Every Ponzi Fails in Time

In February Nassim Taleb remarked that, “every single human being” should short US Treasuries. Mr. Black Swan may have been a little early, but he’s right, of course. Treasuries are a bubble of epic proportions. And when that bubble pops, a lot of money will be made on the short side. For retail investors, that means using ETFs like TBT, which shorts long-dated treasuries (with leverage).

But getting the timing right on this trade has proven tricky. Bond prices just keep going up, pushing yields to absurdly low levels. Investors who bought ProShares UltraShort 20+ Year Treasury ETF (TBT) back in February, when Mr. Taleb made his “every single human” remarks, are down about 20% on their investment. Yield on 10-year treasuries has fallen to 2.8%. In April, the same bond was yielding 4%. In 2000, before the tech bubble burst, the 10-year was paying a healthy 6.7%.