In the short run, the Fed can goose the market. In the long run, the Fed will be ineffective in stopping a correction in a recession.
Exactly.
The Fed can only “drop a few more uppers in the punchbowl”
Here is my current allocation:
5% Puts on the S&P500, JAN08 and JAN09 expirations
50% PROSHARES SP500 2X INVERSE (SDS)
35% RYDEX SP500 2X INVERSE (RYTPX)
10% CASH
Of those, I recommmend the PROSHARES SP500 2X INVERSE (SDS) because you can trade it intra-day, which you cannot do with the RYDEX fund. The S&P 500 Puts are too expensive now. I bought mine before July, before volatility increased and was priced into the puts.
Yes, I know mine is an incredibly risky portfolio allocation, so I don’t need to read your scathing replies about how I don’t know how to manage risks. I’m young. I understand the risks. This is extreme gambling. It is also great fun, and since mid-July it has been a great money-maker, putting me well ahead of the indices for the year.
With that allocation you can imagine how much my accounts go up on days like this. I LOVE BAD NEWS for the markets.
My advice for everyone is don’t be long this market. This is a market with such dark vengeful fury that it will mow down anyone holding bullish positions. I see an additional correction of 10% before the end of the year, and it could be bloodier than that.
Yes, if I sound familiar to you old timers, that’s because I’ve been posting on here since about 2004, only under a different nickname that you know well. I switched to this far more anonymous nickname this month to provide myself more privacy. If you figure out who I am, please don’t post the old nick because that won’t be nice.
I’m still looking for a way to buy puts on the Shanghai A Shares index, and I haven’t found a way. If anyone has any ideas, do let me know. I seek puts because I cannot short in my retirement accounts.
