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

To: Jurgis Bekepuris who wrote (38868)	8/18/2010 1:11:10 PM
From: MCsweet	Read Replies (2) \| Respond to of 78576

I think inflation protection will help a little but overall TIPs could get very hurt in a rising rate environment. To me the risk/reward is not compelling. You are getting paid next to nothing right now, while still taking a fair amount of interest rate risk. If inflation is a worry, I'd rather own commodity-sensitive stocks than TIPs. If you think 6-7% interest rates are possible (especially on the short rates), I'd recommend a floating rate security like GYB (Goldman trust preferred) trading at 17.92 with 4.69% current yield and 5.60% yield to maturity (the later assuming libor stays below the floor rate, the yield would increase if short rates rise). As for me, I'm not ready to pull the trigger back into floating rate. I'd rather wait until it looks like short-term rates might start turning up. MC