You may be right about the general stock market sell off. Really, the broad US market hasn’t been profitable in the last few years anyway. Had to be in international, energy or certain sectors (or better yet real estate).
So if you are convinced stocks are going to go down, then the obvious strategy is to short the stock market, either directly or via inverse funds from Profunds or Rydex. 5% return is really conservative, barely more than inflation. If you are certain stocks are going to tank then you can do a lot better.
The most obvious strategy for those of us on this blog who believe we are approaching a monumental real estate bust is to short housing stocks. In my opinion this is an absolute no-brainer. I’ve been in since Jan06 and already up over 30%, it’s only going to get better over the next couple years. The only drawback to this strategy is you can’t short with your retirement funds. The closest option I’ve found is the SRPIX fund, which is a real estate short fund but unfortunately it doesn’t really track the homebuilder stocks
The ideal situation is for those who sold real estate recently and have been renting, they are sitting on cash which they can invest in anything. And right now, you might as well put some of that money in put options and shorts of homebuilders. You made money on the real estate rise, why not double the pleasure by profiting nicely on the inevitable crash?
