"The fragility of today's economy demands that we, as investors, allocate our assets with more prudence and focus than ever before. The authors' prescience in their first book lends credence to their new warnings. This book deserves our attention."

Robert Friedman , Former CFO , Goldman Sachs
"Given the accuracy of their first book's predictions, you have to be worried that their second book could very well be right. Be prepared and read this book."

Philip Gross , Founder , America Online

Chapter 6 - Short Bond ETF's

When and How to Short Bonds

We don't suggest shorting bonds at this time since we don't feel interest rates are likely to rise rapidly in the next 1 - 3 months. However, this could change quickly and an opportunity may present itself fairly soon. If you do decide to short bonds, which we feel will fall substantially in the long term, the two easiest ways are through two ETFs. One is TBT, which double shorts the 20 year Treasury. A double short means that you will receive two times the amount of any decline. This is done through leveraging. Of course, like any leveraging, this can bite you if the market moves against you.

Also, as we mentioned with bear fund ETFs, there is a risk of not getting quite the return you expect on a long term basis because the funds reconcile daily. This potential loss due to daily reconciliation can be magnified in a double short fund due to the leveraging.

The other short bond ETF to look at is PST, which single shorts 7 - 10 year bonds. It is a single short, unlike TBT which is a double short, so your returns will be lower, but your risks are lower as well.

ETFs, especially short ETFs, can be tricky and we suggest you contact our money management division, Absolute Investment Management, since they will help you wade through the intricacies of short bond ETFs. Please call Mike Lebowitz at 301-907-6794 or go to the website www.absolute-im.com. We work only on a managed account basis which means you have 100% transparency into your account and how we are managing it on a daily basis. There will be a great deal of money to be made here when Treasurys begin to fall, but you want to move correctly and you don't want to move too early.