Sep. 9 at 11:46 PM
Last night I saw a comment on here by
$TMF perma bear @clinician55, they state “The Fed cuts short term rates. The long term rates may not move all that much.”
That thesis (in the very short term) may be true but having a thesis and gaining exposure to it and two different things. What are the options?
$SHV? If SHV were to return to its ATH it would move from
$110.26 to
$111.02. Negligible capital gains on a security that you’ve just admitted is going to have a decreased yield with fed cutting short term rates.
What this account fails to understand is that short term bonds are viewed as defensive, a place to store your capital as cash and collect some yield. The long end of the curve (throughout the entirety of a cutting cycle) is more reactionary and this where the capital gains come into play.
$TLT /
$TMF does not need a market crash or defensive rotation to perform, it can also perform throughout an equity boom. A perfect example of this also happens to the most recent - 2020
