Real Estate offer/ SBND trade

January 23, 2013

I received a call from my property manager in Indiana.  He sent me the info sheet on a property for sale there.  It had been on the market for awhile, and he did a walk-through.  It needed some work (estimate $17,000) but was worth a lot more than they were asking as a REO.  We put in an offer for $33,000.    Property fixed up would worth around $90,000.  Rent would be around $900/ month.

Also placing an open stop order to buy SBND at $8.11, good till cancel. SBND looks like it is making a cup with handle, and I want to buy it on a break right above the recent high.

The ETF is a short bond ETF. It is the PowerShares DB 3X Short 25+ Year Treasury Bond ETN.  An ETN is a exchange traded note.  It is 3 times leveraged to the 25 year Treasury bond.  This has a lot of leverage, and will likely make some big moves, both up and down.  My bet is that interest rates have stopped going down, and will start to rise in what will be a secular bear market in bonds.  Remember, this ETF goes up when interest rates go up.

I am probably early in seeing interest rates rise, but I think it is worth taking a shot.


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