You would get about a 70% gain if that were to occur. That will not happen while you own it. What will most likely happen is lack of volatility on the Russell and it will move like a turtle up over the next three months to 1100 at which time you will sell for about a 20% loss. Interest rates will not go up at that much and will have less of an effect on small caps. Plus they will stay relatively low with commodity prices still making stock attractive through 2014 while the unemployment rate stays between 7-7.5%. All the $8.25 /hr jobs will not increase consumer spending. IMHO
I agree with your analysis, however I will also reference: 1) history and point to the fact that the month of September is the worst performing month in the market's history. You would have averaged a nearly -1% annual return had you held stocks only in the month of September from the market's inception until today. 2) We are also having a flurry of bad economic numbers 3) The P/E on the Russell 2000 is ridiculously high-----47.11 times forward earnings (SEE the wall street journal statics as of this date). What's the point of holding into bad news in the worst performing month in the market? Just because rates are low, is a bad answer when 60%+ of GDP is consumer spending and the numbers we are seeing from retailers is pathetic. This is a no-brainer..,..... SELL now, buy back in October only if trend reverses. These computers are faking are creating a fake out, I'm out long for a monster return, and in SHORT today!!! GLTA.