Using Treasury Protected Securities to Hedge
Far be it from the lips of any trader to question the bull run, but all good, crazy things must come to an end. And it is in this spirit that we plan for the future. Everyone with the tiniest bit of gumption is a genius in a bull market, but it's when the stock comes crashing down that separates the real traders from the future embittered.
This is comparing all the TIP ETFs I could find with the effective Federal Funds rate. The idea is that while a TIP will protect your money from inflation, you want to pick one that is resilient in the face of high-interest rates. I've named my favorite, for the specific reason that it is the most volatile. So while it will succumb to a market crash it may more quickly recover.
The nightmare is to be left bag holding a 2001-2007-type scenario, or 2007-2012.
Now I'm a trend follower. Not a trend-setter. So my plan is to beat the market and generate some money in this environment and then lose 20% of the portfolio at the top when this thing starts flatlining - whenever that might be. It's been right around the corner for a decade and with the stock market totally beholden to the FED, it's not hard to imagine a subtle policy change like slightly raising interest rates totally blowing this thing for 2-3 years. At that time I hope to bail into some combination of TIPS and Food Retail (Ingles, Albersons, Kroger) to weather the storm.
It's not wrong to take advantage of the mania, but you better have a plan on where to put your money.
This is comparing all the TIP ETFs I could find with the effective Federal Funds rate. The idea is that while a TIP will protect your money from inflation, you want to pick one that is resilient in the face of high-interest rates. I've named my favorite, for the specific reason that it is the most volatile. So while it will succumb to a market crash it may more quickly recover.
The nightmare is to be left bag holding a 2001-2007-type scenario, or 2007-2012.
Now I'm a trend follower. Not a trend-setter. So my plan is to beat the market and generate some money in this environment and then lose 20% of the portfolio at the top when this thing starts flatlining - whenever that might be. It's been right around the corner for a decade and with the stock market totally beholden to the FED, it's not hard to imagine a subtle policy change like slightly raising interest rates totally blowing this thing for 2-3 years. At that time I hope to bail into some combination of TIPS and Food Retail (Ingles, Albersons, Kroger) to weather the storm.
It's not wrong to take advantage of the mania, but you better have a plan on where to put your money.