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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club
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To: Alan Bell who wrote (7995)8/23/1999 9:44:00 AM
From: Investor2  Read Replies (1) of 15132
 
RE: "Clearly, one wants to hedge the Nasdaq stocks/funds with QQQ. But would it be better to use QQQ for everything. The QQQ has a higher beta allowing one to hedge an equal amount of S&P like stocks with a lower amount of money."

My opinions only:

First, I'm not too sure that I like Bob's suggestion on Moneytalk that shorting SPY or QQQ is a good strategy for a Bear market. Granted, if there is a bear market, it could be appropriate for experienced investors. However, there are too many people listening to the show who have no idea of the risks involved with shorting anything.

Second, shorting QQQ is even more risky than shorting SPY, due to the high beta that you point out. To say that it is "better" is to ignore the risk side of the equation.

Best wishes,

I2
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