I gave you two suggestions and that is my point. The fact that you are not understanding my suggestions is part of the problem.
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Trading negative interest rates
- Thread starter sprstpd
- Start date
I gave you two suggestions and that is my point. The fact that you are not understanding my suggestions is part of the problem.
I think you need to be more specific about what your talking about doing.... Shorting treasuries is a very difficult thing to do...
I am not necessarily talking about treasuries. Most of the negative interest rate occurrences are happening in Europe currently, but that doesn't mean it can't spread. The way things are going, it seems like negative interest rates will become more prevalent over time until everyone wakes up to the absolute insanity of it all (or an external event happens).
It doesn't have to be shorting negative interest rate instruments. For example, if there were a beaten down sector where the companies in that sector rely on reasonable interest rates to make money, then you could just buy and hold those companies (and pick up their dividend while waiting). But I am not seeing any beaten down sectors with these qualities given current Fed-induced valuations.
I am not necessarily talking about treasuries. Most of the negative interest rate occurrences are happening in Europe currently, but that doesn't mean it can't spread. The way things are going, it seems like negative interest rates will become more prevalent over time until everyone wakes up to the absolute insanity of it all (or an external event happens).
It doesn't have to be shorting negative interest rate instruments. For example, if there were a beaten down sector where the companies in that sector rely on reasonable interest rates to make money, then you could just buy and hold those companies (and pick up their dividend while waiting). But I am not seeing any beaten down sectors with these qualities given current Fed-induced valuations.
Here's the problem. You are lazy. You want some magical trade you can just sit on and think you are going to make a fortune. These trades you want to do are all very complicated and require a lot of understanding and a lot of research. You just want a trade fed to you and the markets don't work that way. The last 10 years some very smart people got blown to pieces trying to short JGB's in Japan because according to them, there was no way rates could stay at zero that long. Well, they did. The bad news is, if you really want to make money in this business you gotta really put in some work. There are no easy trades.
Here's the problem. You are lazy. You want some magical trade you can just sit on and think you are going to make a fortune. These trades you want to do are all very complicated and require a lot of understanding and a lot of research. You just want a trade fed to you and the markets don't work that way. The last 10 years some very smart people got blown to pieces trying to short JGB's in Japan because according to them, there was no way rates could stay at zero that long. Well, they did. The bad news is, if you really want to make money in this business you gotta really put in some work. There are no easy trades.
Well you are an asshole. You have no idea who I am and whether I am lazy or not. You were wrong when you said that there were no negative nominal interest rates (and you were *so sure* about that and derided me about it before you realized you were wrong), so it may be possible you are wrong again.
I wanted to start a discussion about the absurdity of negative interest rates and how one might go about trading them (as a retail trader) and you just couldn't wait to pull your cock out and display it to everyone.
By the way, the best trades are where you just put on the trade and wait because you know the outcome is inevitable. There may not be a way to realize that kind of trade in this instance, but just because you say so doesn't make it so. Plus your attitude makes me think you are just close minded on this particular topic.
And by the way, I've made plenty of money in this business and I've worked hard for it. So stop making assumptions that make you look like a prick.
Well you are an asshole. You have no idea who I am and whether I am lazy or not. You were wrong when you said that there were no negative nominal interest rates (and you were *so sure* about that and derided me about it before you realized you were wrong), so it may be possible you are wrong again.
I wanted to start a discussion about the absurdity of negative interest rates and how one might go about trading them (as a retail trader) and you just couldn't wait to pull your cock out and display it to everyone.
By the way, the best trades are where you just put on the trade and wait because you know the outcome is inevitable. There may not be a way to realize that kind of trade in this instance, but just because you say so doesn't make it so. Plus your attitude makes me think you are just close minded on this particular topic.
And by the way, I've made plenty of money in this business and I've worked hard for it. So stop making assumptions that make you look like a prick.
Sorry buddy. You come off as a lazy guy asking for handouts. Everything you asked on this thread could be found with some rudimentary knowledge of how these trades work but instead of learning it yourself you go off on a soap box about your "personal views" and then claim it's a risk free trade. And no, I was not wrong about the nominal rates. I didn't know you were referring to Europe vs the US. I clarified that. You have no idea what you are doing here. You are driving blind and pretending like it's the trade of the century. If you had even a 3rd grade research ability you could have done a search on the body bags of traders who have been doing that EXACT trade in Japan. Risk free huh? Riiiiight. Your problem is ignorance. You could educate yourself but you probably have already figured out it's not worth the effort since you and I both know you are never going to put this trade on. What other risk free ideas do you have? You know, to keep the "discussion" going.
You know I've only been here a week and it already feels like home. I don't know what's worse--the thought of you two out with your dates punching out replies on ET, or home alone. Only a pathetic soul would sit home on a Friday night and post after post, wishing the markets were still open. Wait, um never mind. Is there a charge for belonging to this site? What, its free? You mean I can sit here every Friday night? Awesome!--SwimrWell you are an asshole. You have no idea who I am and whether I am lazy or not. You were wrong when you said that there were no negative nominal interest rates (and you were *so sure* about that and derided me about it before you realized you were wrong), so it may be possible you are wrong again.
I wanted to start a discussion about the absurdity of negative interest rates and how one might go about trading them (as a retail trader) and you just couldn't wait to pull your cock out and display it to everyone.
By the way, the best trades are where you just put on the trade and wait because you know the outcome is inevitable. There may not be a way to realize that kind of trade in this instance, but just because you say so doesn't make it so. Plus your attitude makes me think you are just close minded on this particular topic.
