Are inverse treasury bond funds a sure bet in the future? If not then why not. All answers appreciated.
No such thing as a sure bet, IMO. Look at people who thought rates couldn't possibly go lower in Japan in the last 10 years. They called the short JGB trade the widow maker for a reason.
hoodooman, a couple of the global macro guys that I listen to such as Jeff Gundlach and others are buying treasuries on dips, as they think we stay range bound for quite some time to come. Their thinking is that because of our budget deficit, slow gdp and a still fragile housing market, there is no way for the Fed to let rates go up any time soon.
I agree but I have a feeling that they can't go much lower and the inverse tbond etfs have been bottomed for a long time now.
I have been buying TMF on dips and selling when oversold for the past year and it's worked pretty well. I suppose I should look at TMV for the opposite dips since I tend to believe it's range bound.
This is the first long term play that I've been interested in since 2000. TMV was a great day trade today.
I hope you are aware that you are paying the carry on that ETF. Not that big of a problem if they keep dropping like a rock, but if it stays range bound you will bleed.
There are no sure things in trading, but personally speaking, shorting treasuries seems like a decent long term play with good risk-reward. That said, I think you have to be ready to commit to staying in the position at least 5 years if not longer. I've been long DLBS since last October and am up over 27% since then but was losing on this position as recently as May. I think if you try to make this a short term trade, you're asking for trouble because rates will be volatile. It wouldn't surprise me if rates actually go lower over the next couple of years if the economy falls back into recession.