DarkToast (98.61)

Inverse ETF's Ascendent

October 13, 2008 – Comments (2) | RELATED TICKERS: EEV , SMN , EFU

Hello Fools -

Back in early August, as my CAPS portfolio was being ravaged by the commodities decline, I was thinking that the hit to the commodities market was a precursor to the market as a whole getting hammered. In CAPS I loaded up on all of the ultra-short ETF's. They didn't do much for a couple of months except slowly dragging my CAPS score lower and lower. 

A few weeks ago I decided to try to salvage my CAPS score. I had gone from a CAPS rating of around 80 to a rating of less than 2. My score had dropped from ~+1000 to ~-2000. None of my red thumbs on banks that were 'doomed to fail' had panned out except for Lehman Brothers. As a few stocks would hit the magic +5, I would close them to try to get my accuracy up. I was looking at ~25% accuracy, with an average pick score of -7 or so.

Suddenly the long predicted crash came to pass. The Ultra Short ETF's got me on the list of the 'One Day Hottest' players last week. Day after day my CAPS score climbed double digits. Last friday I was looking at the price of some stocks. INTC was selling for less than the value of Intels real estate and cash on hand. ESEA was selling for less than the value of its ships. Motivated to buy in real life for the first time in months, I closed the ultra shorts and red thumbed them all. This was within 20 minutes of 3:00 p.m Friday afternoon.

If this bear market rally can hang in there until I can close the ultra short red thumbs, it will leave my CAPS account in the best shape since June, or maybe forever.

Sometimes you CAN time the market.

Be Foolish,

DT