1. The economy is improving
2. Rates are rising
3. QE2 and fiscal stimulus should cement these trends
4. Institutional investors recognize what is going on and are fleeing the bond market (e.g., redemptions from PIMCO Total Return Fund.)
5. Will the Sovereigns that hold much of our debt (China, Japan, GB, Saudi) want to be left holding the bag?
5. The Fed can keep short term rates low but cannot control the price of long bonds...
TBT to the moon?
Of course... the long bond is rising BECAUSE the economy is healing (thank you, Fed & Obama, for doing something) and equities are a better place to be.
Now, when it gets to the moon -- and treasuries yield over, say, 8% (pls do not hold me to that number, I pulled it out of my ear)-- that is a different story... Obviously, at some point, the many imbalances come home to roost and/or the economy over-heats -- but that is a loooong way off.
Cool. Thanks. Ya got me!
I have a thing for wine, cheese and August off. Otherwise...
Arwen is my pal, so can*t tell you what I really think. LOL!
So here is the last of my French (the clean stuff), learned at the toll booths between Nice and Perpignan:
Bon Jour. 50 Euro. Merci. Au revoir!
Yes, long term it's the place to be. I hate to say it, but I'm not French lol(note: I left the "c" & "s" out of Jacques), although I love the culture and if I had to pick 2 languages to learn, 1st Mandarin, 2nd French. French isn't that useful anymore....it is however(in my humble opinion) the most beautiful language. Portuguese is also quite beautiful.
The long and short of it. Long stocks of emerging economies, short the long dated American bonds. Gold and silver still an interesting inflation hedge according to Faber.
Faber believes inflation will be the problem, not deflation.
http://2010.therussiaforum.com/news/session-video3/ This is dated now but still worth a listen.
He addresses all the fundamental issues and how we got here.
Genial, super, fantastique!
What is Marc Faber saying about emerging markets? I have a bunch of retirement money in an emerging market fund... good place to be until recently... but I think a good place to be for longer term, N*est pas?
You have a nice selection of names as well. Good choices. Yes possibly an upper level consolidation is occurring. You are probably right. There is really nowhere else to put money but in stocks anyway. As we agree, bonds are headed south. I'm agreeing with Marc Faber about emerging economies, although many American companies essentially make there money with sales to emerging markets. I just like to buy growth stocks when they are reasonable since I hold for years. The data shows that around 30 p/e is the max you can pay if you are holding for 5 years+. Of course if you are a short term trader then valuation doesn't matter. It's just not my personality to be so short term. There is also the higher taxes on short term gains. I have done ok with my approach. I'm certainly beating the indexes over the last 10 years.
I completely agree with your thesis on long bonds. I just think there are better ways to make higher returns. I have occasionally used them as with TBT. From now on, I'm just stick with individual stocks.