Pat if you're not the firefighter then its best to just
stand aside out of trouble. Are these companies you're
invested in (via the SP or NDX) worth the extra premium
still assigned?
The standing stocks of IBM, MSFT, CSCO are the core
holdings of the indices (MSFT and INTC in ALL of them)
and if they fall a further 50% you can mark NDX, SPX by
about 75% just for that.
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end of lecture
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My best winning position these days is the rydex venture
fund RYVNX which I started back last august so that current
withdrawals are without fee. it follows inverse of NDX
200% so today's 5% move down RYVNX improved 10%. These
are best for one-way moves but it leaks quite a bit -
due to mathematics, the last bear rally round trip sucked about 5%. So I'm taking pieces out on the big down days,
if it manages to get above water some more I'll put this
back at lower prices.
If there's a substantial rally like you expect I'll start another MuFund the simple 1./SPX (which doesn't leak like the leveraged funds). I expect that to take on more water over the long haul, but I am less confident about where it might wander in the meantime. The unleveraged funds leave you level after a round trip, the leveraged ones lose money as big move days are made.
If I had enough in this account to have low relative trading costs I'd be working on combos with the ETF such as QQQ - daily closings are so often much different than
intra-day extremes, you could lock in the extremes of the fund with a hedging transaction during the day.
But its not gonna work if you have the general direction wrong. Are stocks such as GE, AOL, MSFT going towards
fair valuation when they drop, or when they rise?
I dont know, there is too much mystery and possible shenanigans behind those names.
They are relentlessly dropping because foreign investors
are taking money out of US equity assets. Ma and Pa Kettle are being left behind.
I dont know when or how far the market will go down in
its current trend but if it rallies later I would expect
highs at lower levels from those in the previous move.
If that doesn't happen I dont know what to conclude but my
own perception of how it will shake out is like a slinky
stepping down a staircase. I think your attempts to guess
market direction based on the daily economic dribbles, trying to sync with the talking heads or whatever info you are using, is unproductive. |
