patrick.net

If you are just looking to capitalize on your prediction of rising interest rates you can buy SRS (2x) or DRV (3x) ultra-short real-estate ETFs. They move in lockstep with (long-term) rates and can explode quickly given the right spark. The problem with those is that they suffer from decay and over a long enough timeline they trend to zero, so they always eventually reverse-split to keep going. Not a good instrument to buy and hold, unless you can time and buy around the start of the next crash, then it's off to the races. Goes without saying that both have been brutally decimated since the Fed launched the MBS/QE/ZIRP triple-whammy bazooka. Fighting the Fed necessitates excellent timing.

mell says

ultra-short real-estate ETFs

You said you shorted some real estate ETFs a while back didn't you?

indigenous says

mell says

ultra-short real-estate ETFs

You said you shorted some real estate ETFs a while back didn't you?

I bought the short ETFs yes, which is less risky than actual shorting. I never hold them longer than a couple of days, and currently don't own any as I focus on individual stocks. Last time I held them long-term was as a short hedge to all the long positions I had bought when the Fed launched QE and stuff. I imagine a lot of people went broke trying to short into the next "impending" crash. By the time of the announcement of QE2 it was time to stop fighting the Fed and ditch that short. Btw. Taleb shorted himself to riches in 2007.

So what is your take on Patrick's idea?

Why not?

At this moment I'd still consider it a somewhat risky bet, but it's nonetheless doable (greater risk usually offers greater reward). A safer moment to short would be when the market gives in some more (a couple more of those successive bright-red days) or a mini-crash arrives, forcing the Fed to announce some more QE and/or forcing them to vow keeping the rates near zero (the announced "anticipated" raise of a quarter percent is laughable and effectively the continuation of QE/ZIRP), AND the market does NOT react with green shoots, perhaps reverses to red that very same day while rates keep nudging higher. Then it may be about time.

Take a look at a crashing market day today and you can see SRS only up mildly. This is because it moves in lockstep with rates and there is basically now an expectation that the Fed will do everything they can do as long as they can to suppress rates. Right now the market is expecting the Fed to reverse even on its laughable quarter percent hike and the Fed voices are already suggesting that they may abandon even the tiniest of all hikes. That's why it may be premature shorting treasuries if you want to mitigate your risk, you could wait until they actually come out with yet another plunge protection ZIRP/QE continuation promise and the market keeps crashing and rates go up for a safer short.

Harder for the Fed now to boost demand for treasuries by raising rates in light of chinese Yuan devaluation

mell says

If you are just looking to capitalize on your prediction of rising interest rates you can buy SRS (2x) or DRV (3x) ultra-short real-estate ETFs.

There is an ultra short ETF for gov bonds themselves ProShares UltraShort 20+ Year Treasury (TBT).
It's been sinking for years.
Personally I would rather short Apple than try to time the bond market.

Treasuries are "short" of having any value if based on Federal Reserve Fiat Currency Notes.