What about Indicies that short the market (or a piece of it)?

aquaswim47 · #1 (**permalink**) 02-22-07, 06:08 PM

I'm in awe over the new short possibilities that have hit the market. SDS, SRS, SH, DOG, and SKF are alternatives to shorting ETFs. I'm curious if these are less risky or have equivalent risk to shorting ETFs. I'm also wondering if people think I'm absolutely nuts to think it might be time to short the market. Would I've been nuts to use one of those alternative ETFs early in 2000? Just curious. Can I lose my entire investment or more than my entire investment using one of those dedicated short bias vehicles?

Stocktrading101 · #2 (**permalink**) 02-22-07, 11:55 PM

Well, your risk is substantially lower in an index tracking ETF than with any stock. Even with a double reverse affect on a short ETF fund, unless you are seeing the crash of 02, you wont get into too much trouble. Why? Simply because the probability of the S & P 500 going to 0 is probably 0%.

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I'm also wondering if people think I'm absolutely nuts to think it might be time to short the market.

That is for you to decide. If we knew which way the market was going, we'd all be rich right now

Hope that helps.

investoid · #3 (**permalink**) 02-22-07, 11:59 PM

That's a good question and I don't know the answer. I assume you can lose your entire investment, but I don't think that the company making the ETF won't allow negative asset value to occur (I could be wrong though).

I like that I can buy the bear funds in my regular cash account and don't need to worry about shorting a stock (which usually means having to have at least 30% of the value of the short available in cash to cover losses).

aquaswim47 · #4 (**permalink**) 02-23-07, 01:03 AM

Well, it is interesting to see how Iranian politics could affect us. I'm also glad to have received the volatility report on the FarEast by WallSt.Golfer. I'll have to look at my options.

Yeah, it would be interesting if DOG could have a negative NAV (such as if there was a massive expansion in the war budget). Doubt that will happen. But I probably will not take that chance. Thanks for all the advice.

Back to the drawing board.

aquaswim47 · #5 (**permalink**) 02-23-07, 12:01 PM

Proshare Funds have a dozen funds and acts much like a hedge fund. There is a lot of risk in these funds, but they trade inverse the market so they provide opportunities for returns in declining markets and possible losses in raising markets.

ProShares.com: Literature Center - Overview