NoName; I believe they are saying 10,000 by the end of 1999, not
this year. Look at it from this angle..that's about an 11% move
to the up side from where we are in a 1 year window, now even
if it don't end at 10,000 by 1999..the way they will claim victory
is if she goes that high at any point, and that's not altogether
unreasonable. So say you bought the DIA now and put a GTC sale
on her at the 10,000 mark you would have a good chance of getting
it. Say you went into the no-load WDOWX fund now at 8.90 a share and set a target at 10..I think before 1999 ends you would hit your
target. To hedge this put about as many dollars in it on a
ratio of what the MDY is selling for in 100 share blocks.
at this time that's 6,800 dollars and if the market goes up
keep adding to the dollar amount in the WDOWX to sort of match
100 shares of MDY, ( or multiple units ). If a down trend starts
simply short MDY.
--------------------
While I've explained it the way above for simplicity,
that's not the way I would actually recommend doing it.
The WDOWX in an index fund that tracks the DOW, I would prefer
to use one that tracks the S&P such as VFINX, then stand by
to short the MDY on down turns.
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Investing for Dummies;
A Rip Van Winkel , eyes shut, hands off approach will let this
beat the average mutual fund. While most people are impressed
by the ICONs of the funds held up to the light by the people
in the business of selling these things, they are unaware
that if you take all the mutual funds and lump them they
are only up about 3-1/2% for this so called bang up year
That is the average. Many of them are down big time, 50% or more
particular ones in energy , and emerging markets, and commodities.
While a money manager would tell you to diversify, and them that
did sure didn't make a lot this year.
They will seldom tell you to hedge, as they think that's to hard
for the average investor to understand. We are all considered
dummies by brokers, if not out and out stupid.
Still the Rip Van Winkel, eyes closed, hands off , or investing
for dummies approach, would have you long, VFINX, and short MDY.
and it would not only beat the average, it would continue to
make money if the market crashed ( if you stayed $ balanced ).
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It's the best kept secret on Wall Street.
quote.yahoo.com
The MID CAP 400 is hamstrung in respect to the S&P500..
It always falls in down turns more than the 500, as it's
not as liquid, very seldom it out runs the 500, ( only for
brief periods and then only to drop back in a month or two
I don't think even once in the last 3years that it out did
the S&P500 for over a 3 mouth window.
BUT this can change however if your not completely
brain dead you should easily be able to see it when it does.
And it won't likely change unless or until there is a very
big correction in the market, till then it's going to yield
10% even if you go to sleep at the wheel, and leave instructions
with your broker to close you out if at any time
the long falls 15% from it's yearly high & to call you.
As in that event I can assure you the MDY short will have made
more than the long lost, but it's time to wake up and take
a look at what's going on.
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In short the MID can only out perform the 500, "after" a long
bear market..or just for a short period before a
market correction. When the market is really rolling up the 500
will beat the mid, if it dumps the MID will dump harder..after
a big dump if the market goes flat or just makes minor gains, then
the MID may have a few years of glory, but even those will
be subdued glory and you would likely be better off in bonds.
------------------
The reason for the bigger dump during a dump, is the stocks in the
MID are not as liquid, the reason it can't keep up with the 500
in a bull market is it's best runners graduate to the 500..
were they can run without a limit to their cap size.
The momentum in a bull market favors big caps, as index tracking
funds are forced to buy more and more of the gainers in order to
track the index. Ah but with the MID caps, they have to dump the
best runners and take a chance on a new comer as the runners
graduate to the 500, also the 500 is getting in more stocks
that are proven gainers than the 400 gets.
They both kick out slackers.
----------------
Last for worry warts long the 500, short the 400 , has a good
risk reward ratio..it's not a get rich quick system, but it's a very low risk system, & the odds you make some money on it are 5 to 1, (up to 10% or 12% a year,) the odds you lose are only 1 in 5, and that loss is not likely to exceed 2%.
Jim
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