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 (
) -- 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
iShares: Barclays 20 Plus Years Treasuries
ProShares Ultra 20+ Year Treasury
Direxion Daily 30-Year Treasury Bull 3X Shares
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 Haven
Government 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.