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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: BigShoulders who wrote (13770)	4/14/2001 5:39:58 PM
From: E_K_S	Read Replies (1) \| Respond to of 42834

Excellent overview of Brinker's results. I wonder what the results would have been if (1) rather than going to 65% cash (or all cash) based on his call (and incurring the long term capital tax event of 20% on a taxable account)but rather going to 40% cash and investing the proceeds into a "short" hedge fund like the Rydex Dynamic Venture 100 or ProFunds UltraShort funds that would have generated a "positive return" during this cyclical bear market. The overall "net" portfolio loss would have been much less (if you also include the capital gain tax event). The Rydex Dynamic Venture 100 is up 56.3%, and the ProFunds UltraShort O! TC is up 54.8% this year through March 26. biz.yahoo.com From the article: "...The difficulty with market timing, of course, is getting it right. Bear funds received infusions of investor cash during the raging bull market in the late 1990s, all the while generating spectacular losses. "As we know, markets generally go up, so over the long run these bear funds are at the bottom of the heap and don't look good," says Charles Tennes, portfolio manager for index funds at Rydex. "Most of the time, they're toiling away in the shadows, waiting for good times." And those good times, for bear funds, are what the rest of the market lives in fear of." Essentially, the strategy is to use these funds as a hedge to even out portfolio performance and to reduce your risk without dismantling your portfolio. It's easy to review the performance with hindsight, but if we can learn from past experience, then we might be in a better position to deploy these strategies in the future. It appears that one could have hedged the portfolio downside by a 2:1 ratio. The hedge should have been placed about three or four month's after Brinker's call for all cash. Any observations? EKS