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How to profit from Inflation
- Thread starter pathus21
- Start date
Good thread. I agree that buying real estate in good places is the best bet.
I have been buying ETFs that short the 10 year treasury.
See PST, for example.
If there is inflation (or just general lack of trust in the US dollar + US debt), treasuries will plunge in value as yields soar.
I think the downside on PST is also relatively safe. How much lower in yield can 7-10 year treasuries get?
Of course, I just got creamed in my position because of the fed's announcement that it'd be buying treasuries... but in the long run, I think I'll get it back.
See PST, for example.
If there is inflation (or just general lack of trust in the US dollar + US debt), treasuries will plunge in value as yields soar.
I think the downside on PST is also relatively safe. How much lower in yield can 7-10 year treasuries get?
Of course, I just got creamed in my position because of the fed's announcement that it'd be buying treasuries... but in the long run, I think I'll get it back.
Quote from heech:
I have been buying ETFs that short the 10 year treasury.
See PST, for example.
If there is inflation (or just general lack of trust in the US dollar + US debt), treasuries will plunge in value as yields soar.
I think the downside on PST is also relatively safe. How much lower in yield can 7-10 year treasuries get?
Of course, I just got creamed in my position because of the fed's announcement that it'd be buying treasuries... but in the long run, I think I'll get it back.
i'm not an expert on this, but please consider what i will say, i agree with the idea of shorting 7-10 or 30 yr. US treasuries, but your assumption about PST not going much lower is incorrect, it's not probable but still possible for example for the yield to go negative, with government interventions and manipulations, short squizes anything can happen, also with double inverse funds its possible in the very long term for yeilds on treasuries be exactly the same as today and PST (and TBT) be much lower than today due to 2x inverse errosion, if you think 10yr is going down, go and short 10yr. don't mess with these ETFs, especially for a really long term
I can't think of any scenario where 7-10 year treasuries will end up with negative yields.Quote from jjftw:
i'm not an expert on this, but please consider what i will say, i agree with the idea of shorting 7-10 or 30 yr. US treasuries, but your assumption about PST not going much lower is incorrect, it's not probable but still possible for example for the yield to go negative, with government interventions and manipulations, short squizes anything can happen, also with double inverse funds its possible in the very long term for yeilds on treasuries be exactly the same as today and PST (and TBT) be much lower than today due to 2x inverse errosion, if you think 10yr is going down, go and short 10yr. don't mess with these ETFs, especially for a really long term
We're not talking 3 month or 6 month notes... we're talking 7-10 year bonds. Why would *any* investor anywhere buy a financial asset that, even if you held it to maturity over 7 years, would represent *negative* returns? And if you didn't hold to maturity... would just mean capital losses?
Quote from heech:
I can't think of any scenario where 7-10 year treasuries will end up with negative yields.
We're not talking 3 month or 6 month notes... we're talking 7-10 year bonds. Why would *any* investor anywhere buy a financial asset that, even if you held it to maturity over 7 years, would represent *negative* returns? And if you didn't hold to maturity... would just mean capital losses?
Why did they ban short selling stocks? I never thought it was possible in America. Recently I heard talks of actual stock certificates being required to be presented to allow shorting of certain stocks.
Why is there "buy American" clause in stimulus bill. Why is my good friend, who speaks 5 languages and has 2 college degrees and an MPA from NYU and was paid about half of what americans with similar qualifications got, now being refused to have her employment continued at a major bank because of H-1B visa? Why is Cramer bringing up the idea of banning short ETFs every time he speaks?
If its "bad" to short stocks, its certainly "unamerican" and not good to short bonds, because the person who sold short is trying to bring the interest rates up and prevents americans from buying a car or a house and getting out of this crisis. All there has to happen is a little bit more demand for treasuries from another purchase by the Fed, and some kind of "ban" on supplies and any yield is possible.
I also heard of a proposal for a new tax similar to social security, like mandatory 4% tax for a new retirement type of account which could invest into different instruments, maybe even all into government bonds. There could be a requirement for current 401k to include a certain percentage of government bonds.
And if you are talking about ETNs and ETFs all kinds of new risks arise, just check out GOE etn for a good example, and tell me does it make sense? Who bought at 120? Not one who wanted to, but one who was made to, due to margin call or any other reason, same story with volkswagen shorts.
ok too much crazy talk, with all this said i'm probably just losing my mind with all the things going on and this is the top for treasuries and bottom for stocks, and sorry for the long and unorganized post, english is not my first or second language and i don't have much time for clearly explaining all my thoughts
Quote from jjftw:
Why did they ban short selling stocks? I never thought it was possible in America. Recently I heard talks of actual stock certificates being required to be presented to allow shorting of certain stocks.
Why is there "buy American" clause in stimulus bill. Why is my good friend, who speaks 5 languages and has 2 college degrees and an MPA from NYU and was paid about half of what americans with similar qualifications got, now being refused to have her employment continued at a major bank because of H-1B visa? Why is Cramer bringing up the idea of banning short ETFs every time he speaks?
If its "bad" to short stocks, its certainly "unamerican" and not good to short bonds, because the person who sold short is trying to bring the interest rates up and prevents americans from buying a car or a house and getting out of this crisis. All there has to happen is a little bit more demand for treasuries from another purchase by the Fed, and some kind of "ban" on supplies and any yield is possible.
I also heard of a proposal for a new tax similar to social security, like mandatory 4% tax for a new retirement type of account which could invest into different instruments, maybe even all into government bonds. There could be a requirement for current 401k to include a certain percentage of government bonds.
And if you are talking about ETNs and ETFs all kinds of new risks arise, just check out GOE etn for a good example, and tell me does it make sense? Who bought at 120? Not one who wanted to, but one who was made to, due to margin call or any other reason, same story with volkswagen shorts.
ok too much crazy talk, with all this said i'm probably just losing my mind with all the things going on and this is the top for treasuries and bottom for stocks, and sorry for the long and unorganized post, english is not my first or second language and i don't have much time for clearly explaining all my thoughts
A lot of us feel the same way you do. I feel so much rage watching America being run into the ground by its fucking retarded govt. I even wrote a letter to my Senator. There is nothing I can do about it so I am just going to live my selfish little life and try to get rich.
Quote from jjftw:
If its "bad" to short stocks, its certainly "unamerican" and not good to short bonds, because the person who sold short is trying to bring the interest rates up and prevents americans from buying a car or a house and getting out of this crisis. All there has to happen is a little bit more demand for treasuries from another purchase by the Fed, and some kind of "ban" on supplies and any yield is possible.
It is absolutely true that shorting stocks & bonds is unamerican and is a direct attack on the 'American lifestyle'.
HOWEVER.
Shorting is the most natural occurance of nature just as going long. Think of anything really, but let's use trees for example. In order for the forest to stay healthy, rotting trees must fall (or better yet, must be cut down) for the benefit of the forest. That's shorting. It brings balance to the force, etc.
Now, during a bubble-bust that is happening now, balance brought back to the markets is exactly what could lead us out of this mess. Unfortunately that means that the American consumer must give up its wasteful lifestyle and must accept the realities that could be avoided thus far by overleveraging everything. And this is exactly why we will not escape this game of creating bubbles after bubbles, since the American consumer would rather see a nuclear holocaust than to turn off the A/C or to buy a 160" flatscreen or buy a brand new 12-litre SUV for grocery shopping. Right now the new bubble is money itself (money supply). As of now, I can't predict how this money-bubble will implode but the accumulation of real assets and food production capabilities (and ammo...) sounds like a real good idea. (Also against inflation.)