And by the way, I've made plenty of money in this business and I've worked hard for it. So stop making assumptions that make you look like a prick.
You know I've only been here a week and it already feels like home. I don't know what's worse--the thought of you two out with your dates punching out replies on ET, or home alone. Only a pathetic soul would sit home on a Friday night and post after post, wishing the markets were still open. Wait, um never mind. Is there a charge for belonging to this site? What, its free? You mean I can sit here every Friday night? Awesome!--Swimr
I think the equity side might offer more to this trade. The only thing that comes to mind is a gold miner that pays a dividend--but the dividends will be under increasing pressure, and the stocks to follow. Plus there's no guarantee that gold would jump on higher rates. But getting exposure to gold has been one heart wrenching way to play this theme. A question--Is any sector of the economy not affected by a sharp rise in rates? (Negatively) If you can find one, then that would be one answer to your puzzle. It's probably something esoteric, like a Ferry Morse seed company if they are even public. At first rates rise cause the economy is good, then there's eventually a panic and money tightens more just at the wrong time. That's conventional wisdom. Which doesn't work too well in the markets. Portfolio generals always fight the last war, or so I'm told--SwimrI am not necessarily talking about treasuries. Most of the negative interest rate occurrences are happening in Europe currently, but that doesn't mean it can't spread. The way things are going, it seems like negative interest rates will become more prevalent over time until everyone wakes up to the absolute insanity of it all (or an external event happens).
It doesn't have to be shorting negative interest rate instruments. For example, if there were a beaten down sector where the companies in that sector rely on reasonable interest rates to make money, then you could just buy and hold those companies (and pick up their dividend while waiting). But I am not seeing any beaten down sectors with these qualities given current Fed-induced valuations.
Or you could just learn to love denial and try to be more like your friends. Buy Home Depot. Toll and BofA and enjoy the bliss. . .I think the equity side might offer more to this trade. The only thing that comes to mind is a gold miner that pays a dividend--but the dividends will be under increasing pressure, and the stocks to follow. Plus there's no guarantee that gold would jump on higher rates. But getting exposure to gold has been one heart wrenching way to play this theme. A question--Is any sector of the economy not affected by a sharp rise in rates? (Negatively) If you can find one, then that would be one answer to your puzzle. It's probably something esoteric, like a Ferry Morse seed company if they are even public. At first rates rise cause the economy is good, then there's eventually a panic and money tightens more just at the wrong time. That's conventional wisdom. Which doesn't work too well in the markets. Portfolio generals always fight the last war, or so I'm told--Swimr
Sorry buddy. You come off as a lazy guy asking for handouts. Everything you asked on this thread could be found with some rudimentary knowledge of how these trades work but instead of learning it yourself you go off on a soap box about your "personal views" and then claim it's a risk free trade. And no, I was not wrong about the nominal rates. I didn't know you were referring to Europe vs the US. I clarified that. You have no idea what you are doing here. You are driving blind and pretending like it's the trade of the century. If you had even a 3rd grade research ability you could have done a search on the body bags of traders who have been doing that EXACT trade in Japan. Risk free huh? Riiiiight. Your problem is ignorance. You could educate yourself but you probably have already figured out it's not worth the effort since you and I both know you are never going to put this trade on. What other risk free ideas do you have? You know, to keep the "discussion" going.
You didn't know I was referring to Europe because you just assumed. And you are just assuming there is no way to effectively play this trade. Maybe you are wrong, just like your first assumption was wrong. I mean it could be possible that even you could be wrong.
Oh I know I am plenty ignorant on many fronts. For example, if I trade bonds, I always trade them through ETFs. It is just my comfort zone - I trade securities. But I am willing to put in the effort to learn about new instruments if I have the inclination. You seem to think you know everything about everything. Read my last post on how that makes you come off. When did I say it was going to be the trade of the century? You seem to like to exaggerate. What trade am I putting on? I haven't even come up with a trade yet.
This thread is to discuss anyway you might take advantage of negative interest rates. It doesn't have to be shorting bonds. Insurance companies would be positively affected when interest rates rise. However, if you look at the KIE ETF, you'll see how it is already at 5 year highs - hardly a sector that is depressed.
Perhaps foreign insurance companies in countries where there are already negative nominal rates.
I think the equity side might offer more to this trade. The only thing that comes to mind is a gold miner that pays a dividend--but the dividends will be under increasing pressure, and the stocks to follow. Plus there's no guarantee that gold would jump on higher rates. But getting exposure to gold has been one heart wrenching way to play this theme. A question--Is any sector of the economy not affected by a sharp rise in rates? (Negatively) If you can find one, then that would be one answer to your puzzle. It's probably something esoteric, like a Ferry Morse seed company if they are even public. At first rates rise cause the economy is good, then there's eventually a panic and money tightens more just at the wrong time. That's conventional wisdom. Which doesn't work too well in the markets. Portfolio generals always fight the last war, or so I'm told--Swimr
Yes, the precious metals complex may be a great way to play this idea. The miners are severely depressed (based on historical standards), and some pay a decent dividend. I like this idea and I have already invested a decent chunk of my portfolio in it.
You can also view Bitcoin as a more extreme version of gold and I've been dollar cost averaging into it as well (although at a much smaller scale).
That being said, it is not quite as pure a trade as I would like in terms of what I want to capture. However, it is possible there is no better way.
Thanks for the ideas.