Bear View I - Shorting with ETF's
For clues on shorting using ETF's, Tim Middletons column at MSN is worth a look.
Key Quotes: Jesse Livermore made $100 million in the Great Crash of 1929 by being short the market.
David Tice is very, very bearish. (The Manager of PrudentBear fund) "We believe that over the next three years the market is going to be down a lot," he says. How much? "I'd say 50%."
He blames deficits, particularly the current-accounts deficit, which soared past 6% of gross domestic product in 2005 to a total of more than $800 billion.
The trade imbalance means the rest of the world is giving us products and we are giving them dollars. "That's a credit bubble," Tice asserts.
"Policy makers are doing everything they can to keep the economy humming, and therefore they create more and more credit, and that is debasing the value of our currency. You can't borrow your way to prosperity."
If investors flee the dollar, that means they will also flee U.S. bonds -- and stocks.
We agree with David Tices view that you cannot borrow your way to prosperity. Unless you plan on salting away the cash and declaring bankruptcy. And we also agree that the outlook for equity markets is not a rosy one, more on this in Part II.
Key Quotes: Jesse Livermore made $100 million in the Great Crash of 1929 by being short the market.
David Tice is very, very bearish. (The Manager of PrudentBear fund) "We believe that over the next three years the market is going to be down a lot," he says. How much? "I'd say 50%."
He blames deficits, particularly the current-accounts deficit, which soared past 6% of gross domestic product in 2005 to a total of more than $800 billion.
The trade imbalance means the rest of the world is giving us products and we are giving them dollars. "That's a credit bubble," Tice asserts.
"Policy makers are doing everything they can to keep the economy humming, and therefore they create more and more credit, and that is debasing the value of our currency. You can't borrow your way to prosperity."
If investors flee the dollar, that means they will also flee U.S. bonds -- and stocks.
We agree with David Tices view that you cannot borrow your way to prosperity. Unless you plan on salting away the cash and declaring bankruptcy. And we also agree that the outlook for equity markets is not a rosy one, more on this in Part II.
Comments
Is the best bet simply the lesser of these evils?
Thank you for the thought provoking comment.
I am in the midst of a post regarding this very issue.
Coming soon...
The Nattering Naybob