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Post by unlawflcombatnt on Mar 2, 2007 16:41:22 GMT -6
The Dow Jones declined 533 points for the week ending 3/2/07. This was a 1week decline of 4.2%. Below is a copy of the 1wk Dow Jones Industrial Index, taken from Yahoo Finance.
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Post by jeffolie on Mar 2, 2007 20:29:40 GMT -6
A bear market is coming and perhaps a deflationary depression. I believe it is possible for the indexes to make a new high in the next month or two. A bear market is commonly defined as a decline of 20% or more. Most tops are broad and have multiple rallies over a period of weeks or months before turning into a waterfall like collapse. It is not unusual for a top to look like a head and shoulders ( www.chartpatterns.com/headandshoulders.htm ) or 3 peaks with a dome. I have been 200% short using a Profund inverse mutual fund and made 5 figuires this week. I am not playing the short term trader game.
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Post by unlawflcombatnt on Mar 3, 2007 3:16:02 GMT -6
I have been 200% short using a Profund inverse mutual fund and made 5 figuires this week. I am not playing the short term trader game. I'm not sure I understand here. Could you elaborate a little on this?
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Post by blueneck on Mar 3, 2007 7:10:09 GMT -6
This drop precipitated by instability in the Asian (china) markets should be a grim warning that we hitched too much of our wagon to China - and they are just showing the world the muscle they can flex. This may be a retalitory move to try to stifle a lot of the growing anti free trade sentiment in the US.
Remeber the old saying that "when America sneezes the world gets a cold" - Now its when china sneezes, the US gets pneumonia.
China now controls the world economy in a way that the US once did. As Buchanan has said the American century is over and the china century has begun
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Post by beachbumbob on Mar 3, 2007 7:20:47 GMT -6
china's market cap is $1.5 trillion US market cap ?? $40 trillion or so...don't think China economy has that kind of control, yet. But their financial policies can. They do have control over our interest rates. The US market "correction" maybe more than a mere correction. As many of the economic fundamentals are not good: - negative savings rate - collapsing housing market (was primary engine of US econom or past 6yrs) - personal debt levels - Fed debt and borrowing levels - account deficits everywhere we look - inflation (vastly under reported) - dismal GDP growth - world wide explosion of CDOs, derivatives, etc
wheres the next golden goose??? no tech market, no housing ATM machine, no growing economic miracle in sight
could be more than a correction
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Post by blueneck on Mar 3, 2007 8:40:29 GMT -6
Good points there BBB.
No strong new construction, no solid manufacturing base.
Essentially all the things you mention above, no savings, personal debt, fed and trade deficits, etc are in essence a "weakened" immune system, allowing us to be more susceptible to those blips in the Asian markets. Not too mention the amount of debt and interest paid that china holds.
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Post by jeffolie on Mar 3, 2007 10:47:25 GMT -6
ProFunds is a family of mutual funds. The inverse funds are opposite the market's direction. The inverse fund goes up in value when the market goes down. The inverse fund has the same result as shorting the market. I use an inverse fund that increases in value at twice the rate of the market's decline. I invested 100% of my investment funds in the double inverse fund which results in an investment that increases twice (200%) the percentage of the markets' decline. The Nasdaq 100 is the index of the double inverse fund I selected. The Nasdaq 100 declined 5.8% and my fund increased in value at twice (200%) the index resulting in a gain of 11.6%. There are at least 3 families of funds that provide inverse funds that I am aware of - Profunds, Rydex and Direxion. The advantages of using inverse funds is the leverage and lack of characteristics of options or margin. Since the mutual fund is a cash investment, it has no time period that expires or wasting time premium. Also, unlike margin investments, it has no calls for not meeting maintenance requirements. You can hang on to your cash investment position in the mutual fund forever. There is market risk and reward so that you make money or lose money as the index of the fund moves in the direction of the fund (long or inverse). www.profunds.com/ has a lot of funds some which are double the indexes or sectors movement and some which are inverse. It has a $15,000 minimum initial investment requirement. The frequently asked questions can be found here: www.profunds.com/overview/faqs.asp#23
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Post by unlawflcombatnt on Mar 3, 2007 17:50:46 GMT -6
Jeff,
Thanks for the information. It certainly sounds interesting. I can't really afford the $15,000 though.
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Post by graybeard on Mar 4, 2007 8:35:14 GMT -6
Thanks for the info, guys, and especially to you, UC, for this insightful site.
I just bought $2.5K of URPIX, the Ultra Bear inverse S&P fund through my IRA at Fidelity.
Seems to me if you have money in both regular funds of any kind, and inverse funds, you are betting against yourself and may as well be in cash, unless, of course, you specialize in sectors.
Would the Real Estate inverse fund be good, now, or could bankruptcies hurt it?
GB
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Post by jeffolie on Mar 4, 2007 15:10:47 GMT -6
The Ultra mutual funds at ProFunds are 200% short the market.
I have been using index mutual funds for decades to time the market.
Good luck.
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