I have quite a few mutual funds, so this is more of a hedge, feels kind of dangerous to be long here. Mkt is way up economy is not doing well, only up because of ez money. Lots of debt on and on, rather than sell my mutual funds, just buying some short term protection, until I feel better about the economy.
Many ultra shorts have a natural drip on them. As in poker it's like a rake. Look at a long term chart of FAS and FAZ. They are triple long and shorts of in finacials. Look at a 1 year chart of fas and faz, you would think if one was up 40 percent the other would be down 40 percent, BUT one is down 18% and the other 35%. My point is down go long ultra etfs. Better to go short IMO>
It's really more a hedge than anything, in a perfect world, DDM hangs here, then we get a pullback and I would cover. Even if the market goes higher my mutual funds will go up so pretty much a wash. I just don't like the market here. It could run higher ,but higher taxes and higher rates are coming down the pipeline, not to mention high gas prices soon to take effect. Market will start to price this is in next few months.
Bernank says QE to continue into June. IMO, cheap money is the only reason for this market.
I would say "short" in mid-June, but any incipient collapse in averages might provoke another round of QE. The big boys (not a suscriber to conspiracy theory, just going on politics and current events) will get the Fed to support their efforts to prop the market. Or vice-versa...
...after they have made a short term killing playing the downside.
Unfortunately, too many games played in the open for us newly minted cynics to believe that the markets aren't periodically played for the benefit of the heavy donors. The trick is to guess which direction they want to take it, then go along for the ride.
Wish I knew when support was being yanked, when props were being reinstituted. I too, could make a killing playing the indices.
The key is housing. Until home prices stabilize, and start rising, the Fed will continue to pump up the money supply. Obama's fiscal irresponsibility further insures an expanding money supply, as the Fed and Treas will continue to monetize the new debt.
Unless and until home prices exceed the value of mortgage debt, the banks will remain insolvent. The banks are only solvent because they never implemented "mark to market" accounting, and they carry fictional values on their books.
The rise in the stock market since the bottom, in inflation-adjusted dollars, is much smaller than it appears.
Common stocks of companies with pricing power are still the best and most liquid hedge against inflation. Some companies showing good pricing power currently include: XOM, PG, DEO.
I have lightened up considerable recently (I never go on vacation on margin). Better to be lucky, than good.