Buying Bear Funds: Bear Funds Ruled Last Week

» JenL_3 - Bear Funds Ruled Last Week

Bear Funds Rule

some excerpts:

Bear funds ruled last week as markets reacted negatively to interest rate warnings by Alan Greenspan.

Simply put, when the market drops, funds designed to follow the inverse of a given index will rise. Case in point, ProFunds UltraShort OTC (USPIX) gained 13 percent for the week that ended Friday, according to Lipper Inc. This fund engages in short selling and other derivatives plays, hoping to double the inverse of the Nasdaq 100 Index, which lost 6.4 percent last week.

Before jumping into a portfolio like this, bear in mind (pardon the pun) that such funds are generally utilized by market timers looking for opportunities like last week. Few hang on for the long-term unless they feel that the market will head south for an extended period of time. Long-term UltraShort OTC investors, for instance, would have suffered a 74 percent decline over the last 12 months if they had bet against the bulls.

.....Jen

-- posted by JenL_3