closedendtrader

3 Comments

    • Where's the 'Protection' in TIPS? Better to Go with Silver and Gold [view article]
      I'm not a fan of TIPs at current yields, but you're drawing the wrong conclusion above:

      "The standard five-year Treasury Note now yields 2.45%. Meanwhile, today's 5-year TIPS yield is only a slightly positive .07%, implying that investors' anticipated rate of inflation over the next five years is just 2.38%. That means investors expect a dramatic decline in inflation rates from the current "official" rate 4.1%-- which itself is likely understated. Such expectations are untenable given the actions taken by the government and Fed over the past 7 months."

      The reason that investors are willing to buy TIPs with an implied inflation rate of only 2.38% is that if inflation stays at the current 4.1%, they'd earn a 4.17% return, far better than the 2.45% return on the regular Treasury. TIPs are overvalued because regular Treasuries are even more overvalued, a function of the credit crunch fears.
      Apr 03 02:57 PM
    • Switzerland ETF Getting Ready to Rebound [view article]
      If you want to play Switzerland, consider buying SWZ rather than EWL. SWZ has out-performed EWL by 3% - 4% per year on an NAV basis over the trailing 1, 3, 5, and 10 years. While the current 12.8% discount to NAV on SWZ is not compellingly high, it more than makes up for the incremental fees you pay for active management in SWZ vs. index management in EWL. Disclosure: I am long SWZ. Feb 12 09:52 AM
    • Why I'm Shorting Spain [view article]
      If you want to short Spain, better to short the closed-end SNF than the iShares EWP. SNF trades at over a 20% premium to NAV, primarily because of the high managed payout. Next SNF ex-div date is probably not until late March. Disclosure: I'm short SNF, long EWP for a market-neutralizing hedge. Bears on Spain could decide to not hedge. Feb 05 12:54 PM
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