Monday, June 13, 2016

The "Good Bet"

July 31, 2013
MarketWatch: P/E ratios to drop 20% in coming years

The bottom line? It’s a good bet that interest rates will be in a secular uptrend for many years, and we should be planning now how to respond.

The article offers no reasons why interest rates will be in secular uptrend for many years. Not one. There's not even a hint of a reason. Read it in its entirety for yourself. You'll see.

And yet, the bottom line says it's a good bet.

What exactly is a rising interest rate environment? It's such a simple concept but the reality is far more complex. Let me show you.

3-Month Treasury Bill

07/31/13: 0.04%
06/13/16: 0.24%

Rising interest rate environment! Right?

30-Year Treasury Bond

07/31/13: 3.64%
06/13/16: 2.44%

Rising interest rate environment? Hmm.

If betting on rising rates was so good in 2013, then explain this.

ProShares UltraShort 20+ Year Treasury Message Board

merenkov • Jun 6, 2016 11:13

Only down 20% year to date!

This is starting to remind me of 2014, when anyone dumb enough to stay in TBT for the entire year lost 40% of their money. It could be worse, though. The morons in TMV (the triple inverse bond fund) are down 30% YTD...

It's down another 3% in the past week. TBT, it's the "good bet" that just keeps on giving.

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