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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Investor2 who wrote (37046)	3/22/2010 9:27:20 AM
From: p friend	Read Replies (1) \| Respond to of 78520

Consider TMV. DIREXION SHS ETF TR 30YR BEAR ETF The investment seeks daily investment results, before fees and expenses, of 300% of the inverse (or opposite) of the price performance of the NYSE Current 30-Year Treasury Index. The fund normally creates short positions by investing at least 80% of net assets in financial instruments that, in combination, provide leveraged and unleveraged exposure to the target index, and the remainder in money market instruments. It is nondiversified.

To: Investor2 who wrote (37046)	3/22/2010 11:55:50 AM
From: Jurgis Bekepuris	Respond to of 78520

First, let's distinguish definitions. TIPs are inflation indexed bonds with various maturities. TIP is an ETF that holds such bonds and can be bought as any other ETF through your broker. When I say TIPs, I mean bonds. When I say TIP, I mean ETF. :) As I said, TIP and TIPs resolve one issue: it protects from inflation. Actually, they resolve only HALF an issue, since it uses government definition of inflation to adjust for it, so it really protects for a part of inflation only. Now, the drawbacks. TIP and TIPs have lower interest rates before inflation compared to treasuries, so unless there is a marked inflation, you lose. You have to be sure there will be inflation, which I wouldn't swear on. And again oil price increase is only partially reflected in inflation gauge, so oil going to $80-90-100 does not TIP/TIPs return make. TIP as a fund does not protect from interest rate increases that are not related to inflation. If Fed decides to raise rates because they don't want to stimulate economy anymore, TIP will drop as its yield spread to new rates will be wider. On the positive side TIP holds TIPs of various maturities, so the effect won't be as bad as if you bought a single TIPs bond with a single maturity. Morningstar gives TIP portfolio average maturity at 4.76 years quicktake.morningstar.com , which is not bad in terms of interest-rate risk. (In very simple terms, anything over 10-15 years is bad, anything below 5 years is not that bad). Finally, personally I'd prefer an income fund that would gain if US$ dropped. This is not directly related to TIP/TIPs. There is WIP quicktake.morningstar.com , but I don't like it either, since IMHO it has even worse interest rate risk than TIP.