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有二位朋友問TLT﹐Here is my understanding, 一家之言﹐TAKE IT AT YOUR OWN RISK. One thing have to say in advance. I have full time job not day trader. For investment, I am looking for steady income not big money,

qkang98 (大道至简)
本文发表在 rolia.net/zh 相约加拿大网上社区枫下论坛
as long as my holdings pay more than interest. I am happy. Since I am not professional investor, if there is anything wrong with what I said, please let us know.同是中國人﹐希望大家發財。

TLT is iShares Barclays 20+ Year Treas Bond, which is tracking the yield of 20+ years Treasure Bond. Currently it pays 4% dividend. The dividend is paid every month end. The last payment is 0.303 per share on July 1. The next one is on August 1.TLT is usually considered as risk haven. So the price of TLT usually goes in the opposite direction of stock market. When the market is going up, the risk tolerance is high; the money will move out of treasure bond and get into the stock market. In reverse, the money will move back to treasure bond.

Why I buy TLT? First, DOW is up more than 35% from March low without decent pullback. It may continue going up, but the risk is growing. I am afraid to be last bag holder, so I am not dare to chase high. Second, TLT price drops from one year high $120 to $90, the yield is up to 4% now. I doubt FED will allow treasure yield continue going up. Why? the higher treasure yield will push the borrowing cost higher. So it will damage the recovery of real estate market. Without stable house market, there is recovery of US economy. Third, many MM miss this rally. They hold lots of cash and I doubt they will jump into the market at this time. So where will their money go? I think partially it will go into the treasure bond (4% is better than 1% interest).

My current trading strategy is: I did the first buy of TLT at $90 yesterday. If it goes above $95, I will consider to sell it. If it goes down to $85, I will average down. down to $80, average down again. If you take a look at the historical price of TLT, it never goes under $81. If that does happen, with at least above 4% dividend yield, I should break even in two years.

Historical Prices and dividend of TLT
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(#98785@43)
2009-7-28
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