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ProShares UltraShort 7-10 Year Treasury Message Board

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  • mmmparsley mmmparsley Jan 1, 2009 7:31 AM Flag

    OK, I'm in this thing

    Are you crazy?

    You know who decides the actual return on your Inflation Protected bonds? It's the Government? They don't count either food or energy in their measurements.

    And what do you think that tells you about what the US Government would recommend to themselves when it comes to selling TIPS and buying ENERGY and AG. Why pick up the scraps the government decides to give you, as they can adjust inflation to new benchmarks whenever they like, when you can expose yourself to real assets that respond immediately to real inflation.

    Dave

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    • This. That CPI number is inaccurate or late at best and downright fishy at worst.

      Besides, the party that makes the payments (the govt) is the same party responsible for the metric. That is a fundamentally bad deal that leaves YOU wide open and vulnerable to any manipulation of that metric. And the govt has plenty of incentive to manipulate it.

      Bond investors know the reality of inflation and when this panic clears and the money printing filters through the system you will see a higher nominal yield demanded (lower price) on all bonds.

    • Why buy TIPS? Preservation of principal for one thing and inflation is not going away. Regardless of how they define it. TIPS are a reasonable investment right now.

 
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