I would prefer a more objective catalyst but something is better than nothing (not be sarcastic). I'm not sure but I think the reader is telling me that he is in the process of selling and wants my take on the Prudent Bear Fund (BEARX) and the Prudent Global Income Fund (PSAFX).
BEARX is actively managed. In using an inverse fund I want to know exactly what the fund will do. This is because any fund along these lines that I use would be to reduce net long exposure, not to be net short in the portfolio. The reader doesn't spell out if he is selling everything or just reducing.
My general preference for this is to use the ProFunds Ultra Bear Fund (URPIX). It is leveraged to capture double the inverse of the S+P 500. In my opinion it is more efficient, as a portfolio tool, than the un-leveraged funds.
I had never heard of PSAFX, but it looks interesting. Top holdings include bonds from Iceland and Norway along with some gold stocks. The fund is down $0.26 in the last week so maybe they still have the Iceland bonds? I'm not sure about that. The total return for 2005 was minus 4.3% according to Morningstar.
I think I have disclosed here that I own Pimco Local Developing Markets (PLMIX) for clients to capture a similar effect as PSAFX does, PLMDX is the ticker for retail. PLMIX has not been around that long but PSAFX has been much more volatile.
For now, neither BEARX nor PSAFX would be my first choice in their respective categories but I'm sure they will capture their intended effects.
If the reader is planning to have zero stock exposure, I would tell him that is a huge bet. 100% or 0% of anything is a big bet and not a position I would ever suggest to someone.
I would also add, or maybe I should say repeat, that a lot of what the reader is trying to capture will be more easily accomplished with new products that should be coming soon. You know about the silver ETF, I think there will be other commodity and currency ETFs too.
1 comments:
As someone who has been nervous and bearish in my gut for about a year and a half now but has chosen to stay long the market (mostly in Asia). I have to caution the discussion of Bear market funds when you are nervous.
I have made a lot of money during this nervous period of mine by staying long the market. The mountain of mortgage and credit card debt is a major problem that will eventually cause significant problems for the market. BUT, that does not help me time the market.
For now I am nervous and fully invested because that has been more profitable. I am sure that will change eventually, but there better be pretty sound reasoning before shorting the market.
Believe me I read both the bull and bear market sites and think the bears make a LOT of good points. I just do not think you (but mostly me) should squander retirement funds on bear market funds without really really good reasons for buying them.
This is supposed to be investing not betting. That is what I love about this Blog even when I disagree with Roger. He talks about investing, not treating the markets as a casino.
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