The biggest borrower of them all, the u.s. govern-ment, gets away with murder. It offers a crummy yield on its bonds, repays your principal with cheesy, inflated dollars and then has the gall to tax you on your nonexistent real return. The chart displays the beating that a top-bracket buyer of Treasury notes can look forward to.rnInvestment pro Lisa Hess takes a look at this grim picture and predicts that interest rates will go up (see p. 138). So, if you have cash, don't put it in long bonds now. But what if you are already fully invested? How do you hedge against rising rates? Her antidote: sell the U.S. short. More precisely, buy some exotic, expensive funds that take dou-bled-up short positions in Treasury bonds.
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