"[email protected]" wrote:
> One investment vehicle I like is ProShares UltraShort
> Lehman 20+ Year Treasury ETF (TBT). This ETF is
> effectively shorting long term US govt. bonds. There
> are risks, but I feel it is worth it because I see one
> of the two scenarios playing out over the long term:
Marlon,
TBT describes itself thus. "The fund seeks investments that correspond to twice
(200%) the inverse of the daily performance of the corresponding Treasury
Bond." This is a very sophisticated instrument. I use beta instruments only to
capture the daily fluctuations in volatile sectors. One has to have a good
understanding of the depth of these instruments before you get involved with
them. I am convinced that beta instruments are for trading and are not nearly
efficient as investments.
> Besides this, other strategies to hedge against a US$
> decline/high inflation include: commodities, gold, foreign
> currency, foreign markets and TIPS/WIPS. I think all US
> based residents should have a significant portion of their
> liquid assets in USD and inflation hedges. While I am a
> long term optimist on the US, in the short to medium term,
> things don't look so great.
The US is borrowing 46 cents for every 100 cents it spends. When inflation hits
the US, it will hit it with a wallop. Everything quoted on the world markets in
US dollars will rise i.e. oil, metals, commodities, etc. As you have correctly
pointed out, these are all good places to invest. While TIPS offers some
defence against inflation, WIPS may not, as any country that exports to the US
will be forced to depreciate their currency in tandem too.
For fun, take a look at FTP on Toronto. They supply the Swiss Govt with the
paper to print their banknotes. The Swiss Govt, like the US and all
other countries that have introduced "quantitative easing," is exponentially
increasing the amount of money they print. FTP may build a plant to triple
their paper output this year. A word of caution. If the Swiss Govt does not
have the money to pay for the paper, the Swiss Govt will buy the same quantity
of paper from FTP as they normally do as "plan B" will be to resort to printing
bank notes with an additional three or six more zeros on them. This is
popular, I am told, as it allows citizens to carry much more money in their
pockets........
Mervyn1650Lobo
BTW, I love your President. He is proving to be much more socialist than I am.
Hussein, peace be upon him, walks (and talks) like an Egyptian.
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