning a one year bond into a 1.5 year bond. I don't know when that last happened, but the motivation is certainly there today for the government to do that if our foreign friends stop buying. I guess its kind of like signing up for one tour of duty in Iraq, and being invited back for a second or third, where declining the invitation is not an option. I am concerned because my wife's federal retirement program options are severely limited - US Treasuries, US small caps, foreign stocks, and perhaps a few others. I am not pleased by the choices. We are overweighted on the foreign stocks to get some protection via the falling dollar. I don't think we can go to cash, which of course is the ultimate US short bond. Certainly better than the long bond these days.