The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
By Andrew McCormick
NEW YORK (TheStreet) -- Contrary to very popular opinion and in conjunction with their 30-year bull market, buying U.S. Treasuries could be the best investment of 2011.
Few times in history has an investor been able to invest with a major trend and simultaneously be a contrarian. When these opportunities arise, they must not be passed over. This means seriously considering funds such as the Vanguard Long-Term Treasury Fund (VUSTX), iShares: Barclays 20 Plus Years Treasuries (TLT), ProShares Ultra 20+ Year Treasury (UBT) and Direxion Daily 30-Year Treasury Bull 3X Shares (TMF).This investment opportunity holds three major drivers. First, U.S. Treasuries hold the benefit of a safe haven during a stock market decline and periods of uncertainty; if they naturally resume their upward trend, any market sell-off could accelerate the upward move. Second, they remain in a massive 30-year bull market; major bull markets tend to continue further than expected and well past traditional valuations. Finally, buying U.S. Treasuries is a major contrarian play; an overwhelming majority of analysts and fund managers loathe this asset. Rarely does an investor see an opportunity with so many factors simultaneously available: the synergy aspect could be impressive. This investment view on Treasuries isn't common. Often professionals and amateurs alike state the following reasons why a continuation of low rates and a Treasury bull market are impossible: Government bonds are in a bubble, inflation is just around the corner; the government is a debt junkie with an out-of-control deficit; and the U.S. dollar is going to devalue into oblivion. The data these bond bears lean on isn't necessarily wrong: They just have the timing incorrect. At some point interest rates will absolutely rise for a prolonged period. It just won't be right now. So, I don't disagree with the critics; I disagree with their ability to time the trade.
A Safe HavenGovernment bonds are traditionally considered a conservative, safe investment. When the stock market sells off or a crisis occurs, bond prices will rally as investors seek a safe haven. During the recent Japanese tsunami crisis, government bonds around the world advanced quickly. They proved to be a haven during 2008's financial crisis, during the tech bubble collapse, after 9/11, and after the 1987 crash, as well.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV