Two months ago I suggested that despite the Feds resolve to start buying bonds directly, it was time to get out (you can view those comments by putting TLT in the search engine at the top). At the time the TLT was at 103.75 and an initial target of 95 was suggested that could ultimately go to 83. Here we are today;
We are at 96.57, not quite to the line. That equates to about a 1% increase in yield and about $75000 per million. At this point, at least from a wave perspective there are too many possibilities to carve out a short term strategy. However, over the next few years rates are going up, not down. To understand what this means go to the PV calculator, http://www.moneychimp.com/calculator/present_value_calculator.htm and take the rate from say 3.30% to 4.30% on any fictive amount for 100 years. The value drops from 3890 to 1484, that is the head-wind that all “valuations “ are confronted with , regardless of what it is, the rent from an apartment, the value of an annuity, a perpetual preferred share, whatever.