Friday, August 8, 2014

The 10 Year U.S Treasury Note at 2.37 percent as a Safe Haven Investment? Really?

There are lots of investments that make sense as a flight to quality during a time of crisis. And there is no question that over the last few days, buying U.S Treasury Notes and Bonds has been a very profitable trade. However, for anyone with a time frame of more than 60 days, this is a total head scratcher. Given that the Fed wants 2% inflation, QE is proposed to come to an end in a couple of months, and fed funds are likely to be increased next year, buying the 10 year note at these levels seems like a bizarre investment to take "risk off".

Looking to park some money in these times of turmoil. Why not take a look at gold mining stocks that pay a reasonable dividend. Given that we are close to the cost of production for gold, there is not a huge amount of downside risk, and the upside could be quite significant.

For those that are looking for a short term trading idea, consider shorting the SPX four minutes before the close today, and closing out the position 5 minutes after the close. This tactic is based on the assumption that traders will not want too much risk over the weekend and will sell off right at the close. Of course, then again traders may not choose to sell off at the close. Also please beware that even if this tactic works and you have a profit on your trade at the close, it is incredibly risky to be short over the weekend.. If we have a quiet weekend, the futures may go back up before trading starts on Monday morning.

8/16/14 Update
As a perma-bear, many of my investing/trading predictions posted in this blog have been painfully inaccurate. But dang I nailed the above. The market did go down on the close on 8/8/14, and it was a quiet weekend on the news front and the market opened up big on Monday 8/11

The Information on this blog is provided for education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. YOU SHOULD NOT MAKE ANY DECISIO upN, FINANCIAL, INVESTMENTS, TRADING OR OTHERWISE, BASED ON ANY OF THE INFORMATION PRESENTED ON THIS BLOG WITHOUT UNDERTAKING INDEPENDENT DUE DILIGENCE AND CONSULTATION WITH A PROFESSIONAL BROKER OR COMPETENT FINANCIAL ADVISOR. 

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