Friday, June 30, 2006

Pring: "Return of the Bear"

I sourced this from The Big Picture but it is worth reading. The article is linked in PDF form here. The caveat from my side is I am bullish for markets for the next 3-4 months, but at the same time I wouldn't want to be caught on the wrong side of what Martin Pring is suggesting.

Not wanting to repeat the chart from the article which Barry emphasized on The Big Picture (follow the above link to see his comments). I would like to point one towards Pring's analysis of the business cycle as it relates to now.




If the markets morph into a repeat performance of 2000 (or certainly a retest of 2002 lows) then some of these ultra bear funds are looking real attractive at the moment.

Take the performance of the Rydex Inverse Dynamic OTC H (RYVNX). Over the last three years it has meandered around $25 with little in the way of volatility compared to the NASDAQ. You could hide your money here with little downside risk and wait and see how the break of the 4-year support line in the NASDAQ pans out. Note the rapid advances in the fund as fear takes a grip in the markets (twice in 2001 and once in 2002) - its due another run and could double or triple your money inside the next 2 years. Leaving you with plenty of capital available to buy up the next bottom.



Once the summer rally plays out in whatever fashion it does I know where I will be placing my money next.

Always be prepared to look at all options...
 
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