Bear Funds
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Please ignore this if it's already been talked about on here.
Was wondering what the general consensus on "bear" funds are on here?
IMO, you have to be very pessimistic about the markets over the long haul to invest in these? I realize that alot of them utilize a shorting strategy.
how do these fit into a long term saver's asset allocation? Aren't they just going to net a loss over the long haul, and only provide gains in poor market years?
That's how I feel... So how are these funds in business?
Are people just going in and out of them whenever they see a stormcloud on the horizon? That sounds inefficient.
Take out your ICA guide from American funds. Do you want to be moving left to right on this chart or right to left?
These funds are in existence because people make stupid shortsighted decisions based on the last few weeks, not the last 100 years. As long as there is no shortage of stupidity in the world we will always have a job.
[quote=Big Taco]IMO, you have to be very pessimistic about the markets
over the long haul to invest in these? I realize that alot of
them utilize a shorting strategy.
how do these fit into a long term saver's asset allocation? Aren't they just going to net a loss over the long haul, and only provide gains in poor market years?
[/quote]Purely a short term tactical thing. If you bought a short QQQQ fund in 2000, you look very smart right now.
Bear funds range all other the place from passive short ETF's to actively managed short funds. The active funds are usually further split up into "Macro" short funds that do a top down investment strategy, and short fund that go off in search of over valued stocks.
Some funds are mix of the two strategies. The general concensus is that it takes 1-3x more skill to manage a short portofolio vs a long portfolio. Hence you see alot of quant L/S funds.
On the whole short funds are going to reduce the total market exposure of a portfolio. If you have $100 in SPY and $100 in a short SPY fund, your net exposure is zero.
You can do the same thing by selling off $100 of SPY, with less heartburn.
Don’t ever use a bear instrument without a stop sell. Ticker: QID, is a “leveraged” negative inverse ETF with twice the inverse of the QQQQ. Let me explain further: if QQQQ is down 2% today, QID is up 4%. If QQQQ is up 2% today, you are down 4% -or so that is how it is supposed to work. If you ever implement one of these into a portfolio, just make sure you put a stop loss sell order in, or you could get clobbered. I have used it before, and lost money, but I did have “downside protection.” There are several of these, and some are not “leveraged,” to double the inverse. Hope this helps.
What a bunch of wusses!<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
Yeah, you buy the bear fund when you think there is going to be a bear market! If you're buying it for insurance, fine. Me, I'll buy it as a speculator.
You've never shorted a stock? Yes, you can lose your stash quick, but when you are right!!!!
It's much more common to see a stock down by 20% in a day than it is to see a stock up by 20% in a day. Stocks are the only thing that people don't want more of when they go on sale!
Would I buy a bear fund and hold it forever? No, I'd try not to, but I AM still holding some <?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />AIM Technology funds that are still down net net! I'm held my China funds when they were down for years. I'm holding some "Growth funds" that are down, I'll be glad to sell you a closed end bond fund that I bought when rates were at 9% ish PPT? was that it? I mean, we've had the greatest bull market in bond since then right? I'll tell you what? I'll give it to you for what I paid for it then, how about that?
There is no such thing as "Set it and forget it" And while we're on the subject, you guys that get into the middle lane and figure you can put it on cruise control and just keep going! YOU CAN'T! Driving is not a leisure time activity! Pay attention, get into the slow lane and get out of the way when you come to merging traffic you lazy bastards! "Oh jeeze, it's so much work to move from lane to lane when there is traffic on the road, I'll just stay here and go the speed limit!" They should make you walk next time! they you'll find out how much easier it is to drive EVEN if you have to pay attention and change lanes once in a while! You don't want to drive? Hire a chauffeur goldangit!!
There is no such thing as "Set it and forget it" And while we're on the subject, you guys that get into the middle lane and figure you can put it on cruise control and just keep going! YOU CAN'T! Driving is not a leisure time activity!
Sophia! Awesome and inspired. The voice of experience. I am a right line to middle lane and back kind of camel driver myself.