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Brendan Harper
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  • My first post ... Short Treasuries 0 comments
    May 30, 2009 12:46 PM | about stocks: TMV

    Since I work for a discount brokerage firm, I am very limited in the advice I can give. I've decided to start this so when I do eventually work as an full service broker or financial advisor, prospective clients can see a history of stocks I pick.

    It is frustrating working as a broker at a discount firm and watching very nice people throw money away. I cannot tell you how many calls in the past few weeks I have got from people looking to buy GM. Why anybody would buy this stock is beyond me. This company is going bankrupt. This has been the inevitable for weeks, but still the phones ring off the hook of people buying GM. Even now that Bloomberg has reported GM will declare banktruptcy, the stock is trading at $0.80. This is stock should be trading for pennys. The recent 8-K filing doesn't even mention current stockholders when talking about who will own a part of the New GM when it forms.

    Now for something that is a must buy. TMV is an etf by Direxion that is guaranteed to increase in value, and with a recent pullback on friday May 29th, it is a great time to jump in for $80 a share. This new fund allows investors to go three times short on 30-year Treasury bonds, which is essentially making a bet on interest rates. For those who don't quite understand this, shorting treasuries means the fund TMV will increase in value when the price of bonds fall which happens when interest rates are raised.

    As the recession eases, the Fed will be forced to eventually increase rates to combat inflation. Fed Rates may not be this low again for the next 20 years. It is not a matter of if they will raise rates, but when. Throw in the fact that the US is facing an astronomical budget deficit and borriwng at record paces, it's also possible US debt will lose its AAA rating within the next 5 years.

    Most stocks I pick I will not be as bold and say this stock/fund is a can't miss, because a lot of things can happen in this crazy market, but the Fed can't reduce rates any lower. TMV is a sure thing.

    Stocks: TMV
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