Friday, August 10, 2007

More stock investment/trading ideas as quotes from some news stories.
Jun. 13
Finally, for the more aggressive among you, consider inverse bond funds like
Rydex Inverse Government Long Bond Fund
(RYJUX : 19.65, -0.16, -0.8% ) or
ProFunds Rising Rates Opportunity ProFund
(RRPIX : 20.26, -0.17, - 0.8% ).
These funds trade inversely to bond prices -- meaning they RISE in value when bond prices FALL. You can also target vulnerable sectors of the market. For instance, you could sell short the
SPDR S&P Homebuilders ETF
(XHB : 25.50, -1.53, -5.7% ).
Or, you could buy the
UltraShort Real Estate ProShares
(SRS : 112.00, +6.82, +6.5%).
The leveraged ETF is designed to rise 2% for every 1% decline in the Dow Jones U.S. Real Estate Index, a benchmark index of commercial REITs.


Stocks mentioned:
RYJUX RRPIX XHB SRS

Mar. 5
Larger capitalization exchange traded funds like the Diamonds Trust (amex: DIA - news - people ) and the Rydex Russell Top 50 (amex: XLG - news - people ) sustained the least damage, while the small cap iShares Russell 2000 Index (amex: IWM - news - people ) was down 2.12%.

The iShares MSCI Malaysia Index (amex: EWM - news - people ) was down 6.64%, iShares MSCI Australia Index (amex: EWA - news - people ) lost 5.81%, PowerShares Golden Dragon Halter USX China (amex: PGJ - news - people ) lost 4.3% and the iShares MSCI South Korea Index (amex: EWY - news - people ) was down 1.45%.

The big winners were of course the inverse ETFs that move opposite the markets, with the ProShares Ultrashort Real Estate ETF (amex: SRS - news - people ) up 7.39% for the day. SRS seeks daily moves that are 200% in the opposite direction of the underlying index. U.S. real estate tracking ETFs were hit very hard again.

At some point, prices will settle at levels sure to bring out the bargain hunters. Bargain hunters may want to focus on Thailand trading at 9.5 times earnings, Brazil at 11.9 times, South Korea at 10.9 times, Germany at 13 times, Brazil at 11.8 times and the Netherlands at 11.8 times earnings.

Stocks mentioned:
dia xlg iwm ewm ewa pgj ewy srs

NOTE: The inverse ultrashorts may not truly return 200% of the markets they cover. I've read that some of them-- the ultrashort S&P play offered by ProShares, did not offer a true 200% upside on a down day, but without a source I can't confirm that. If I find it I'll add it here. However, thestreet.com answers has a positive post about the SRS, at least in the short term, and it has gone up lately due to the poor performance in the housing sector. My one concern about these plays is that shares in ProShares ETFs are not real shares (read their prospectus), and they don't have a long enough track record for me to believe that they would make good on their promises if the company became insolvent for some reason or other. In my opinion, you can play them, but not with money you can't afford to lose.

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