|
One year ago, we were laughed at.
You see, in December of last year the research staff for
Market Advisor -- one of StreetAuthority's most
popular investment advisories -- released our "11 Surprising
Investment Predictions for 2009."
We predicted that the Dow would rise to 11,700 by the end of
the year... that the high-yield shipping sector would be one
of the market's top rebound plays... that an unknown group
of "sci-fi" companies would see large gains despite the
recession... along with a number of other forecasts.
But when you go out on a limb with your predictions like we
did -- especially when still in the middle of one of the
worst recessions in market history -- some people just
laugh.
That's OK. Those that invested alongside each of our
predictions gained +65.6%, more than triple the S&P 500's
performance.
The Dow didn't quite make our 11,700 target, but ending the
year near 10,500 isn't far off. Especially when you consider
that it has soared from a low near 6,550 in March!
Our prediction of the rebound in high-yield shippers was
spot on. This high-yield sector proved to be one of the
market's brightest spots. The Baltic Dry Index, used to
measure shipping rates, started the year below 800 and
finished above 3,000 -- a rise of 275%.
And the "sci-fi" companies we discovered? Our picks --
Digital Angel (Nasdaq: DIGA), Checkpoint Systems (NYSE: CKP),
and VeriChip returned +44%... +57%... and +362% (before
merging with another company) in 2009.
Of course, not every one of our predictions came to
fruition. But imagine how much better off you'd be today if
you used our market predictions to profit last year.
That's why we want to tell you about our craziest prediction
from our newly released "11 Surprising Investment
Predictions for 2010." (You can
read the entire report here.) As an income investor
you might not believe this prediction -- heck, you might not
want to believe it -- but given our past record, we
certainly think you should pay attention:
|
"Treasuries will crash as interest rates
on 10-year bills skyrocket from 4% to 7% in a year. The Federal
Reserve will raise rates aggressively in 2010 to
fight inflation. Bond investors will lose
trillions. But shrewd investors who position
themselves in "reverse-bond" securities will
clean up."
|
PIMCO's "bond king" Bill Gross calls U.S. Treasuries the
"last, great financial bubble" and "the most overvalued
asset in the world, bar none."
We're not going to argue with the man who manages more bond
money than anyone else in the world. And we can certainly
see his logic...
Under breathtaking spending, the federal budget deficit will
jump to an all-time high of $1.5 trillion this fiscal year.
The national debt is now above $12 trillion. Believe it or
not, the government's annual expenditures ($3.5 trillion)
are running at 167% of its tax revenues ($2.1 trillion).
As the global economy recovers, inflation -- and then
interest rates -- will rise sharply. Under no scenario are
today's historically low interest rates on U.S. Treasuries
sustainable.
We understand why the Fed is trying to clean up the
mortgage-backed securities mess. But in trying to save the
financial system by snapping up these toxic securities, the
Fed has simply created another dangerous credit bubble. You
can't cure a problem caused by too much debt by issuing more
debt.
Bottom line: Bond investors are being presented with a
once-in-a-lifetime opportunity to get their money out of
U.S. Treasuries at a generational top.
But how can you actually profit from a fall in Treasuries?
If you can stomach the volatility, the leveraged
UltraShort 20+ Yr. Treasury (NYSE: TBT) is designed to
prosper under just these conditions.
This special fund is actually designed to rise twice as much
as Treasuries fall. So if long-term Treasuries fall -5%,
this fund should rise +10%. If we see a crash in Treasuries,
TBT should be in a strong position.
Good investing!
Paul Tracy
Co-Investment Strategist
StreetAuthority Market Advisor
P.S. -- An Israeli airstrike could send oil
soaring... Microsoft might buy a chain of 5,264 stores...
the world's 8th largest economy may legalize marijuana...
These predictions and more make up our "11 Surprising
Investment Predictions of 2010."
Visit this link to read the rest of our predictions
for the next year.
|
Printer-Friendly
