You would have to dig through the prospecti of those ETFs to determine their real asset structures, and furthermore, you assume the risk of your brokerage going under if you go that route. It is much safer IMO to just buy into a Treasury-only MMF like those mentioned in that popular post listed at the top right of the blog. You then have a clear ownership claim and can write checks straight from the account. There is also Treasury Direct, though I don’t have any experience with it.

GNMA funds depend on the US continuing to back up that (generally risky) debt. The advantage of short-term Treasuries is they will be the very last paper to be defaulted on. Basically, the government will have to topple before they go bad (and if that is coming around the corner, you want physical gold).

I hope my opinion helps.

Mike

Thank you,

Allen

Overall, this is looking very good for the bears. We just need good set-ups for the right risk-reward profile to get short with clear stops.

Five reasons why I am bearish:

I. Short interest is relatively low and it seemed to have bottomed in October 2009. From the linked graph, short interest has further to go.

II. Money managers are generally bullish.

III. The market is still not oversold as the MACD hasn’t breached zero on SPY yet, the RSI is still at 40 though, but I do not expect this “correction” to result in a “panic bottom” where the RSI sinks below 30. I assume panic bottoms do not happen when the crowd is still already skeptical and bearish during the peak.

IV. During uptrends, in order to outperform one must buy the dips. In order to do this, one must convert the cash in a portfolio to stocks, sell something else in the portfolio to buy stocks, or borrow money to this. A correction will trigger stop losses to force even more selling. The bullish fuel that made people buy the dips by either of the three means seems to be exhausted.

V. Volatility will discourage people from taking short positions during a sell-off as they do remember the pain from shorting early in July and the rally on Thursday this week, but if is positioned from shorting the market at a top, then one would not have to worry about whipsaw. This volatility would force the weak long positions to sell, and result in a gradual rise in short positions.

Again, I do not see the bear’s beatific vision coming. Inflows into bond funds are still high, and the crowd remains bearish overall. The market has a built in sentiment support, or perhaps, low interest rates allow one to put high multiples on stock.