Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Sharck Soup -- Ignore unavailable to you. Want to Upgrade?

To: golfnut777 who wrote (20877)	5/7/2001 1:23:02 PM
From: DlphcOracl	Read Replies (1) \| Respond to of 37746

golfnut777: <<What's the possible downside on the USPIX fund if the market continues moving up?>> The answer is simple: you lose big time!!! If the NASDAQ 100 moves up 10% from the point at which you buy USPIX or Rydex RYVNX shares, you lose TWICE that amount, or 20%. Thus, if you use the leveraged ProFunds or Rydex Funds, you have to be fairly certain that the NASDAQ is either at or near a low or high and you must be prepared to lose 10-40% in the very short term before the NASDAQ changes direction. For example: I think that if NASDAQ hits 2500-2600 sometime this month, that will be a good short prior to earnings warning season in June. I expect NASDAQ to retrace some of the gain from low of 1640 to 2500-2600 (if it gets that high) between now and October. What I will do is to buy into USPIX taking partial positions. At 2500, I would buy 1/3 or 1/4 of the total shares I intend to buy. If NASDAQ goes to 2600, I would then buy another 1/3 or 1/4. Obviously if NASDAQ goes higher, I have a paper loss which is double to NASDAQ rise. Assuming I still have the courage of my conviction, I would ignore this and not use a "STOP", and continue holding until NASDAQ begins moving down. At that point, I would complete my position in USPIX shares. I must emphasize that this is quite risky and if you panic and sell too soon, you will lose a large amount of money. You must use these funds when you are convinced the NASDAQ or S&P are VERY oversold or overbought. The beauty of these funds is that: (1) you are using leverage or margin without risk of a margin call; (2) you do not have to be stock-specific. Hope this helps.