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To: bcrafty who wrote (130587)	3/11/2006 5:23:21 PM
From: skinowski	Respond to of 209892

how much of the Rydex assets are actually a hedge Agree... More than once I argued along similar lines. Many Rydex players follow some pretty sophisticated strategies - which will additionally confuse things. Btw, I e-mailed Shack's remarks about Rydex to Jason G. - if he decides to offer any comments, I'll let you guys know.

To: bcrafty who wrote (130587)	3/11/2006 9:05:30 PM
From: chainik	Read Replies (1) \| Respond to of 209892

Bcrafty, the point you make regarding hedging is certainly a valid one. Some would argue that this hedging completely destroys the predictive ability of Rydex or COT. Here is my argument: are you currently short in your retirement account? Probably not if you are bullish. I am kind of neutral/sceptical - long, but nothing aggressive (gold, Asian ETFs, food, dividend-paying infrastructure etc - and a lot of cash). I'll be glad to shift all my cash into RYVNX when I turn bearish. In other words, hedging is also a sign of pessimism, especially heavy hedging. Regarding COT - I am the first to admit that I don't understand the fine details, but what I see is that commercials were very short at 2000 top, very long at Oct 2002 and March 2002, short in December 2004, long in October 2005. Exactly opposite for small speculators ("very long" means longer than most of the time during preceding year or two). Betting on the side of commercials was profitable. Whether one looks only at large contracts on S&P or also takes into account minis, NDX, and Dow is a question of preference, but IMO COT has been very useful during the last few years. Right now COT data look somewhat bearish to me (although Shack made a very good argument that, in contrast to previous good tops, small speculators are not too aggressive on the long side). Same about Rydex - hedging or not, extreme readings in Rydex pointed to significant tops and bottoms, eg schaeffersresearch.com BTW, I just read a post of Iblayz on IHub regarding position of commercials at 2002 bottom. Just some #s. investorshub.com