Stockchase Research Editor: Michael O’Reilly A good defensive holding as a hedge against a pending recession. It holds 20-30 year US treasuries. As interest rates have risen it has naturally gone down in value. US 30 year treasury yields are within 50 bps of the levels reached prior to the 2008 financial crisis. We recommend placing a stop-loss at $80, looking to achieve $150 – upside potential of 60%. Yield 2.6%
Good option for investors.
US Dollar is usually benefactor of investors looking for safety.
Also get strong yield as interest rates increase.
Shares currently presenting good buying opportunity.
Inverted rates at the long end mean the market's telling you high probability of a recession. Not a bad entry point to dip your toe in. Curve might re-steepen temporarily, if inflation is stickier. Partial position now; if he had $1, he'd put 50 cents in right now.
The market thought the Fed pivoted, so the market rallied. But what happens if the Fed doesn't engineer a slowdown? Well, they will slam on the brakes by hiking rates hard. The Fed has burst some bubbles, like cryptos, but more need to be burst. He bought bonds for the short-term. TLT is probably the place to be.
Best ETF to get exposure to 30-year Treasury bonds. Trades 20 to 30 years fixed income. This is the one he uses. More aggressive option with 25+ year maturity remaining is ZEROZ-N. ZTL-T is also an option in Canada that can allow to hedge the currency risk. Keep in mind that if inflation wins and Fed misses, you don't want to hold long bonds.
(A Top Pick Mar 17/22, Down 6%) We'll get deflation first, he thinks, then hyperinflation. TLT is there for emergencies, like massive deflation, when TLT will rally, then he would take gains. These are long-volatility assets that could do spectacularly in the future.
In his portfolio, he's put equal measures of PHYS and TLT. Buy this with USD. This and gold are the only 2 asset classes left that can play the long volatility strategy. If you have the two together, it eliminates all possibilities. If we have major deflation, gold will get hit, but TLT will go spectacularly up. Or vice versa, if we have hyper-inflation.
(A Top Pick Mar 08/21, Down 0.9%) Believes best hedge against equities for Canadian investors.
US Treasury is one of highest quality investments available.
If/when equity markets drop, believes shares will rise.
If looking to reduce volatility, will be a good investment.
(A Top Pick Oct 19/21, Down 6.5%)Stockchase Research Editor: Michael O’Reilly Our PAST TOP PICK with TLT has triggered its stop at $135. To remain disciplined, we recommend covering the position at this time. This will result in a net investment loss of 5%, when combined with the previous buy recommendation.
Stockchase Research Editor: Michael O'Reilly We reiterate TLT as a precautionary holding, to protect in the event of another market retracement. TLT is an ETF that represents US 20 long term treasury bonds of a term of 20+ years. Yields on long term treasuries have rebounded back to 2.00% making this another good entry point. We now recommend setting a stop loss at $135. Yield 1.51%
Represents the 20+ year maturity of the USD treasuries. You get USD exposure and the long duration exposure. For a Canadian portfolio, if we get a deflationary wave, the USD and long bonds do well.
(A Top Pick Jul 06/20, Down 15%) This was a hedge against the market falling during Covid last year. TLT is the best hedge to the Canadian long stock investor. TLT holds long-dated US treasuries (in USD). When things go pear-shaped in late 2018 or March 2020, TLT does very well, because there's a rush to market safety. Also, TLT will reduce market volatility. He still holds this, but sold part of it. The consensus now is that there will be sustained inflation moving forward. TLT should continue to do well. He expects this to fall round $120 and would add to his holdings here. The bond bull market is not over, he feels, though many do.
Stockchase Research Editor: Michael O'Reilly TLT is an ETF that represents US 20 long term treasury bonds of a term of 20+ years. Yields on these treasuries have been rising steadily since the pandemic based market collapse last March from under 1.00% to 2.25% now. This is a precautionary holding, to protect in the event of another market retracement. With the S&P500 trading at 22.4x earnings the market is at risk to correction if this season's reported earnings disappoint. As we consider this a hedge, we do not set a target or stop-loss, but instead will monitor trends in the underlying yield as a signal. Yield 1.61%
iShares 20+ Year Treasury Bond ETF (TLT) Frequently Asked Questions
What is iShares 20+ Year Treasury Bond ETF stock symbol?
iShares 20+ Year Treasury Bond ETF is a American stock, trading under the symbol TLT (previously TLT-Q on Stockchase) on the NASDAQ (TLT). It is usually referred to as NASDAQ:TLT or TLT
Is iShares 20+ Year Treasury Bond ETF a buy or a sell?