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Capitalizing on Higher Interest and Inflation Rates
02-10-2008, 08:27 PM
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#1
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Recycles dryer sheets
Join Date: Apr 2007
Posts: 491
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Capitalizing on Higher Interest and Inflation Rates
I am firmly convinced that interest rates along with inflation are going to rise precipitously in the next few years (say 3-5 years). I mean inflation in the range of 6-8% and interest rates of 9-11% I see this lasting 5-8 years. Ignoring whether or not I am right, what would be the best way to take advantage of this? The only thing I can think of is taking out a very large loan and buying a very $2M house in River Oaks (The nicest neighborhood in Houston). What else is out there that has a lower carrying cost without concerns for the liquidity trap?
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02-10-2008, 08:29 PM
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#2
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Recycles dryer sheets
Join Date: Oct 2007
Posts: 483
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Short-sell bonds.
__________________
TickTock Rule Of Finance - heavily discount any promises of money/benefits to be paid to you in the future
"I've traded love for pennies, sold my soul for less" -Jim Croce, Age
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02-11-2008, 06:58 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Easy trading vehicle for you: RYJUX. This is an inverse long govt bond fund that puts the exposure on via futures contracts.
I'd also have a heavy commodity/commodity producer bias in your portfolio.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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02-11-2008, 09:10 AM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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Quote:
Originally Posted by Culture
I am firmly convinced that interest rates along with inflation are going to rise precipitously in the next few years (say 3-5 years). I mean inflation in the range of 6-8% and interest rates of 9-11% I see this lasting 5-8 years. Ignoring whether or not I am right, what would be the best way to take advantage of this? The only thing I can think of is taking out a very large loan and buying a very $2M house in River Oaks (The nicest neighborhood in Houston). What else is out there that has a lower carrying cost without concerns for the liquidity trap?
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Boy, aren't we the "Doom and Gloom" squad.........  Bottom line, the govt/Fed will NOT allow inflation to hit those high numbers........
I don't see any Paul Volker days coming back........everybody loved their 11% CDs until they found out their car loan was 19% and their mortgage rate was 15%..........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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02-11-2008, 09:11 AM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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Quote:
Originally Posted by brewer12345
Easy trading vehicle for you: RYJUX. This is an inverse long govt bond fund that puts the exposure on via futures contracts.
I'd also have a heavy commodity/commodity producer bias in your portfolio.
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Managed Futures!!
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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02-11-2008, 09:13 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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02-11-2008, 09:24 AM
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#7
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Thinks s/he gets paid by the post
Join Date: Nov 2007
Posts: 1,052
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Hold cash and load up on non callable 15% tax free muni bonds, when they appear.
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02-11-2008, 09:25 AM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by FinanceDude
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I think the ER is whacky on that thing because some of the costs of the futures trading activity gets reflected strangely. Remember, if you short a bond you have to pay the coupons.
Its similar to the way expense ratios sometimes look funny on CEFs that are levered: the interest cost of the leverage gets caught up in the expense ratio.
But I should say that I think making this kind of bet is not for the faint of heart, and should probably not be done by the typical investor.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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