3 Strategies for Huge Returns
With the market at all-time highs, here are three ideas from Steven Orlowski of Personal Finance designed to hedge your bets.
With the Dow and the S&P 500 having officially breached the psychologically important thresholds of 15,000 and 1,600 respectively, it may be time to start filling your quiver with arrows that can defend your portfolio, just in case the market realizes it may have gotten ahead of itself.
But even if the major averages continue to rise, superb moneymaking opportunities definitely lie ahead. As a matter of fact, while many investors are already lightening their equity loads and taking short positions against the major averages, there are other developing conditions that could lead to above-average gains.
Let's consider a few.
We're 4 1/2 years deep into a zero interest rate environment. We know they can't go lower...and they will eventually go higher. Rates will rise, bond prices will fall, and if you sit on your hands you'll lose a lot in the "safe" asset class—fixed income.
Here's an arrow you might want to use: the ProShares UltraShort 20+ Year Treasury ETF (TBT). The long bond has been bid way up, forcing the yields on Treasuries way down. As bond prices rise and yields fall, TBT loses value. When the opposite occurs, shareholders of TBT can make a lot of money.
On a split-adjusted basis, this exchange traded fund (is down 80% from when it debuted in May 2008. The opportunity for investors today is huge: Let's not fool ourselves.