Short term bullish long term bearish

by Byron on July 18, 2011

The risk in holding US Government bonds isn’t that you won’t get paid back. Of course you will. If the government doesn’t have the money to pay you back, they’ll print some.

The risk is the dollar’s value will significantly decrease – say 10 or 20 percent – while you’re clearing 3 percent from Uncle Sam.

Short term, I think some level of austerity becomes reality for 2013 and beyond. (Leave it to the jokers in Washington to make the problem worse while they champion how the problem is being solved.) But the market will see that the future does mean less money being spent, and a stronger dollar to follow.

All that said, I hate trying to time a market to the upside when it is abundantly clear that longer term the only trend is lower. On the dollar, I’m short term bullish, long term bearish. Vice versa on US equities.

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