Buying Bear Funds
- Slick
- KirkL
- matttheduck
- Mark_J
- litab16
- JenL_3
- GoodGuy
- JenL_3
- RandeS
- JenL_3
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» matttheduck - ira and bears
slick, i requested info on the rydex funds bb recommended becoming familiar with yesterday. i was asked whether this was for an ira, so apparently there's no problem there. i think the only prohibition is shorting in the ira.-- posted by matttheduck
» Mark_J - Rydex Ursa
I have been trying to short-term time the market using Nova and Ursa from Rydex. I have been trading in my Waterhouse IRA account. At Waterhouse, there is no transaction fee for the Rydex family. They give you something like 4 free short-term moves, but then charge you a $25 transaction fee for the 5th and subsequent short-term trade. I believe a short-term move is defined as holding a fund less then 6 months. In an IRA, the minimum amount is $500 or $1000, I can't remember which. The limit is higher in non-IRA accounts at Waterhouse. So yes, you can buy a bear fund in your IRA.I've come to the conclusion that I can't short-term time the market. I've been expecting the 10-15% correction and have been in Ursa from DOW 9600 to 11000. I recently used the 6% pullback to switch from Ursa to Rydex OTC since bob thinks we're going to new highs.
The good news is that since the market has basically traded sideways the past 3 months, I didn't gain or lose in my short-term strategy. I just lost sleep wondering each day if I should go bullish or bearish.
I've decided I'll stay in the bull funds until Bob issues a sell signal. I'm out of the guessing game...
Other bear funds to consider are offered via Profunds. They have an UltraBear fund. I don't know the minimums required, but Waterhouse does offer the Profunds family as a no transaction fee fund.
Waterhouse fund list is at:
-- posted by Mark_J
» JenL_3 - Bear Funds @ Schwab
I called up a Schwab Rep. to ask about Rydex Ursa(RYURX) and Profund Ultra Bear (URPIX), both of which can be purchased through Schwab:Neither is on the Schwab One Source List so the $39.00 fee per trade applies.
There is a 1.34% annual operating expense for RYURX and and 1.33% for URPIX.
There is no front load and no redemption fee for either fund, thus no 6 mo. holding period.
Minimimum initial purchase is $2500 (or $1000 in an IRA or custodial account) for both funds.
.....Jen
-- posted by JenL_3
» JenL_3 - Bear Funds Ruled Last Week
This from CBS.MarketWatch.com: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
» RandeS - Over the long term, Bear Funds are a LOUSY investment.
Over the long term, Bear Funds are a LOUSY investment. Given the market's propensity to rise more than not, your odds are lousy with these vehicles. Bear funds are market timing tools, and, despite what some might say about the ability to time the market successfully, using these funds for a short-term play amounts to nothing more than speculation, pure and simple.-- posted by RandeS
» JenL_3 - A Short Primer
A useful primer on Shorting and Bear Funds from MoneyDaily.com:The article has a great table comparing the various Bear funds and S&P500 performance. But the author concludes:
In short (forgive the expression), your simplest bet is to use a discount or online broker to short the SPDRs or the NASDAQ 100 units on the Amex. If you want to stick to funds, though, then whatever you do, do NOT use the "Ultra" funds; if the market goes against you, they will lose $2 for every $1 you put in.
Anyway, here's my best advice: If you must short, use only a small portion of your portfolio--say 10 percent, max. Set an absolute dollar limit on how much you are willing to lose, and get out if you lose one penny more. Better still, start by washing your face in ice-cold water or slapping yourself vigorously on both cheeks--anything that might get you to reconsider.
....Jen
-- posted by JenL_3
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