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THE BOND TRADE OF THE YEAR

5 April 2009 by TPC 4 Comments

In my 2009 Investment Predictions I said that TIPs would substantially outperform treasuries.    If you ran a bond desk and had this simple long TIPs/short Treasuries trade on your year is over and you are drinking copious amounts of champagne on a beach in the South Pacific while the rest of the world spirals into the burning depths of hell.

Treasuries are down roughly -13% YTD vs the 2% return on TIPs.  A 60% annualized return in the bond market.  Not bad.

TIPs, apparently, aren’t just for waiters….

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More on this topic (What's this?)
Why Bother With Bonds? (Contrarian Profits, 3/30/09)
The Impact Of Rising Interest Rates On Stocks And Bonds (Disciplined Approach to Investing, 2/26/10)
Etrade Releases Bond Fund Selector Tool (Stock Trading To Go, 3/30/09)
Junk Bond Spreads Widening: A Canary in the Coal Mine? (naked capitalism, 2/15/10)
Read more on Bond Investing, Treasury Securities at Wikinvest

4 Comments »

  • Alex said:

    How's the weather there now? :) . Unless you didn't play it.

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    TPC Reply:
    April 6th, 2009 at 5:01 PM

    78 degrees and sunny today. :-)

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    # 6 April 2009 at 3:31 PM
  • In Debt We Trust said:

    How about shorting the 30 year instead?

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    TPC Reply:
    April 6th, 2009 at 5:09 PM

    There are three outcomes that will come from all of this money printing. higher taxes, higher interest rates and higher inflation. Invest accordingly.

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    # 6 April 2009 at 3:35 PM