If You Were Convinced ?

Discussion in 'Economics' started by Star, Dec 30, 2005.

  1. Star


    That interest rates would rise during 2006, where would you invest to take advantage of rising interest rates?
  2. I actually cannot think of any assets that rise in a rising interest rate economy. You'd probably have to buy one of those short-mutual funds (fixed income) or go do outright shorts on bonds or something.
  3. jrlvnv


    Sell the euro dollar futures.... Not the currency though. ED is the symbol so like a EDU06 ... The move against the US interest rates.
  4. ig0r


    Uhh... short fed funds futures?
  5. jrlvnv


    I said short ED if you think US interest rates are going up. Do a little research on it if you don't understand it or ask a more general question starting with something else other then umm please.
  6. Simply asking the question suggests that you are in the "dumb money" camp, so one approach would be to find out what you would do and take the contra side of that trade. :D

    I hope you don't take it personally, as it makes good sense to be on the contra side of any trader asking this question. Its as though you were wearing a T-shirt with the logo "I'm with stupid" only the arrow points straight up....

    Happy New Year.

  7. meskhot


    Sell ED futures only if you think that short term interest rates are going to rise HIGHER THAN EXPECTED. There are already a few IR hikes priced in the ED, which represent a "consensus" view.
    You can also short the banking sector, most likely to suffer from tightening periods if you are really convinced.
  8. meskhot


    Your condescendance suggests that you are in the "smart money camp", and therefore you have great ideas about the future direction of interest rates.
    Please share them with us.
    BTW, I just read the reports of two truely brilliant economists (Roach from Morgan Stanley and Rosenberg from Merrill) that have completely opposite views...
  9. Roach is total loser, he is a permanent chicken little on the US economy and rarely is right about anything.

    I stopped reading his stuff about 6 months ago because it never changes. Read something from 1 year ago and read something 1 week ago and is virtually the same analysis :p
  10. well sir:

    If I were part of the smart money crowd, the right thing, the "smart thing" to do would be not to own up that it in public.

    Also it would be stupid to share any insight with you, as you also seem to be a member of the dumb money group.

    On a more interesting topic. I notice that Warren Buffet has now lost more than a billion dollars betting wrong on the US Dollar. At the moment, Mr. Buffet is a "charter member" of the dumb money crowd, as are several banks that decided to "piggyback" his trades including UBC, Lehman, et al.

    I would guess that these folks consider themselves to be simply early rather than outright long. This ability to hold a position through a painful loss is characteristic of sharp investors who sometimes take a real bath in the markets. Remember that for some years, people criticsized Buffet for missing the Dot.com rally until it turned around on them, becoming the dotcom bubble.

    So again, one has to define oneself in terms of the longer run and hope that they are right more often than wrong. In Buffet's case that is true. Also he has deep pockets and can afford to be wrong longer than any of us.

    Good luck,
    #10     Dec 30, 2005