The double top formation in Treasuries is looking very ominous but now the media and investors have caught on to the trouble in bonds. Franklin Resources is reporting outflows and negative returns in fixed income accounts which is astonishing considering how significant inflows have been for years. For this reason we must consider that if stock strength remains, investors could finally return to equities to propel prices much higher, probably to 2007 levels in 2011.
In the meantime, I’ve sold our TBT position today for a nice profit which was a bearish play on Treasuries. Sentiment has reached an extreme with Treasuries and my guess is downside is limited for the time being.
Over the past year I’ve preached that one of the primary requirements for investors to maintain and recoup from 2008 is perseverance. That has been especially true in 2010 as the investors who reacted due to fear in the past two years are now being treated to negative returns while RMHI equity accounts are coming much closer to our 2007 valuations. The “fear trade” almost never works yet the hardest trade (to be able to buy in spite of rampant fear) almost always does.
To accumulate wealth via investing is not easy, it takes courage and determination in the face of frequent bouts of fear. If you hang tough and have your assets managed effectively your returns should far and away exceed fixed income and guaranteed return investments.
No positions
Brad