jg, you’re right, they don’t deliver quite 200%. More like 150%.
Rydex Inverse Dynamic S&P500 Fund returns almost twice the inverse of the S&P500. The 1 year return for the S&P500 is 14%, and for RYTPX is -22%.
Likewise, RYCWX, Rydex Inverse Dynamic Dow, had similar returns.
Rydex has other inverse funds: long bond, mid-cap, Russell 2000, NASDAQ (named OTC).
I purchased these funds in November, so my losses are still small. My biggest surprise has been the stock market rally, heading into a recession. This again proves to me that markets are not rational, not forward looking, not efficient. Markets seem to be bubble blowing machines.
After the stock market started falling this spring/summer, I thought the markets were anticipating the recession from the housing bust. I was utterly surprised by the fall rally, the high-flying private equity deals, and the imbalance between the bond and stock markets. The bond market is priced for a recession, while the stock market is priced for more profits ahead. While insiders are cashing out, the Dow has gone longer without a 2% correction than any time since the 1960’s.
