SRS continues to underperform in a big way. On 10/27, SRS closed at 199 and IYR closed 34.18. Today, just about three weeks later, IYR is down to 33.10 -- yet SRS is at 163.
In other words, in three weeks IYR is down 3% yet SRS is down 18%!
And check out the past year: IYR is down 50.6% and SRS (a "double short") up 59.8%.
Yes, I know all about the mathematical reasons why SRS will likely never double the inverse of IYR in the long term. And yes, I saw how the incredible October drop of IYR (44% in four weeks!) actually made SRS hit 200.
But in order for SRS to be a true "double short" in the long term, we'd need to see another massive drop in IYR in a short period of time. Considering how much air has been taken out of REITs already, can REITs actually drop again that fast? The key here is the speed of the drop. If REIT's continue to sag slowly over the next couple of years, SRS goes nowhere -- probably down, in fact.
So while I fully expect continued weakness in the REITs, SRS might be getting to point of being a great short.
let me give you an idea hope you know what is the business ( profile ) this fund is dealing with this is the fund they are inverse the real estate index . so tell how many more years you think the real estate price will going up . as far every one know the most the banks they are on the way to be broke , how can you think you can short this fund to make money . i would like to know
all the ultra shorts are pointing in this direction...the market has been beaten senseless...do be short now is more risky than being long or out...i'm certainly no expert..just using a little common sense and reading the charts which seem to be dictating a downward spiral...
The past few years: 10 year Average for the DOW has been approximately 10,000 --> Todays level a 15% drop 10 year Average High for the S&P has been approximately 1100 --> Todays level a 20% drop
You have to go back 10 years because the last bust that should have happened to correct the markets was interrupted by Greenspan. Not letting that play out, dropping rates to zero caused the current bubble. Free markets only work when they are allowed to boom AND bust. Problem is the government keeps interfering in this process, and we end up delaying the inevitable. Even today they are trying to do the same but the problem has become so severe, so enormous that they most likely will fail. That is why I believe the sell off has not played out yet. In my opinion the markets have another 25% to fall. The DOW 5500-6500 and the S&P 500-600
I agree with you but you know something? I got so focused on the same points you are raising that I missed out on some big gains. Still, we DO need to determine ranges and I think a person would be wise to slowly lessen the lower range over time.