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iShares TIPS Bond Message Board

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  • noelco_4_me noelco_4_me Feb 14, 2012 1:06 PM Flag

    Tips conundrum


    Thank you for your response. I am always interested in the thoughts of someone who trades/invests with a purpose. Understanding the goal, may help me in understanding its applicability to me or others.

    You referenced a situation in Europe that seemed to always hit your investment in TIP. Each time the Europeans were hit with some economic issues you mentioned that the price of TIP was hit. You seemed perplexed or at least frustrated.

    I believe that it is nothing more than a flight to quality (relative to the economy of Europe) that is causing this. Funds naturally flee unsettled economies and go toward the more stable economy. In this case, when Europe gets hit, people sell European based instruments and move them toward the more stable (relatively speaking) economy....which would be in many cases the U.S. economy.

    When the dollar is stronger and other currencies are weaker, guess what happens to TIP? It moves up because people are buying into a stronger investment to lock in some sort of matter how low it may be. And at the very least, try to protect the principal from erosion.

    If you think the Fed has driven the rates low (ridiculously low)...think Japan...they are at a negative rate and have been at or below Zero for a couple of years.

    I like market timing. I have been trading based on technical indicators (stochastics, RSI and MACD among a few of my favorites) for 30 years now. Nothing mysterious to me there.

    Good Investing, Ken

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