What are the best investments to consider if interest rates rise aggressively?

During the 80’s interest rates rose up into the mid and high teens. If that scenario were to repeat itself over the next 5 years, what investments should I be looking at to take advantage of this hypothetical scenario?

By | 2013-08-28T01:18:55+00:00 August 28th, 2013|Mortgages Home Loans Interest Rate|3 Comments

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  1. Jerry August 28, 2013 at 1:51 AM - Reply

    Your first two answers are okay, but kind of indirect.

    The most aggressive direct bet on an interest rate rise is TBT. TBT is an ETF that is a levered 2x short on long term Treasuries. If rates rise, long term bonds drop the most (have the highest duration).

    Caveat: TBT should only be used as a fairly short term bet. Levered ETFs return a multiple of the DAILY return, which is not the same as a multiple of a longer term return. No levered ETF should be used as a long term holding.

    Cash is a powerful asset if rates skyrocket. One of my earliest (~1982) investments was a bank CD that paid 16%. That was also the start of a long bull market in stocks.

  2. Cold August 28, 2013 at 1:36 AM - Reply

    How about an ETF that holds commodities…

  3. Jim Z August 28, 2013 at 1:34 AM - Reply

    You want TIPS etf’s or mutual funds. They guard against inflation. Gold and energy stock would also be a consideration. eg: TIP

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