NEW YORK (ETF Expert) -- There may be 36 different reasons why riskier assets won't survive in 2012. Some of the more popular possibilities?
"Taxmageddon" could send the U.S. into recession. Reining in the budget deficit would cost millions of jobs in the private and public sectors. China's plans to stimulate its economy might be limited by food price inflation. And, of course, the European Union could fracture into pieces.
If one or more of the above-mentioned calamities smacks down stocks and commodities, should investors assume that U.S. Treasury bonds will provide shelter? Is it possible that hedge funds, traders and institutional money managers might dump "risk-free" U.S. Treasury bonds as well?
At the moment, the big boys believe that U.S. Treasury Bond ETFs still have room for more capital gains. Why? Because mom-and-pop investors can't get enough of "safe" investments. Why else? Because the Federal Reserve is likely to shoot yet another quantitative easing bullet some time in the next six months.Of course, safety is in the eye of the beholder. There have been times when gold has held the title... and times when it has been lumped in with overall commodity weakness. There have been times when the Swiss franc has reigned supreme... and times when interventions have caused rapid depreciation in the fiat currency. The yen and the dollar have also had respective periods in the sun. It follows that U.S. Treasuries could be liquidated during extreme economic distress, rather than continue serving as a safe haven superstar. In general, however, those who see danger for the iShares 7-10 Year Treasury Bond Fund (IEF) or for the iShares 20+ Year Treasury Bond Fund (TLT) expect severe increases in core inflation to bring about a selloff. Others may talk about China and Japan diversifying away from U.S. bonds. Still others hypothesize that a markedly stronger economy would precede a bear market for treasuries. Is it possible, though, that 30%-40% bond market losses might arise from the potential catastrophes that the world faces in 2012 (e.g., fiscal cliff, eurozone collapse, severe unemployment, food inflation, etc.)? Could hedge funds, traders and institutional money managers make a mad dash for cash, locking in gains and waiting out system-wide trauma?
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
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
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
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