I expect that you could sell your holdings of ETF TIP above 118 today and simply hold the cash. Sometime during the remainder of 2011 or during the 2012 run-up to the election, you can buy back more shares of ETF TIP with the cash. My expectation would be to buy below 110 easily.
What we are seeing now is a panic of people getting out of stocks (both taxed and 401k deferred tax accounts, etc.) and looking for "somewhere" to park the money. But ETF TIP at 118 is not the right place. And the brokers couldn't care less....
Treasury TIPS and I-Bonds I would hold to maturity. E-Bonds are useful if you hold them long enough for the "double" to kick in, which results in a good interest rate return in current conditions.
Are we trading like gold here and if so, what happens to TIP if gold corrects? Are we going to correct here? I almost sold 1/3 of my position at 115 last week and was too scared to. I thought for sure that marked a temporary top. Instead we just sliced through 115 like it was practically nothing. This is getting f'ing bizarre. The 10 year went negative and significantly so today.