by Oakley » Sat 05 Mar 2011, 12:49:23
Inverse bond funds. Examples are PST and TBT.
When interest rates increase bond values decrease. Inverse bond funds have sold long US government bonds short and used the proceeds to buy T-bills. They make money when interest rates increase fast enough to overcome their built in cost of making the interest payments on the long bonds they have sold short.
The current yield on 10 year Treasuries is 3.492%. My view is that this rate will be 8% in August, 2013 which could cause inverse bond funds to almost triple in value. I personally will sell these funds then.
"The deepest sin against the human mind is to believe things without evidence" Thomas H Huxley